Two Australian venture capital funds have gained sought-after recognition from the Federal Government for their support to local startups.

Startup accelerator BlueChilli has been named as the newest Registered Early Stage Venture Capital Limited Partnership (ESVCLP) by the Department of Industry. It is one of only 10 funds to gain such recognition since 2007.

ilab, a startup accelerator established by the Queensland Government in 2000 and now operating through UniQuest, The University of Queensland’s commercialisation arm, has also been named as a conditionally registered ESVCLP. That status allows venture capital groups with more than $10 million in funds to channel its investment efficiently into startup companies by gaining exemption from standard income and capital gains taxes.

Artesian Venture Partners, the fund manager for both BlueChilli and ilab, says the funds invest at the critical seed and angel stages of emerging high growth companies.

Tim Heasley, COO of Artesian Venture Partners, says the funds will ensure a greater number of home-grown technology companies to match the early successes of the likes of Atlassian.

Heasley says you can’t pick where the winners will come from at this early stage in a startup’s life.

“Once something is screened by the partner organisation – the iLab or the BlueChilli – we will invest a little bit more and will be likely to continue to invest with them once they show traction,” he says.

He says it’s a numbers game with 90% of the returns from the startups coming from 10% of them.

Artesian is also the investment manager for the Sydney Angels Sidecar Fund, Slingshot Venture Fund (Newcastle) and the iAccelerate Seed Fund (University of Wollongong).

BlueChilli has invested in and incubated more than 45 companies over the past two years.

Since 2000, ilab has incubated more than 140 startups companies and helped raise more than $80 million in grants and investment to fund their growth, generating nearly 800 technology jobs.

via Two New $10 Million Australian Startup Funds Make It To Tax Free Status | Business Insider.