SciVentures is interested in investing in all categories of technology, not just (for example) in biotechnology, life sciences, or in information technology and communications (ITC).

SciVentures understands that pre-seed investment is a high-risk activity. Thus it mitigates risk to some extent via investment in a broad portfolio of technologies. Over time, the risk of being highly extended in any one technology can be mitigated.

Therefore, SciVentures believes strongly that a broad investment portfolio that is invested in a range of different institutions, spread across various regions of Australia, and which encompasses the broadest array of possible commercial technologies is a route to minimising the inherent risk of pre-seed investment.

Eligibility for Investment

An intending applicant to the SciVentures Pre-Seed Fund should read the attached downloadable Eligibility criteria document carefully.

It fully outlines the criteria by which an opportunity can be judged "eligible" under the guidelines of the Pre-Seed Fund program which has been set up as a part of the Commonwealth Government’s "Backing Australia’s Ability" initiative.

The decision tree which follows summarises the PSF eligibility criteria.

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To view Eligibility Criteria

Objective - Globally Competitive New Business Generation

The Australian national economy, while significant, is quite small relative to the global economy. This is well depicted in terms of the NASA photograph of the world at night, which appears below.

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This composite picture, taken over a two-week period, provides a highly visual representation of the world economy. The amount of light is known to closely represent the product of GDP per capita and national population.

Thus, this composite photo can be viewed as clear support for the often stated comment heard in Australia that, "Economically, Australia is only 2% of anything globally".

Based on this graphic representation of the impact of economic scale, it can be easily understood why, while in the United States, US$1B pA sales companies can be grown without any export sales, in Australia an approximate annual AU$100m sales volume seems to be a virtual limit for technology companies that focus on the home economy only.

Given this relative position, the reason for SciVentures' (and for other venture capital funds') focus on globally scalable business opportunities can be readily understood.

Thus, from the outset, SciVentures seeks sustainable, globally competitive intellectual property positions for large market opportunities. These competitive research outcomes, obviously, provide the most likely potentials for significant and lasting major business successes.

Size of Investment

SciVentures generally limits its total pre-seed investment in any one opportunity to a ceiling of AU$500,000, although the Constitution of its pre-seed fund allows it to invest up to AU$1,000,000.

This internally generated SciVentures limit has been chosen to allow the fund manager to make enough investments for it to develop a sufficiently broad and significant investment portfolio.

However, in exceptional circumstances, SciVentures may be willing to invest up to the $1,000,000 limit.

Methodology - Staged Approach

The SciVentures staged approach is based on an internationally recognised approach to "front-end innovation" that has been proven through successful use in USA at companies such as AlliedSignal (now Honeywell) and at Alcoa.

As pointed out, small amounts are invested at the earliest stage when risk is highest, and, thereafter, increasing investment is allowed as information about the opportunity leads to a reduced risk.

Control

SciVentures uses several mechanisms to control both the portfolio risk and the risk at the individual investment level.

A primary control is the separation of the SciVentures technology assessment committee (TAC) from its investment committee (IC). Thus the TAC recommends investment opportunities to the IC, which independently determines those opportunities that SciVentures will invest in, with reference to the opportunity, its potential, and to its consequent impact upon the overall SciVentures investment portfolio.

A second control mechanism is the use of the SciVentures investment review board (comprised of all investors) as a review mechanism of the overall process of the fund manager, its eligible institutions and the portfolio of investments.

Additionally, SciVentures' international panel of successful new business/technology innovation experts (ITAP) provides an independent external reading of the uniqueness of any individual technology and/or of its business model.

Co-investment

SciVentures will generally invest alone initially in an Eligible Company or in an Eligible Project.

It will continue to do so, at least until an investment has progressed into Stage 3 of the SciVentures process.

However, there may be investments where a co-investor can add value to the prospect of a successful outcome or of an improved outcome, especially during Stage 3 of the SciVentures Process.

There may also be circumstances where the opportunity requires further fundamental research and therefore, part of the expenditure does not qualify for Pre-Seed funds. In such cases, SciVentures will consider co-investment.