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Breakthrough Victoria posts $3 million loss
- The Victorian government’s $2bn venture capital fund, Breakthrough Victoria posted a $3m loss during its third year of operation. The loss was lower than expected for an investment firm that is in the early stages of its evolution, according to its annual report. The funding body cut costs after its operating grant funding ceased, which included dozens of staff and an annual wages bill of nearly $10m. Breakthrough Victoria suffered criticism for its costs and investments earlier this year, and this led to directors leaving.
- In total, the fund has made $350m worth of investments across 44 investments to date, the majority of which have been to tech companies or as co-investments with university platforms. Breakthrough Victoria spent $52m getting two US companies to Melbourne, which included $37m for stratospheric balloon company World View. The company manufactures balloons for weather monitoring and can stay airborne for up to 45 days. The opposition has suggested taxpayers’ money has been gambled, with Breakthrough Victoria in financial disarray.
- Breakthrough Victoria attracted attention in 2023 when annual report revealed total costs of $22m and just $73.7m invested. There were calls to shut it down from those including Adir Shiffman, chair of ASX-listed Catapult Group, and Seek cofounder Matt Rockman. Shiffman described it as suspiciously political, poorly conceived, using the wrong KPIs, with an overly broad and unclear mandate, poor governance and a lack of useful reporting.
- Opponents to the fund have suggested there is no need for $2bn in government money to compete with Australia’s large private venture capital industry. Supporters, however, suggest the fund is essential for science start-ups and medtech companies that would suffer without its financial backing.
- Despite recent losses, the fund’s net assets as at June 30 this year were $536.1m, an increase of $172m from the previous year. Those funds are a result of an increase in investments held worth $159.3m and $175m received in capital funding from the state government.
- Breakthrough Victoria’s investment timeline has recently been extended from 10 to 15 years, which now stretches to 2034-35. During this period the government will contribute $450m. The board has already approved $17m of investments, with more expected to be settled following the reporting period.
- While Breakthrough Victoria has attracted some controversy, it argues that it isn’t just a venture capital fund. It has also co-invested with six Victorian universities to drive commercialisation of research – an investment that is matched dollar-for-dollar by the universities.
- Breakthrough Victoria’s sole shareholder is Victorian Treasurer Tim Pallas, and former Labor premier John Brumby chairs the board. Opposition industry and innovation spokesperson Bridget Vallence has suggested Breakthrough Victoria is in financial strife, although Brumby has defended the fund and suggested it goes beyond being a venture capital organisation.
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