A new fund providing investment capital for SMEs has been praised by a long-time champion of the start-up industry.
Incubators New Zealand chairman Andy Hamilton said the Government's Seed Co-investment Fund, focused on smaller equity investments at an earlier stage, would help emerging businesses get on their feet.
The fund
is aimed at young, innovative businesses with the potential to grow quickly, particularly in the technology sector and the Government will invest up to 50 per cent of an equity investment where other private investor groups contribute the balance.
The Government's contribution is capped at $250,000 a company and it has committed up to $40 million to the programme over five years.
The seed fund will be managed by the Venture Investment Fund, set up in 2001 to implement the Government's venture capital programme.
So far, it has invested $56 million alongside private sector co-investors in a series of privately managed venture capital investment funds.
Hamilton said that although the venture fund had done a good job for more established companies, seed and start-up investments needed help too.
"It's not anyone's fault, it's just you had investors who were not prepared to take the risk and entrepreneurs who couldn't reduce the risk," he said.
"About 20 to 30 early stage venture capital deals were done last year but, for us to have an effective market, there needs to be 10 times that number."
Launching the fund last month, Economic Development Minister Jim Anderton acknowledged many SMEs found it difficult to attract investors because of their size.
Hamilton said the fund would go a long way towards helping more small companies get capital.
Anderton anticipated initial seed fund investments would be committed before July 2006, with the programme ramping up the next year.
