AusBiotech has held roundtable member discussions this week in Melbourne and Sydney to workshop the details of an investor incentive model to stimulate and encourage investment in pre-revenue companies.
The model will contribute to Treasurer Joe Hockey’s Tax White Paper process, recommending to the Federal Government how an investor incentive would best work to support the commercialisation of medical and biotechnology research, to provide cures, treatments, diagnostics, devices and solutions.
The deployment of capital into sunrise industries will stimulate the economic activity that supports the Australian economy to expand and sustain high-skilled jobs.
AusBiotech is advocating for greater incentives to encourage investors to provide capital to the life sciences sector’s young innovative companies. In particular, there is a gap in the various incentives that exist to encourage investors to ‘park’ their capital in pre-revenue, pre-dividend companies for more than 12 months. These so-called ‘patient investors’ are desirable as they provide more stability and certainty to start-up companies.
There are a number of models that were considered and discussed: a Flow Through Share (FTS) scheme, like the mining industry has recently been provided; the UK’s Venture Capital Trust and Enterprise Investment Scheme (EIS), which was designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in start-up companies.
The roundtables agreed that the model should be to agnostic to whether the company is listed or unlisted, but differentiate a target company using the eligibility criteria for the R&D Tax Incentive’s refundable component. It should enable investments via individuals and collective investment vehicles and encouraging ‘parking’ of investments for long periods.
The investor incentive would form part of an end-to-end motivation for innovation in AusBiotech advocates making tax incentives an asset for innovation and business, along with:
- Retaining the R&D Tax Incentive intact; and
- Introducing the Australian Innovation & Manufacturing (AIM) Incentive, to incentivise the monetisation of IP, and in turn innovation, and retain the associated benefits once it reaches commercialisation.
AusBiotech is preparing a paper over the next week and welcomes member feedback to Chief Industry Affairs Officer, Lorraine Chiroiu (lchiroiu@ausbiotech.org).