Since its inception the Innovation Investment Fund (IIF) has licensed 13 new venture capital innovation funds that have helped 99 Australian businesses commercialise original research. To date the IIF program has committed a pool of $524 million of government and private capital to invest in promising early-stage companies. Yesterday, the program received a tick from internationally respected econometricians Professor Gordon Murray and Professor Marc Cowling who were commissioned to analyse the program.

The report showed that the program is effectively supporting start-up ventures in Australia, contributing significantly to the economy and improving the lives of Australians through job creation and commercialisation of vital products such as Bronchitol, which treats cystic fibrosis.

Lets take a quick look at Bronchitol which is a product of Pharmaxis Ltd.  The the Gillard Government suggests Bronchitol would not have been available to cystic fibrosis sufferers without support from the IIF program (and the Howard Government).  Pharmaxis have raised equity of over $142 million ($10m in 2002 from a private placement, $25m in 2003 from an IPO, $20 m in 2004, $87m in 2005) as well as receiving a START Grant of $6m in 2002.  Their income in 2010 included sales of only $828k but interest of $3.935m and they had $86m in cash.  The most successful aspect of this business so far is raising equity.

The IIF need venture capital innovation fund managers that are prepared to support hi tech and high risk projects.  Unfortunately they are only prepared to invest in sure things, provided other parties, like mum and dad investors, will share the risk.

The report, titled An Independent Econometric Analysis of the ‘Innovation Investment Fund’ Programme (IIF) of the Australian Commonwealth Government: Findings and Implications, will inform the development of future options for support of venture capital in Australia. The report can be accessed at