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Venture capital backs local talent

AAP logoAAP 18/11/2016 Ethan James

Australian start-ups have benefited from a jump in domestic venture capital investment as venture capital funds raised a record $568 million last financial year.

A total of $347 million was invested by venture capital firms in 2015/16, up 50 per cent on the previous year, figures from the Australian Private Equity and Venture Capital Association (AVCAL) show.

Most of the money, $300 million, came from within Australia, the highest amount in a decade.

"(It) points to the strength of the Australian venture market, driven by strong industry returns and the abundance of great quality start-ups looking for venture capital to fuel growth," AVCAL chief executive Yasser El-Ansary said.

Information technology companies were the main recipients, receiving 47 per cent of the total investment, followed by financial services firms then healthcare and consumer products and services ventures.

More than $107 million was invested in 57 seed or start-up companies.

The total number of companies being funded remained was on par with 2015 figures at 93 but the average invested capital was $2.7 million, up from $2 million.

Meanwhile, private equity funds invested $3.3 billion last financial year.

More than half of that was for companies in the buyout stage, such as management buyouts, indicating that the Australian PE sector is evolving into a more mature market, AVCAL said.

And just under half of the companies backed by private equity last year were at the expansion or growth phase, a trend Mr El-Ansary said was encouraging.

"(It) is a positive marker for the broader economy. These scale-up businesses will be crucial for future employment growth," he said.

Total total private equity and venture capital investment increased five per cent to $3.7 billion.

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