Breakthrough Victoria was launched in 2021 to be a private investment company for Victoria, providing patient capital and investment that impacts the State’s economy and wellbeing, providing long-term capital to innovation businesses that will improve people’s lives and benefit Victoria’s economy and bring together commercial and government partners to build on Victoria’s track record for innovation.
This is the first in what will be a regular thought leadership series that sees our team share insights on emerging trends, strategic sectors, and the role of patient capital in shaping the future.
Government Venture Capital: A CEO's Perspective on Driving Innovation
Rod Bristow, Breakthrough Victoria CEO
In many ways when the Victorian Government decided in 2021 to create Breakthrough Victoria, they were ahead of pack.
Just over four years later BV has;
- amassed over $1.06 billion in co-investment
- A portfolio of 33 companies
- More than $300m invested with total current portfolio value of $318m (TVPI 1.06)
- The $100m BV University Innovation Fund has established co-funding agreements with 7 Victorian Universities, with four invested companies announced through the University of Melbourne Genesis Fund and a $7.5 million fellowship program announced in late 2024. Each co-investment partnership was established to invest in startup companies spun out of research from the partnering university or startups commercialising the university’s intellectual property.
BV’s Portfolio Company economic Impact (figures as of June 2024 )
- Engage over 1,200 local suppliers
- 88% are commercialising Victorian IP
- 57% are already exporting, with that number expected to grow to 83% within the next year*. Exporting to US, UK, Japan, Germany, Switzerland, Spain, Japan, India, New Zealand, South Korea, Taiwan, China, Malaysia, Indonesia, India, Brazil, Mexico
Annual Report 2023/24 figures:
- Ratio of co-invested capital to invested capital since inception = $2.67 for every $1
- Total capital leveraged from direct investments since inception $650m+
Jobs projected to be established from portfolio companies: 2000+
Following the early success of BV the federal government launched the NRF, and now other Australian states are looking at setting up their own sovereign funds.
The need today for sovereign funds is greater than ever.
Founded in 2021, Breakthrough Victoria fuels Victoria’s economy with patient capital, backing innovative businesses that improve the lives of Victorians. Partnering with government and industry, we drive investment and commercialise local innovation, making Victoria a hub for bold ideas and economic growth
As CEO, I am fortunate to have a front row seat to the transformative impact of innovation financing, where patient capital supports projects over long time horizons and ensures a fair share of rewards.
The latest OECD report offers a comprehensive analysis of government-aligned venture capital, highlighting both its potential and its challenges. Far from being a new or novel intervention, the report identifies 412 Government Venture Capital entities across 37 OECD Member countries.
While this type of VC plays a crucial role in filling financing gaps and supporting firms that private VC investors might overlook, its effectiveness depends on strategic structuring to maximise impact.
Partnering for Success
At BV, we are committed to bridging the financing gap for founders with ideas that will fundamentally change the way we as a society live, particularly those developing new and breakthrough technologies from Victorian research and development.
The OECD report reaffirms that entities like BV play a critical role in funding firms in high-tech sectors such as biotechnology, information technology and green energy—areas where private VC investors may hesitate due to uncertain investment return profiles resulting from high uncertainty and long return horizons.
Last week’s article in The Australian Financial Review, https://www.afr.com/technology/ceos-can-get-away-with-it-the-reason-for-australia-s-r-and-d-emergency-20250205-p5l9qr , highlighted a "national emergency" facing Australia due to a 13-year decline in research and development (R&D) investment.
Despite a surge in startups and venture funding, the nation lags in innovation, particularly in "hard" science-based R&D. Industry leaders, including Tesla chair Robyn Denholm, emphasised the need for increased R&D investment to maintain Australia's global competitiveness.
Breakthrough Victoria directly addresses the lack of patient capital by providing capital with a long-term vision. By investing in high-risk, high-reward ventures in sectors such as medtech, biotech, and climate tech, BV ensures that promising Australian technologies don’t have to rely on international investors to succeed. This approach is critical for building sovereign capability in industries like biotech, clean energy, and advanced manufacturing—areas that will define the next century of economic growth.
Another key takeaway from the OECD study is that sovereign funds perform best when they operate in collaboration with Private VC. In just four short years, BV has demonstrated a strong ability to crowd in private capital, with our investments leveraging over a billion dollars in co-investment from private VC firms.
This aligns with the OECD’s findings that start-ups receiving "mixed" funding—both public and private—exhibit innovation and exit performance comparable to those solely financed by Private VC. This is a particularly important point as public VC investment is typically deploying capital to help solve for market failure: yet can deliver comparable returns to solely commercially focused VC investors.
Public funds serve as a powerful catalyst, de-risking early-stage investments and attracting private capital. BV crowds in private investment that enhances the overall innovation ecosystem.
The report states that sovereign funds are particularly effective in supporting firms that have already secured grants or filed patents. This reinforces BV’s approach of targeting founders who have demonstrated a degree of technical and commercial viability.
However, BV and other sovereign funds should not be viewed as a substitute for foundational research or development funding.
Instead, it should be integrated with other public support mechanisms, such as research grants, incubators and accelerators and venture studios, to maximize impact and ensure a continuum of support for early-stage founders.
BV’s Approach
The private VC industry is highly concentrated in specific geographies and industries, often favouring founders with established networks and proven business models.
BV focuses on leveling the playing field by directing funds to promising yet underserviced sectors and regions. This role is particularly crucial in the context of the green transition, where market-driven investment alone may be insufficient to tackle urgent climate challenges.
Another major problem highlighted in the AFR article is the disconnect between Australia’s research institutions and industry. While Australia boasts a world-class research sector, its commercialisation efforts lag significantly. The result is a wealth of groundbreaking discoveries that may not translate into successful, Australian-based businesses.
Breakthrough Victoria plays a key role in bridging this gap. By partnering with universities, research institutes, and industry, it ensures that cutting-edge research is not just published in academic journals but is also developed into real-world applications. This is particularly important in sectors like medical technology, where Australian firms like Cochlear have shown what’s possible when research and industry align.
Sovereign funds similar in construct to BV are an essential instrument for fostering innovation-driven entrepreneurship. But they should not operate in isolation.
The OECD report underscores the need for a balanced approach where public and private investors collaborate to support high-potential firms. BV is here to serve as a powerful catalyst for innovation and economic growth.
As a CEO in this space, I am committed to ensuring that BV continues to drive forward the next wave of transformative innovations for the benefit of all Victorians.
About the author: Rod has 30 years’ experience encompassing the stockbroking, asset management, wealth management, agribusiness and not-for-profit sectors.
His previous roles include CEO of Sydney and Singapore-based VC firm Investible, ICEO of ASX-listed Clime Investment Management Limited, MD of Infocus Wealth Management Ltd, CEO of environmental NGO Greening Australia and Chief Operating Officer and alternate MD of Australia’s largest retail stockbroker, CommSec. He also cofounded a business in the environmental management and carbon offsets space, and his career has been defined by a deep commitment to the intersection of capital and impact.