The Early Stage Venture Capital Limited Partnerships (ESVCLP) Program is aimed at stimulating Australia’s venture capital sector by making available an attractive structure for venture capital funds.
What is an ESVCLP?
An ESVCLP is a venture capital fund, structured as a limited partnership and is registered under the Venture Capital Act with Innovation Australia.
The fund of an ESVCLP must be structured as a limited partnership and have committed capital of at least $10 million and no more than $100 million.
There are currently seven conditionally registered ESVCLPs in addition to the eight ESVCLPs registered with Innovation Australia.
Benefits
- A venture capital fund registered as an Early Stage Venture Capital Limited Partnership receives flow-through tax treatment. That is, it is not a taxing point.
- Investors (limited partners) in an Early Stage Venture Capital Limited Partnership are exempt from tax.
- The manager is entitled to claim their carried interest in the fund on capital account rather than revenue
The extent of the tax benefit depends upon a number of factors. Early Stage Venture Capital Limited Partnership participants should seek professional tax and legal advice.
The information included in this article is not, and should not be substituted for, legal advice. Fund managers should seek professional tax and legal advice before making a decision on the most appropriate fund structure to use.
Ari Katsoulas | Barrister 