For every dollar a software startup needs in Australia, a fintech company needs two — yet the country’s venture capital regulations prevent most funds from investing in financial services companies at all, according to Up Bank co-founder Dom Pym.
The issue lies with the Early Stage Venture Capital Limited Partnership structure (ESVCLP). It offers generous tax incentives to venture funds but bars them from backing any company that requires a financial services licence. That restriction cuts off capital to the sector that produced Afterpay and Airwallex.
Pym describes these restrictions as “a real catalyst” for creating his new Triple Bubble Fund with Brian Collins from Audacity Ventures and Euphemia CEO Judy Anderson-Firth. Deliberately forgoing the tax advantages in exchange for the freedom to invest in fintech, they have set up the fund as a managed investment trust.
“I am on record as saying that any fund manager that needs tax incentives to be successful mustn't be a very good fund manager anyway,” Pym told Capital Brief.
