The Bill setting up a $300m Venture Capital Fund to foster innovation and encourage smaller start-ups to expand, passed its first reading in Parliament today.
"The fund helps fill the 'capital gap' faced by New Zealand firms that expand beyond the early start-up phase," Associate Finance Minister David Parker said.
The move puts in place a key element of the Wellbeing Budget's Economic package.
"New start-ups are well served by angel investors with some seed capital support from the Government. But mid-sized ones, between about $2 million and $20 million in size, are not well supported." David Parker said.
"We want to increase the amount of technology that gets commercialised and to lift the level of innovation and productivity across the country. This Bill achieves those aims.
"The fund will help keep more start-ups in New Zealand for longer and support the proportion of these firms in local ownership."
It will be administered by the Guardians of New Zealand Superannuation who will appoint the New Zealand Venture Investment Fund to manage the fund-of-funds.
It will work with local and International fund managers to bring the right expertise and connections to help grow New Zealand firms.
"I expect the additional $300m will be leveraged by investments from the private sector, so far more than $300m will flow into the sector."
Like other Government initiatives including the R and D tax credit, ring fencing of losses and extending the brightline test it will help weight investment towards the productive sectors, and lift economic performance.
After 15 years all assets of the Venture Capital Fund will be returned to the Crown to fund superannuation.
The Bill will be open for submissions during the Select Committee process and government agencies will consult directly with industry on key policy choices.
