Perspective on Industry Viability: The Case of Venture Capital in Australia

Abstract

The paper aims to evaluate the viability of the Australian venture capital industry using a system approach and life-path assessment of multiple data sources, academic literature and public documents. Like any other system, the venture capital industry has a unique life path and viability issues. The Australian venture capitalists have adopted a number of established financing practices from international experiences, especially from the US, while dealing with internal market forces, institutional arrangements and policy regimes. We evaluate the factors which can help the system to survive and sustain vis-a-vis the ones which can disrupt and diminish its lifespan. Two interconnected aspects of industry viability are considered. The first aspect relates to continuity of core industry activities, such as fund raising and investing in promising early stage technology ventures. The second aspect is about the industry’s ability to deal with the growing stakeholders’ demand for environmental, social and governance aspects in investment decisions. We evaluate industry practices, institutional arrangements and the role of stakeholders to assess viability issues, objectives and strategies.