By Karyn Silcock
The Australian Government has recently set up the country's largest renewable energy venture capital fund to help high-potential Australian renewable energy start-ups launch and market their innovative technology and products.
As part of its Clean Energy Future plan, the Australian Government has announced the establishment of the Southern Cross Renewable Energy Fund, a $200 million, 13-year coinvestment arrangement between the Australian Government, Softbank China Venture Capital (who have each committed to contribute $100 million) and fund manager Southern Cross Venture Partners.
Here, HopgoodGanim partner Nicole Radice and solicitor Karyn Silcock outline the Fund's investment criteria and how renewable energy start-ups can make the most of this opportunity for capital investment.
In a nutshell
- Australian companies developing pioneering renewable energy technologies can find it difficult to source venture capital, often due to limited operating histories and difficulty demonstrating measureable results in the market.
- The Southern Cross Renewable Energy Fund's primary objective is to make critical, early-stage equity investments and provide ongoing investment management strategies to support and develop Australia's renewable energy sector.
- Both listed and unlisted Australian companies seeking capital can apply to the fund manager, provided they meet specific criteria related to their operations, size and revenue.
Criteria for obtaining venture capital funding
To be eligible to receive investment capital from the Fund, an Australian company can be either listed or unlisted and must, at the time the Fund first invests in it:
- be incorporated under the Corporations Act and have an Australian Business Number (ABN);
- be commercialising or have the potential to develop renewable energy technologies for commercialisation (if the company does not yet market its renewable energy products or services, it must agree to do so under an investment arrangement with the Fund);
- have business activity at the seed, start-up or early expansion stage of its development;
- be providing all of the goods and services it produces through commercialising renewable energy technologies to third parties who are not associates;
- have a majority of its employees (by number) and assets (by value) inside Australia at the time the Fund first invests in it, or will use the whole of the proceeds from that initial investment within Australia;
- have an average annual revenue over the previous two years that does not exceed $20 million; and
- not be an associate of a company (other than an eligible education or research body) which has an average annual revenue, over the previous two years, of over $100 million. The calculation of revenue for a year will exclude any abnormal items.
Further details of the program's administrative guidelines and investment criteria will be available from Southern Cross Venture Partners, who are charged with making the Fund's investment decisions.
What are 'renewable energy technologies'?
Renewable energy technologies are technologies that use, or enable the use of (termed 'enabling technologies'), one or more renewable energy sources. This may include technologies that:
- generate and/or supply energy, including hybrid systems;
- provide a direct energy input for other uses, such as transport, heating, cooling, cogeneration and trigeneration; or
- are otherwise associated with, or used in conjunction with, renewable energy technologies.
The Fund has adopted further technical definitions for assessing suitable applicants. Please click here or contact us for further information.
Applying to the Southern Cross Renewable Energy Fund
HopgoodGanim is experienced in advising renewable energy companies and can assist you by:
- assessing aspects of your company's eligibility for a venture capital injection from the Fund;
- providing specialised advice on an appropriate investment proposal and capital raising strategy to grow your company; and
- drafting a prospectus or other capital raising disclosure document and working with financial advisers and brokers to market your company to potential investors.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
