The following information applies to both these partnerships unless stated.

Fund manager responsibilities


The fund manager must self-assess activities to ensure the partnership only invests in eligible investments. They must also ensure the partnership complies with the legislation by meeting ongoing registration and reporting requirements, including submitting quarterly and annual activity reports.

For an ESVCLP, the fund manager must ensure the partnership also complies with the approved investment plan.

The Committee may revoke registration if a partnership contravenes the legislation.

The Department of Industry, Innovation and Science and the Australian Taxation Office (ATO) will monitor the partnership to assess compliance.

Eligible investments


Before investing, the fund manager must ensure that the investment meets certain criteria. 

The investment must (among other requirements):

  • be in accordance with the legislation
  • comply with the approved investment plan [ESVCLP only]
  • represent no more than 30% of the partnerships’ committed capital
  • be in an Australian business (see Exception to Australian location test )  
  • be in the form of new shares or units, or options to acquire shares or units or convertible notes with equity characteristics (see SAFE note)
  • be at-risk

The investment must also be in a business that:

  • is in its early stage of development [ESVCLP only]
  • has total assets of no more than $250 million for VCLP investments or $50 million for ESVCLP investments
  • has at least 50% of its employees and at least 50% of its assets in Australia
  • has a registered auditor, if the entity value is more than $12.5 million
  • is unlisted (or will be delisted within 12 months if a VCLP investment)

The investment must not be in a business if its predominant activity is:

  • property development
  • land ownership
  • finance (see Fintech amendments)
  • insurance (see Fintech amendments)
  • construction or infrastructure
  • to make investments to receive interest, rents, dividends, royalties or lease payments (see Fintech amendments)

The Committee may revoke registration for partnerships that repeatedly hold ineligible investments.

This information is a guide only. For more detailed information on the eligibility criteria, please refer to the following guides:

Exception to Australian location test


There is provision for a partnership to invest up to 20% of its committed capital in businesses that do not meet the Australian location test.

Fintech amendments


Amendments have been made to income tax law and the Venture Capital Act 2002 to ensure that venture capital investment tax concessions are available for investments in fintech businesses. These amendments commenced on 1 January 2019 and apply in relation to investments made on or after 1 July 2018.

Provided they meet the other eligible venture capital investment requirements, partnerships can now invest in entities which satisfy any of the following:

  • developing technology for use in relation to finance, insurance or making investments
  • undertaking an activity that is ancillary or incidental to developing technology in relation to finance, insurance or making investments
  • covered by a finding from Innovation and Science Australia, in force at the time of investment, that their specified activity is a substantially novel application of technology

ESVCLPs intending to invest in fintech businesses should consider whether their approved investment plan permits this. If it doesn’t, they need to request the Committee to approve a replacement investment plan.

For more information on applying for a finding that the specified activity of a fintech business is a substantially novel application of technology refer to the Fintech - private finding application guidance.

SAFE note


A SAFE (simple agreement for future equity) note  is a convertible security that allows the investor to buy shares in a future equity round. To be an eligible venture capital investment, a SAFE note must have the characteristics of a convertible note and not be a debt interest.

Registration requirements


Registration can be revoked for failing to fix a breach of any of the registration requirements within a stipulated period.

To maintain registration, a partnership must:

  • only hold investments permitted under the legislation
  • act and invest in accordance with the approved investment plan [ESVCLP only]
  • only carry on activities related to being a VCLP or ESVCLP, as applicable
  • only hold a debt interest that is a permitted loan
  • continue to satisfy the eligibility requirements of the VCA
  • have committed capital of at least $10 million, and no more than $200 million if an ESVCLP

For an ESVCLP, a limited partner (or associates) cannot provide more than 30% of a partnership's committed capital without the Committee's prior approval. Widely held super funds, widely held foreign venture capital fund of funds, banks and life insurance entities are exempt.

Reporting requirements


Failing to submit returns or provide requested information can lead to the Committee revoking registration.

Partnerships must submit quarterly returns within one month of the end of each quarter, which include:

  • committed capital
  • drawn down capital
  • invested capital
  • investments
  • disposals

Partnerships must submit annual returns within three months of the end of the financial year, which include details of:

  • limited partners, their committed capital and any changes
  • investments held (at cost and book value) and disposals made
  • changes made to the partnership agreement during the year

ESVCLPs must also submit annual reports within three months of the end of the financial year on the partnership's implementation of its approved investment plan, including any investments and disposals made during the year.

Partnerships must also maintain appropriate records to demonstrate legislative compliance. For example, a partnership must be able to show that each investment it holds is an eligible venture capital investment.

If the partnership is an ESVCLP, you must show investments have been made in accordance with the approved investment plan.

The Department of Industry, Innovation and Science may check that a partnership complies with the law after it is registered. Similarly, the ATO may check that a partnership complies with the legislation it administers.