188 C Significant Investor visa requires at least AUD$5million of complying investments which must all be provided by an Australian Financial Services (AFS) licensed managers operating in Australia. The AUD$500,000 (10%) of complying investment quantum that needs to be invested in venture capital and growth private equity funds cannot be used in your nephew's high-tech startup in Melbourne, unless it is made through a Venture Capital and Growth Private Equity (VCPE) fund or Early Stage Venture Capital Limited Partnerships (ESVCLP) fund that is registered. You cannot choose to directly inject capital into his firm or any appointed company of your choice unless the firm already happens to be one of the companies within the venture capital fund investment portfolio that you have selected.
How can I invest in my nephew’s start-up company and use the investment for my 188C application?
My nephew is setting up a high-tech start-up in Melbourne and is looking for investors. I learned that as part of the investment made for the purpose of Australia’s 188C visa category, investors are required to invest at least $500,000 in venture capital and growth private equity funds, which will be used by start-ups and small private companies. I want to help my nephew with his business and also apply for a 188C visa. I am wondering if investors have the autonomy to select start-ups that they want to invest in.
The subclass 188 significant investor visa (commonly referred to as 188C) requires a $5 million investment in a complying investment. An investor can choose from different funds for this purpose. The requirement is for $500,000 to be invested in a venture capital limited partnership, early-stage venture capital limited partnership or an Australian venture capital fund of funds. These must be registered (conditionally or unconditionally) under the Venture Capital Act 2002 in Australia. Depending upon the fund you're working with there may be flexibility to discuss how the funds are allocated or it may be possible to establish a partnership. A benefit for person obtaining venture capital funding can be using this to meet the funding requirement to apply for a subclass 188 entrepreneur visa (188E), or subclass 132 venture capital visa (132B).
You are able to invest $500,000 with some flexibility, with the remainder into more strictly regulated investment/funds.