An ESVCLP stands for an Early Stage Venture Capital Limited Partnership, which is a Federal Government program designed to stimulate the early stage venture capital sector in Australia. The program:

• makes it easier for fund managers to attract pooled capital, to raise new venture capital funds between $10 million and $200 million to invest in innovative early stage businesses

• offers tax benefits to fund managers and investors

• connects investors with early stage businesses

• helps Australian businesses grow by receiving financial support and guidance from expert advisers

As per our current knowledge there are 13 current ESVCLPs active in Australia.

As per our current knowledge there are 0 current ESVCLPs active in WA, however there are currently two applications lodged, one of which was made by Quokka Capital.

As per the Government website, an ESVCLP must be a new partnership rather than a restructured existing partnership.

Applicants must apply to Innovation and Science Australia's Innovation Investment Committee (the Committee) for registration under the Venture Capital Act 2002 (VCA).

The Committee will register a partnership as an ESVCLP if it meets certain eligibility criteria.

If registered, an ESVCLP can then make early stage venture capital investments in companies or unit trusts that are at the following stages of development:

• pre-seed

• seed

• startup

• early expansion

The investments must also meet other criteria and be held for a minimum of 12 months.

An ESVCLP must meet ongoing registration and reporting requirements under the VCA to maintain its registration.

Once registered both investors and fund managers can claim tax benefits. ESVCLP tax benefits differ for investors and fund managers.

Investors benefit from an ESVCLP's flow-through tax status. The partnership itself is not taxed and the income and gains flow through to investors. This avoids double taxation.

Investors in an ESVCLP are exempt from tax on their share of:

• income and gains from eligible early stage venture capital investments

• income and gains from disposing of eligible venture capital investments

The ATO will allow a tax concession based on the ESVCLP's proportional interest when it does exceed that value.

Limited partners receive a non-refundable carry forward tax offset of up to 10% of the value of their eligible contributions.

The tax benefits for investors depend on a number of factors. For more information on the tax benefits in the ESVCLP visit the Governments Customer Information Guide.

Our advice would be to speak to your accountant, and provide them with this link which outlines the approaches to calculating the tax offset.

Individuals who qualify as either a ‘sophisticated investor’ within the meaning of section 708(8) of the Act or a ‘professional investor’ within the meaning of section 708(11) of the Act (Eligible Investor) may invest in an ESVCLP, including "sophisticated investors", “experienced” and "professional investors” (as defined in section 708(8), 708(10), and 708(11) of the Australian Corporations Act 2001 (Cth)).

Please join our investor list [click here], to receive the Information Memorandum for the ESVCLP when it becomes available. Application instructions will be provided to the individuals on this list in due course.