The Federal government has announced a review of its early stage startup investment support programs with a report due back to the Treasurer by the end of the year.

Announced in 2016 as part of Malcolm Turnbull’s National Innovation and Science Agenda, the Early Stage Venture Capital Limited Partnership (ESVCLP) program aimed to boost Australian investment in startups by giving tax concessions to investors and fund managers.

The program had been advocated by the local startup sector as part of a series of concessions to overcome concerns local ventures were suffering from the treatment of investments under Australian tax rules.

Under its terms of reference, Treasury and Industry Innovation and Science Australia will be seeking comments from the startup and investment communities over how the concessions operate in practice and whether they are achieving their intended objectives.

The government has claimed the program was a success citing Australian Investment Council research showing the local venture capital industry raised $1.3 billion raised in 2020, compared to $200 million in 2013.

It is not clear how much the taxation changes are responsible for the surge in investment as venture capital investment has been surging globally over the past decade with industry website Crunchbase reporting yesterday global VC bets had surged 95% year-on-year for the first half of 2021. The US$288bn reported by Crunchbase is nearly three times the figure of three years earlier.

However the review will not be suggesting new policies with the terms of reference specifically excluding “policy or reform recommendations or consideration and costing of policy options.”

Details of the review are available at the Treasury website with submissions expected to open soon.