Hon Trevor Mallard
Minister for Economic Development

Venture capital for young high growth firms

Budget 2006 delivers a $60 million boost to the government's Venture Investment Fund providing further help for young New Zealand firms with high growth potential.

"This new funding for the Venture Investment Fund underlines the Labour-led government's commitment to work with business to develop a high value export-led economy," said Economic Development Minister Trevor Mallard.

"To increase our prosperity, we need more firms that can successfully compete at the leading edge in offshore markets. Innovation is vital to this, but financing young high-growth firms can be a risky business.

"The venture capital market plays a critical role in this process as it helps New Zealand's innovative ideas to be commercialised, and also helps to finance young firms with good growth potential."

Budget 2006 will see $60 million of new capital funding for the Venture Investment Fund (VIF) over the next three years, with the possibility of another $40 million over the following two years, depending on an evaluation in 2009.

The Venture Investment Fund invests in innovative New Zealand businesses and aims to
• accelerate development of the New Zealand venture-capital industry through co-investment with private investors, by increasing the level of early stage investment activity in the New Zealand market
• develop a larger pool of people in New Zealand's venture capital market with skills and expertise in early stage investment
• facilitate the commercialisation of innovations from Crown Research Institutes, universities and the private sector
• get more New Zealand businesses on paths to global success by increasing their access to international experts, networks and market knowledge.

The fund was launched in 2001 with an initial government investment of $100 million which is expected to be fully committed by mid 2006.

A study released last year showed that the New Zealand Venture Investment Fund had been a catalyst for developing the venture capital market here, and also contributed to the pool of people with skills in seed and start-up investment.

ENDS

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