Fund Launches To Channel New Foreign Millions Into Australian Startups – Sapien Ventures LLP - Fund To Soak Up New Foreign Capital Inflows As A Result Of Changes To Significant Investor Visa Program And Invest In Early-Stage Australian Tech Disruptors

Sapien Ventures, the Australian venture capital fund focused on disruptive technology, launched in Sydney today.

The fund has been set up to take advantage of new capital inflows as a result of changes to the Significant Investor Visa (SIV) program that took effect on July 1 this year. The new rules mandate that $500,000 from each new visa (which are worth $5 million) be invested directly into early-stage venture capital funds.

Founding Partner Victor Jiang said the Australian fund industry was vastly unprepared to soak up these flows.

“To put it in real terms, the Australian venture capital industry raised $266 million in FY14[1]. With thousands of SIV applications already in the pipeline, these new rules could see hundreds of millions more being poured into Australian venture capital funds in the immediate future. There currently isn’t enough infrastructure to take on this money that’s been mandated by policy. Growth is needed.”

According to Basis Point Consulting, a conservative estimate of 400-800 SIVs could be granted each year, seeing $200-400 million per year flowing into Australian venture capital. Mr Jiang said this represented a fulcrum moment for the Australian economy.

“Startup economies are vibrant, job-creating and wealth-creating,” he said. “Silicon Valley is the best-known example, but places like Israel and London have also created thriving startup hubs to foster the economic success stories of the future. With the end of the mining boom and no other viable economic diversification in sight, this could be a massive game-changer for Australia. Observations from our Silicon Valley experience indicate that every $50 million invested in startup companies can create as many as 1,000 new direct jobs in the Australian tech sector, or as many as 5,000 indirect jobs created in the economy overall[2].

Mr Jiang added that a successful venture capital economy also led to flow-on benefits as successful companies moved to listing stage.

“If Australia gets this right it will create a steady stream of IPO-ready companies, which will add much-needed liquidity to the small-cap market, as well as broadening the domestic investment universe for SMSFs and super funds. Over time, we could even hope to reverse the ‘brain drain’ that Australia is so infamous for, and tempt our superstar expats to come back home.”

Sapien Venture’s initial $50 million fund is now open to investors. A series of additional funds is planned over the next several years. The funds focus on early-stage technology companies with the potential to disrupt traditional industries, particularly fintech and ‘marketplace’ style ventures.