Global plan needed for Aussie venture capital 'carnage': Atlas chief

April 15, 2020 3 min read

Global plan needed for Aussie venture capital 'carnage': Atlas chief

Former Macquarie Private Bank boss Guy Hedley has warned Australia must encourage international startup investment to flow more freely to help address the "carnage" caused by a slowdown in local deals.

 

"We're seeing these brilliant Australian inventions and ideas and if something doesn’t happen, they're just going to hit the wall," Mr Hedley said.

 

Research startups will struggle to get private capital from within Australia in the coming months, Mr Hedley warned.

Research startups will struggle to get private capital from within Australia in the coming months, Mr Hedley warned. CREDIT:BLOOMBERG

 

Mr Hedley, who was chief of Macquarie Private Bank from 2001 to 2012, is now executive chairman of Atlas Advisors, a Sydney funds manager with $1.7 billion under management and a focus on the significant investor scheme.

 

This visa program allows overseas participants from China and regions come stay in Australia provided they invest at least $5 million here.

 

Mr Hedley said he was concerned that application assessments for visa candidates had stalled in the wake of the virus, and said more should be done to expand such programs and their remits to invest in early-stage companies. Doing so could help fill an investment shortfall longer term, he said.

 

Atlas Advisors executive chairman Guy Hedley.

Atlas Advisors executive chairman Guy Hedley.

 

The requirements have been that significant investor visa holders invest a minimum of $500,000 into venture capital and growth funds.

 

"The [virus] situation has frozen everything, but by the time you get to venture capital, it's just carnage," he said. "You could force these investments [from visa programs] into more venture capital now," he said.

 

Mr Hedley said that while family offices and venture capital funds will stop writing deals in the coming months, there will be sustained long-term interest from investors in markets such as China and India that can be better leveraged to help fill the capital gap.

 

The warnings of a credit crunch add to a chorus of voices predicting research-focused startups including those working on treatments relating to coronavirus will struggle to stay afloat as investors park their cash in low-risk options.

 

Longer term, early-stage research firms that are connected to universities could struggle with runway due to a credit crunch, Mr Hedley warned. "It's that 'valley of death' that scares me for these companies... the brightest R&D is coming out of our universities."

 

Across the medtech and venture capital spaces other experts have also warned Australia needs a national plan to keep research-intensive companies afloat in the period after coronavirus shutdowns.

 

The concerns have once again prompted calls for a pause on planned caps to the research and development tax incentive scheme, which the government has been planning to enact for the last 18 months. The Australian Investment Council (AIC) warned in a submission on the changes last month that disincentivising research spending during this period could have a longer-term impact on jobs growth.

 

"Given the current economic conditions and challenges, we should be incentivising our SMEs to expand their investment in R&D, which will lead directly to productivity and employment growth," AIC chief executive Yasser El-Ansary said.

 

The federal immigration and home affairs portfolios were contacted for comment.

 

https://www.brisbanetimes.com.au/business/small-business/global-plan-needed-for-aussie-venture-capital-carnage-atlas-chief-20200413-p54jbt.html



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