Australia’s venture capital-backed ecosystem has expanded 13.7 times since 2018, according to seed fund Side Stage Ventures and data group Dealroom. Over the past five years that growth has translated into an almost 25% pooled return for investors.
Australia now ranks first globally for decacorns - companies worth $10bn or more - created per dollar of capital invested. It also sits third worldwide for unicorns, generating 1.09 companies valued at $1bn for every $US1bn raised.
Those rankings are now under threat from a proposed capital gains tax overhaul flagged by Canberra. The plan from the federal Treasurer would scrap the 50% capital gains tax discount and instead introduce indexation.
Founders argue that change would effectively double tax on a successful start-up exit, lifting the rate from about 23.5% to potentially 47%. Side Stage Ventures is coordinating a working group of roughly 20 founders to push back against the proposal.
Many in the local tech community stress that ecosystem success is not automatic and can reverse if incentives deteriorate. They point to the delicate balance between attracting high-risk capital and the after-tax rewards that make those bets rational.
Higher exit taxes could shift founder and investor attention to rival hubs where capital gains treatment is more favourable. The debate now centres on whether the government can preserve strong revenue settings without undermining one of Australia’s most productive growth engines.
