Early Stage Venture Capital Limited Partnerships (ESVCLP)


Early Stage Venture Capital Limited Partnerships provides fund managers and investors with support to help stimulate early stage venture capital investments. Benefits include tax exemptions on an investor's share of a fund's income and tax gains.
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Application detail:

You can apply at any time using the online application form.

 
What do you get?

Partnership registration to get tax benefits for both fund managers and investors.

Who is this for?

Fund managers seeking to raise venture capital funds of between $10 million and $200 million.

Overview


The Early Stage Venture Capital Limited Partnership (ESVCLP) program aims to stimulate the early stage venture capital sector in Australia. The program:

  • helps fund managers attract pooled capital, so they can raise new venture capital funds of between $10 million and $200 million to invest in innovative early stage businesses
  • offers tax benefits to fund managers and investors 
  • connects investors with early stage businesses
  • helps Australian businesses grow by receiving financial support and guidance from expert advisers

Fund managers can apply to Innovation and Science Australia to register a partnership as an ESVCLP.

The Department of Industry, Innovation and Science and the Australian Taxation Office (ATO) jointly administer the program on behalf of the Australian Government.

How it works


An ESVCLP must be a new partnership rather than a restructured existing partnership.

Applicants must apply to Innovation and Science Australia's Innovation Investment Committee (the Committee) for registration under the Venture Capital Act 2002 (VCA).

The Committee will register a partnership as an ESVCLP if it meets certain eligibility criteria.

If registered, an ESVCLP can then make early stage venture capital investments in companies or unit trusts that are at the following stages of development:

  • pre-seed
  • seed
  • startup
  • early expansion

The investments must also meet other criteria and be held for a minimum of 12 months.

An ESVCLP must meet ongoing registration and reporting requirements under the VCA to maintain its registration.

Once registered both investors and fund managers can claim tax benefits. ESVCLP tax benefits differ for investors and fund managers.

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Eligibility


What are the eligibility criteria?

You can apply to register if you are:

  • a new venture capital fund
  • a limited partnership or an incorporated limited partnership
  • established in Australia or a country that has a double tax agreement with Australia

You must have:

  • a general partner (often also the fund manager) who is a resident of either Australia or a country that has a double tax agreement with Australia
  • between $10 million and $200 million in committed capital (although a partnership that doesn't satisfy this requirement may be eligible for conditional registration)

To contribute more than 30% of the committed capital, an investor must be a:

  • bank
  • life insurance entity
  • widely held super fund
  • widely held foreign venture capital fund of funds

All other investors are not able to contribute more than 30% of the committed capital, without the approval of the Committee.

In addition, you must have a qualifying partnership agreement that:

  • ensures the partnership remains in existence for between 5 and 15 years
  • requires partners to contribute capital when required
  • prohibits adding new partners except as provided for in the agreement
  • prohibits increasing committed capital except as provided for in the agreement
  • confers on the general partner the right to require partners to contribute their committed capital to the partnership

The partnership agreement must also include a plan that:

  • sets out the partnership's intended investment activities
  • shows that the investment activities focus on making eligible venture capital investments in early stage venture capital businesses

Your partnership must also have access to the skills and resources needed to implement its approved investment plan. 

All information should be read in conjunction with the relevant legislation:

 

Applying


How do you apply?

If you would like to apply for registration as an ESVCLP, complete and submit the online application  form.

You’ll need to include the following documents.

  • A certificate of registration as a limited partnership or an incorporated limited partnership. This is issued by the relevant state or territory government authority.
  • A certificate of registration if the general partner is a venture capital management partnership.
  • An investment plan that is included in the signed partnership deed. The Committee needs to be satisfied that the investment plan  is appropriate and focuses on early stage venture capital investments.
  • A signed limited partnership deed which includes the investment plan and includes the clauses set out below.
  • Details of all individual investors and their committed capital. The Committee may request documentary evidence of committed capital.
  • The partnership's information memorandum or any public offer documents.
  • CVs and time commitments of the key people active in your partnership. The Committee needs to be satisfied that the partnership has access to the skills and resources necessary to implement its investment plan.

The partnership deed must include the following clauses (use the wording below):

  • Require partners to contribute their committed capital as and when required under the agreement.
  • Prohibit the addition of new partners to the partnership except as provided for in the agreement.
  • Prohibit increases in the partnership's committed capital except as provided for in the agreement.
  • Confer on a general partner the right to require partners to contribute their committed capital to the partnership.
  • The partnership must remain in existence for a period not less than 5 years and not more than 15 years from formation of the partnership (this is the date the partnership was registered as a limited partnership or incorporated limited partnership).   

The Committee may request further information, documents or evidence relating to the application.

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Apply for ESVCLP registration now

If you’re confident you’re eligible, you can apply using our online application form below. Make sure:

  • You have all documents, including signatures as required
  • You have an appropriate investment plan
  • You’ve read the Customer information guide

Other applications for decisions

Other applications can be made to Innovation and Science Australia for decisions about ESVCLPs. These include approving an updated investment plan and allowing a partner’s committed capital to exceed the 30% limit.

Registration requirements

Following registration, ESVCLP fund managers must satisfy ongoing requirements. The Committee may revoke registration if a partnership contravenes the legislation.

Need help?

Contact us for help with your application or to find out more.

Monday – Friday, 8am – 8pm across Australia

Customer stories


Many successful Australian businesses began as start-up or early stage firms with limited funds. Their access to venture capital and people with commercialisation skills helped them turn their ideas, research or innovation into commercial success.

Venture capital funds have also been able to grow and prosper as a result of government venture capital initiatives.

Guides, information papers and statement


Customer information guide

Fintech - private finding application guidance

Information Paper - Approved forms

Information Paper - Interpretation of 'Associate'

Information Paper - Exercise of s9-4(1) discretion

Information Paper - A partnership's committed capital

Information Paper - Extension of application timeframe

Expectation and compliance statement

Examples of combined investments in foreign companies