Domestic investment in venture capital was outpaced by that of foreign investors from 2014-15, with the latter now dominating the growth in funding for high-growth, early-stage companies, says OnMarket BookBuilds.
OnMarket indicated that the value of funds committed by offshore investors to venture capital and later stage private equity increased by 29 per cent, or $1.4 billion, from 2014 to 2015.
Conversely, locally-sourced funds increased by 0.2 per cent from 2014 to 2015, OnMarket said.
“Offshore investors are increasingly reaping the benefits of local innovation and growth, rather than Australian investors who are missing out on opportunities to invest in early-stage, high-growth Australian companies either directly or through their super funds,” OnMarket chief executive Ben Bucknell said.
Mr Bucknell said the ASX listing rules are more flexible than those in overseas markets, with fewer restrictions on the minimum amount of capital that needs to be offered to the public, along with less prohibitive listing and compliance costs.
“This makes it easier for earlier-stage companies to raise capital directly from Australian investors rather than being restricted to VCs as their only source of funding,” he said.
Mr Bucknell pointed out that the growing disparity between foreign investors and domestic investors does not need to continue.
“From the perspective of companies who need access to capital, a much bigger audience with much deeper pockets is the Australian public. Local investors have a huge appetite for equity investments and want more access to early-stage investment opportunities.”
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