The Commonwealth Government’s first Renewable Energy Venture Capital Fund is ready to roll in the New Year after Southern Cross Venture Partners was selected to manage the $200 million fund with a tenure of 13 years. The fund is a commendable step that recognises not only the importance of clean energy but the role of venture capital to act as a catalyst.
The Australian government is investing $100 million in the fund with an equal amount coming from Softbank China Venture Capital, an arm of Japan’s Softbank. The fund forms part of the Australian Government’s $3.2 billion Australian Renewable Energy Agency.
“While Australia has many innovative companies developing renewable energy technologies early-stage companies with a limited operating history have found it difficult to source venture capital,” said Martin Ferguson, the Minister for Resources and Energy, explaining the rationale for the government’s decision.
“This fund will provide capital finance and active management to help promising Australian renewable energy companies achieve commercial success in Australia and overseas markets,” he added.
Patchy record in renewable energy
Australia’s renewable energy record is hardly laudable. Only 1.7% of all electricity produced in the country comes from renewable sources. In consumption, the record is a lot better at 5.2%, but that is because of generous exports of non-renewable energy. Consequently, the bid to tap venture capital is a critical step toward accomplishing the goal of 20% share for renewable energy by the year 2020.
The Australian Private Equity & Venture Capital Association, or AVCAL, applauded the government for moving quickly to establish the fund. The group’s CEO, Dr. Katherine Woodthorpe, said the REVCF mandate “recognises the unique role venture capital fund managers play in commercialising Australian innovation,” and the expertise they bring.
The government understands that it must play an important part in funding and coordinating investment in innovation if Australia is to help lead the commercialisation of renewable energy
Technologies, she said.
Southern Cross Venture Partners, launched in 2006, has a geographic presence in the United States and China, besides Australia. It, along with Softbank China, is also collaborating with the Commonwealth Government on a $40 million Innovation Investment Fund, administered by AusIndustry.
Co-founder and Managing Director Bob Christiansen heads Southern Cross in Australia while co-founder and Managing Director John Scull heads the Silicon Valley office. Southern Cross’ portfolio companies include Mantara, Mesaplexx and RIO, Inc. The firm typically invests between $2 million and $5 million in early-stage companies. The fund is expected to be operational early this year.