Blue Sky Ventures just won the right to run a $50 million VC fund for the South Australian government

Elaine Stead of Blue Sky Ventures.

The South Australian government has formally awarded the right to operate its $50 million venture capital fund to Blue Sky Ventures.

Speculation was first raised in May that Blue Sky had all but wrapped up the tender for the fund designed to fast-track the state’s startup scene, but the AFR reported Thursday morning that the papers had now been signed.

Blue Sky Ventures is the startup investment unit of the larger Blue Sky Alternative Investments vehicle. The VC is managed by Elaine Stead, who will also take on the responsibility for the South Australian project.

Stead said last weekend in a blog post that she would remain in Brisbane, where Blue Sky is headquartered, to operate the South Australian fund.

“From this week (the new financial year), we start a new project and I’m actually going to have to double my travel for work.”

The South Australian fund will last 15 years and end up investing in 8 to 12 companies, Stead told the AFR. Startups will have to be from the state, or be willing to relocate there, to secure capital from the pot.

“The Venture Capital Fund is structured as a unique co-investment fund that enables the state government to invest alongside private venture capital funds to assist innovative local ventures with high growth potential,” said state innovation minister Kyam Maher.

Stead, who earned her bachelor and doctorate degrees at the University of Adelaide, told the AFR that South Australia’s current environment was ripe for investors.

“South Australia is an area that is often unloved by Sydney and Melbourne based investors,” she said.

“As a result there is a supply-demand dynamic that is favourable to investors. They have got equivalent R&D [research and development] inputs, but they are not capitalising on it.”

The South Australian initiative is similar to Victoria’s $60 million entrepreneurship pot. That programme, LaunchVic, has come under fire this week for its continued funding of US accelerator 500 Startups to setup in Melbourne, despite its co-founder Dave McClure being embroiled in a sexual harassment scandal.