Venture capital and new Significant Investor Visa reforms – will demand increase?


16 June 2022


The Significant Investor Visa stream is a pathway to provide significant migrant investment into Australia under the Business Innovation and Investment Program (BIIP).  The Australian Government has introduced reforms to the BIIP, which took effect on 1 July 2021[1]. We discuss the changes and explore if Venture Capital and Private Equity demand is likely to increase within Australia.

Over $15.9 billion had been invested in the Australian economy since 2012 through the BIIP[2]. The recent reforms include:

  • the significant investor visa stream (SIV) continues to be a complying investment for the BIIP, and the ‘investor stream’ (IV) will now also be a complying investment;
  • applicants must be nominated by a State or Territory government agency or Austrade, meet certain requirements and have a genuine intention to hold investment for the life of the provisional visa

The SIV stream investment threshold remains at $5 million and the IV stream (now a complying stream) investment threshold has increased from $1.5 million to $2.5 million.

The ratios under the BIIP will be as follows:

  • Venture Capital and Private Equity (VCPE) component increased from 10 per cent to 20 per cent of the investment;
  • the Emerging Companies component remains at 30 per cent of the investment;
  • the Balancing Investment component will reduce from 60 per cent to 50 per cent of the investment;

The Emerging Companies and Balancing Investment component require an annual audit; and new SIV holders will be eligible to apply for permanent residence if they meet the qualification requirements after 3 years (reduced from 4 years). The SIV will be valid for five years (previously four years).

Within the complying investment framework:

  • 2,349 visas have been granted since the commencement of the program on 24 November 2012;
  • AUD 745 billion had been invested in complying investments.

Data collated by the federal government indicates the increased success of the SIV:

Description

FY 2010 / 2011

FY2020 / 2021

Early-Stage Venture Capital Limited Partnership (ESVCLP) committed capital

$130 million

$3,367 million

Venture Capital Limited Partnership (VCLP) committed capital

$ 4,422 million

$13,664

 

 

 

 

 

Economic Development Initiative

The new reforms are promoted as an economic development initiative creating more Australian jobs and promoting growth of key sectors.

The reforms create further flexibility in the pathway to provide significant migrant investment into Australia. The increase in component share in the VCPE from 10 per cent to 20 percent and the new IV (not just SIV) stream should see an increase in VCPE demand as migrant investors look to comply.

Australian VCPE funds should take advantage of this opportunity by ensuring they establish and maintain complying funds.

DMAW Lawyers can assist in establishment and provide guidance of regulatory obligations of VCPE, Emerging Companies and Balancing Investment funds within the Complying Investment Framework.   

This article provides general commentary only.  It is not legal advice.  Before acting on the basis of any material contained in this article, seek professional advice.

 

Author:

Mario Pegoli, Corporate Adviser and Lawyer in our Corporate team

Email: mpegoli@dmawlawyers.com.au
Phone: +61 8 8210 2293