Coalition pledges early-stage VC support as fintechs call for clarity
A Dutton Coalition government will expand a program providing tax exemptions to early-stage startup investors, says Shadow Treasurer Angus Taylor.
But some of Australia's most notable fintech founders say the scheme should not just grow, but provide clearer guidelines for investors.
In its new small business roadmap, the Liberal Party pledges to grow the Early‑Stage Venture Capital Limited Partnerships (ESVCLP) scheme if it forms government at the May 3 election.
The ESVCLP scheme benefits investors in growth companies, providing them with tax exemptions covering the income and capital gains of their eligible investments.
As a program designed to encourage investment in emerging Australian startups, the tax breaks only apply if investments go towards companies with $50 million in assets or less.
The Coalition intends to double that threshold to $100 million if elected, and lift the separate Venture Capital Limited Partnership threshold from $250 million to $500 million.
Speaking at Wednesday's business debate in Melbourne, Taylor said it was vital that "venture capital in this country has a real opportunity to make investments".
Actions like lifting the asset caps are "important enablers" for investment, he added, after describing continued business investment as a priority in the next Parliamentary term.
The Coalition also intends to index those caps, which it claims will encourage more homegrown startups to stay put and seek domestic investment in the future.
ESVCLP in focus
The legislation underpinning the ESVCLP program does not explicitly ban investment in fintechs.
However, engaging in banking, lending, insurance, and certain kinds of investing activity can make a startup ineligible for ESVCLP investment.
Despite 2018 amendments designed to improve fintech access, a 2022 review of the system, conducted by the Treasury and Industry Innovation and Science Australia, heard evidence that investors were still spooked by those guidelines.
"The programs have made finance more readily available for high-risk expanding businesses;
however, fintech remains an area for further growth," it said.
Although the Coalition plans to expand the ESVCLP threshold if it forms government, industry representative group Fintech Australia says more should be done.
In an open letter to both Labor and the Coalition, published Thursday, Fintech Australia CEO Rehan D’Almeida called for ESVCLP policy guidance to "better include and support fintech investment".
"We feel compelled to put these concerns in a letter, as there's a direct alignment between the fundamental issues of this election and the solutions the fintech industry can deliver through its growth," wrote D'Almeida.
"While we welcome Shadow Treasurer Angus Taylor's campaign promise to reform financial services policy—including key fintech initiatives—within the first 100 days of taking office, we truly believe such policies should be bipartisan as they serve the interests of all Australians," he continued.
Industry calls out policy "inertia"
In the new letter, D'Almeida wrote that Australia's growing Fintech sector is among the world's most sophisticated.
"However, as other nations catch up and our policy work slows, we risk falling behind, especially as technology evolves."
Beyond the ESVCLP program, Fintech Australia said both major parties have overseen a period of "political inertia" to the detriment of local startups.
It called on both parties to finalise reforms affecting the digital economy and asset regulation, payments reform, privacy, and responsible lending.
"Unnecessary delays" to those reforms "have become existential threats for many fintech businesses," wrote D'Almeida.
The letter was co-signed by figures including Yanir Yakutiel, CEO and founder of Lumi; Beau Bertoli of Prospa; Alex Simmons, co-founder and CEO of Kashcade; and Maryna Kovalenko, of crypto compliance startup Syla.
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