Venture funding is all about financing start-up or emerging businesses that are considered to have long-term growth potential. While still small, it’s growing in Australia.
“Venture funding has grown almost 15-fold in Australia since 2011 and there are several funds well over $100 million that have been formed in the past couple of years,” Widner says.
That doesn’t mean it’s a sure thing for your up-and-coming business, however. In reality, only a handful of small businesses are venture funded each year in Australia.
To date, it remains the preserve of high-growth businesses.
“Venture has to go for really big returns,” Widner explains. “That usually means technology companies that can’t raise debt because they’re not going to be profitable for a long time.”
Venture funding may not be the place for regular investors, either. Nevertheless, opportunities are appearing for high-net-worth individuals. There’s an interest there, Widner confirms, and it may be that, with time, Australia will get closer to the United States in this respect.
“In the venture fund I worked for in the US, even if 75 per cent of our capital came from institutions, most of our investors were individuals.”
Again, for these individuals it was the venture space rather than the promise of huge returns that was the attraction.
“They liked being in this asset class. It was really interesting for them to see how we invested and to meet with the entrepreneurs.”