If Australian superannuation funds invested 1% of their $2 trillion asset pool in venture capital the country would have the world's highest rate of venture investing per person.
And if venture capital is not soon given some scale in Australia, it is unlikely the country will truly reinvent itself as an innovation economy.
This was a view presented by OneVentures partner Melissa Widner at a media briefing yesterday. It backs the Sydney-based venture capital firm's belief that there needs to be a greater focus on funding later stage companies in Australia.
OneVentures believes later stage investment peaked at $90 million in 2007, as by 2015 that figure had halved.
Widner said sophisticated fund managers will say you can't make money in Australia in venture capital "and they'll show you the data why, without understanding that Australia [has] invested in this asset class at its peak."
She added Australia became really excited about venture capital investing in 1987, again in 1999, and now - which leaves her concerned because the country gets "excited at the bubble."
She said during those vintage years, the returns on venture capital were horrible. But the US, which reformed venture capital investment rules for pension funds in the 1970s, has been in the asset class long enough "so they could see you can make money."
OneVentures managing director and chief executive Michelle Deaker said out of the GFC super funds consolidated, became conservative and became so large "that to write a cheque for them means they need to deploy $250 million and potentially be 25% of somebody's fund."
"It's probably not realistic for Australia. We need to find a way to carve out some of that capital and perhaps have it managed elsewhere so it can be deployed into venture funds," Deaker said.
Deaker said there had been a big focus in Australia on funding companies between their initial idea and first major investment hurdle, commonly referred to as the "valley of death". But it currently has a 90% failure rate.
She added attracting later stage funding has emerged as the second "valley of death", and was forcing companies to seek alternative options such as premature public listings or offshore financing opportunities.
OneVentures partner and managing director Dr. Paul Kelly said the Australian Securities Exchange (ASX) had been the land of the walking dead for many, many early stage companies.
"If you tell that story well, there is enough appetite out there in Australia to be able to fund companies privately. You don't have to go to the ASX early to tap into that [funding]," Kelly said.
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