The IIF and IIF Follow-on Fund supported the industry through its last tough decade, and over three programs have invested about $421 million in Australian venture. The growth of the industry has slowed, however, and it now oversees about $2 billion in funds under management. Transactions have taken the form of followon investments, rather than new deals, and the average investment continued to decline from $1.8 million in 2008 to $1 million in 2010. Out of all the venture managers interviewed for this story, only Carnegie is bullish about the prosects for the industry – if resources venture and other industries in which Australia is globally competitive, such as health care, are taken into account. Others believe that a small number of managers – well below 10 – have gained enough critical mass to survive a period of less Government and institutional support. “A lot of the ideas wither and die,” says Birrell. “Some scrape by on money from family and friends,” and, increasingly, with help from angel investors – solo backers – who are becoming increasingly important. He believes that as long as the industry can survive this sombre chapter, it can become stronger and meet institutions’ expectations. But there will almost certainly be casualties in this year and the next, Woodthorpe says, although the broad investment industry will probably never know about it. “These investments take a long time to die because of their 10-year, closed-end nature, and the funds managers that haven’t been raising money for a long time will just quietly turn off the lights one day and go home.”

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