Financing high technology: The Australian venture capital market

Abstract

To remedy a shortage of venture capital for the development of emerging high-technology businesses, the Australian government in 1984 initiated a Management and Investment Companies (MIC) program. Under the program, 11 MICs were licensed to raise venture capital from investors who are allowed to claim 100% of their investments as a tax deduction. This study identified a total of 47 venture capital organizations of different ownership structures and investment preferences. Undoubtedly, the MIC program has played a catalytic role in the rapid development of this market to its current capital base of A$353 million. However, there are still segments within the market where venture capital supply is deficient. Further, the recent stock market downturn has dampened the venture capital supply government initiative in reviewing its policy framework at this juncture is crucial in order to remove impediments and create a positive environment conducive to the long-term development of the venture capital market in Australia.