Earlier this year, New Zealand launched a revamped investor visa scheme, the Active Investor Plus visa, designed to attract high-net-worth individuals by slashing minimum investment thresholds, removing English language requirements, and reducing time-onshore commitments to just 21 days over three years.
In return, investors gain a clear and rapid path to permanent residency.
The response has been immediate. Immigration advisers in Auckland have reported a surge of interest, particularly from China, Japan, Indonesia and the United States. The contrast with Australia could not be starker: our own Significant Investor Visa (SIV) program remains frozen, with 500 applications – worth a potential $2.5 billion in investment – stalled at the bottom of the processing queue by ministerial directive.
At a time when global capital is more mobile than ever, and our regional competitors are aggressively courting investor migrants, Australia is in danger of sending a message that this kind of patient, risk-tolerant investment is no longer welcome.
That’s a mistake we can’t afford – especially for our startups.
Unlocking capital
If we are to successfully confront our low productivity, the need for more R&D investment, and declining local venture capital, as the AI revolution gathers pace, unlocking additional investment into home grown Australian tech-enabled startups isn’t just an option – it’s a necessity.
Introducing a new investment migration option like the recently scrapped Significant Investment Visa (SIV) would be a good start and would unlock $500 million a year for Australian startups, delivering local jobs and kick-starting the productivity uplift they enable through technology dissemination.
The SIV required applicants to invest at least $5 million into the Australian economy, including a mandatory 20% allocation to venture capital and private equity.
For the first 10 years of the program, from 2012 to 2022 when data was last published, Australia attracted more than $15 billion of complying investments.
SIV fund managers have estimated that applicants and their families invested up to double this amount outside the program.
When it was paused in late 2023, 500 SIV applicants had been nominated but not processed. Most of these applicants are still waiting to be assessed.
Processing these 500 visas alone would bring $2.5 billion immediately into Australia’s economy, of which at least $500 million would be invested into venture capital and private equity.
This potential influx of capital comes at a time when Australian startups are feeling the pinch.
A chronic capital shortage
According to Crunchbase, Australian venture capital is well below the OECD average, 90% less than Singapore and 80% less than the US on a per capita basis.
The Australian Investment Council recently noted the chronic shortage of suitable venture capital for startups and earlier-stage technology businesses in Australia.
Figures from the Australian Government’s Department of Industry, Science, Energy and Resources show that between 23% and 35% of funds raised by Australian Venture Capital Limited Partnerships/Early Stage Venture Capital Limited Partnerships (VCLP/ESVCLP) structures at their peak were coming from SIV investors before this tap was turned off.
In an environment where local accelerators and incubators are yet to fully recover from a pandemic-induced “great reset”, unlocking even a fraction of these SIV funds could give Australian startups the support for ambition they need.
Murray Hurps
Fair minded critics of recent policy developments understand the Albanese Government is juggling multiple priorities: job creation, responsible migration and community safety, and broader economic impacts.
Their focus on ensuring that visa streams offer clear community benefits is correct and well-intentioned.
But Home Affairs Minister Tony Burke’s Ministerial Directive, placing 500 pending SIV applications at the bottom of the visa processing queue, means VCs and startup founders are questioning the Government’s understanding of the challenges in attracting necessary foreign investment.
The Directive’s statement, “Noting Australia’s ease in attracting foreign investment for profitable activities, venture capitalist and investor streams will be processed behind other streams”, was greeted with incredulity by many in the startup community.
The decision was especially surprising given the Government’s own independent Migration Review, chaired by Martin Parkinson, noted the “outcomes for the small Significant Investor stream have been stronger than for the remainder of the BIIP (Business Visa Program)”. The SIV has now been placed as a lower priority behind those other visa categories.
Many SIV applicants are now exploring alternative pathways, including the revamped investor visa in New Zealand which offers immediate permanent residency. Ironically, once they secure New Zealand citizenship, investors may still enter Australia under reciprocal agreements without bringing the associated investment migration capital to Australia.
From a policy perspective, this situation highlights a potential missed opportunity: Australia risks losing billions in patient, risk-tolerant capital that has, in the past, been a significant enabler of our local venture funds.
Significant Investor Visa success
As one example of the impact of SIV investment, in 2023 at the University of Technology Sydney, we launched the UTS Startups Growth Funding program, enabling rapid, founder-friendly SAFE-note investments of $100,000.
Designed to make up for the decline in the number of local accelerator programs, this initiative was made possible by MA Financial and, crucially, SIV investor’s capital.
Three early-stage companies – Dnpl, NeoGenix, and GradCut – have received investment through this arrangement in its first year of operation.
In each case, the SIV-funded investment provided both essential cash flow and a vote of confidence, accelerating, or immediately unlocking, further investment.
In the words of Steven Vasilescu, CEO and cofounder of NeoGenix: “The investment we received was a huge boost for us. It enabled us to open our early access program for our AI-based fertility product, which is now being used in four countries across nine IVF clinics. The funding from the SIV program and other support we’ve received from UTS Startups has helped us expand quickly, to places we thought would take us much, much longer to reach.”
NeoGenix cofounder Steven Vasilescu
A balanced approach can capitalise on the significant benefits of a SIV or similar investment visa category while respecting the government and community’s concerns regarding the integrity of the migration system.
At the very least the Government should maximise the opportunity of those waiting to be processed. The Minister could request his Department prioritise the SIVs in the system, immediately unlocking $500m for Australian venture capital.
A refreshed investor migration program, especially one targeting gaps in early-stage investment and opportunities in national priority areas, would be a huge step forward for accelerating productivity and building job creating industries of the future.
We all have a role to play to encourage collaboration: Government, universities, and private investors should work hand in hand to deploy SIV capital with consideration for retained benefit for Australia. University startup programs have shown that strong pipelines of investible companies can be built and retained here.
At a time where almost everyone could use some good news about our local economy, it is time to challenge assumptions about our “ease in attracting foreign investment” and embrace the opportunity presented by investor migrants.
In this new age of global economic disruption, only nations that seize such opportunities will be the ones to deliver a prosperous future for their citizens.
- Murray Hurps is the Director of Entrepreneurship at University of Technology Sydney and MD of Startup Muster
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