NZVIF praises venture capital sector budget boost

Media Release – 19 May 2006

NZVIF praises venture capital sector budget boost

The New Zealand Venture Investment Fund (NZVIF) today praised the $60 million boost to the venture capital market announced in the 2006 budget.

NZVIF Chief Executive Franceska Banga said, “This is recognition that our venture capital market needs sustained support. It is a significant step in the right direction and reflects the increasing investor interest in new and emerging New Zealand businesses, and our research and innovation."

The funding includes $60 million of new capital funding for the Venture Investment Fund (VIF) over the next three years, with the possibility of another $40 million in the following two years.

Banga added, “The NZVIF programmes have a vital role in accelerating the development of the venture capital market in New Zealand, and this additional funding sends a signal that the Government supports sustained development of the industry”.

Minister for Economic Development Trevor Mallard says, “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".

The Minister added, “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”.

The venture capital industry is also encouraged by the news, with Executive Director of the NZVCA Chris Twiss saying, “We see this additional funding as an endorsement of the successful role of NZVIF to date in helping to develop the necessary venture capital industry infrastructure, depth, and expertise that is needed to build a sustainable industry over the long term."

The new funding is in addition to the existing $100 million for the Venture Investment Fund (VIF) and $40 million for the new Seed Co-Investment Fund, making it a total of $200 million available to early stage and venture capital companies in New Zealand.

The new funding also reinforces the positive tax changes for the venture capital market announced in the recent Taxation Bill, in which that non-resident investors are now exempt from tax on gains on the sale of shares in companies they have invested in alongside the New Zealand Venture Investment Fund.

Banga said, “Competitive tax treatment for international investors is vital to developing a credible, internationally competitive venture capital market in New Zealand, and we welcome this initiative.

These changes are an encouraging step towards ensuring that competitiveness."

ENDS

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