Government launches $100m fund for business start-ups

5.15 pm

Entrepreneurs stand to benefit from the creation of a $100 million New Zealand Venture Investment Fund, announced in today's Budget.

The Fund will finance business startups in partnership with private sector venture capital.

"New businesses based on technology and high value-added products and services will be a key part of New Zealand's economic transformation," said Research, Science and Technology Minister Pete Hodgson.

"They will need seed capital, but that end of the venture capital market is presently under-developed."

Mr Hodgson said the new fund will be a minority investor in a number of 'drop-down' funds run by private-sector fund managers.

They would be about $30-50 million in size.

Government's involvement in the venture capital market through the NZ Venture Investment Fund would be short-term and one-off, and the Government would gradually withdraw from the market.

One of the operating principles for the fund would be that the Crown would at least recover its capital plus an amount equivalent to the cost of borrowing over the lifetime of the fund.

Mr. Hodgson said the fund would be based on a strategy used successfully by countries such as Israel and Singapore.

"Besides increasing the supply of capital we want to accelerate the development of a larger pool of business people with the necessary skills and expertise," he said.

The fund would facilitate the commercialisation of innovations from Crown Research Institutes and universities as well as the private sector.

The Government has also announced an increase in direct investment in research of $11.6 million.

www.nzherald.co.nz/budget

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