MARK CARNEGIE: A Trained Monkey Could Do Better Than Australia's Professional Venture Capital Industry

Getty/Christian Petersen

The Federal Government took away the funding of the Corporations and Markets Advisory Committee (CAMAC) in the budget, but it will release its final report this morning on “Crowd Sourced Equity Funding”.

This is an important topic because you often hear from start-ups how difficult it is to raise funds in Australia and how they would consider moving to the US. In particular, many are concerned about how the terms that venture capital (VC) firms demand amount to hijacking the idea and the firm which owns it.

But perhaps no more, with the AFR reporting that CAMAC will recommend:

“Small companies should be allowed to raise capital in the same way websites such as Kickstarter encourage consumers to commit funding to new products, qualifying them to become share¬≠holders in the company.”

This new rule would apply to companies raising between $1 and $3 million and would follow similar moves in other jurisdictions including the US, UK, New Zealand and Israel.

It is hard to see how this is a bad thing as long as the regulatory framework and disclosure rules around the raising are well understood by both investors and those seeking capital.

Anticipating the move, there are a number of crowdsourcing ventures being established already. Jeremy Colless from Artesian Capital said the move could see a doubling of the amount of early stage investment available to start-ups or near start-ups.

But Australian businessman and advisor Mark Carnegie didn’t miss with this comment either:

The whole point is how we break the venture capital logjam; the answer is not institutional money.

The truth of the matter is, Australian venture capital as an industry has been an unmitigated disaster. A trained monkey could have done better than the professional venture capital ­industry in Australia.

We will seek comment from AVCAL, the Australian Private Equity & Venture Capital Association, once the report is released later this morning.

You can read more here.

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