Technology industry players have slammed the federal government’s proposed changes to merger laws, arguing they could “kill off the start-up sector” by suffocating acquisitions of firms that fuel investments into new ventures., acquisitions above a certain monetary and market share threshold must be reported to the Australian Competition and Consumer Commission, which will then review the deal in 15 or 30 days.
Veteran venture capitalist Daniel Petre said setting the threshold for mandatory notification too low would be “cumbersome and not useful”.“It is super important to remember that the majority of returns for investors in the sector and the majority of exits for start-ups in the US is through acquisition by larger entities,” Mr Petre said.
“Further, time kills deals. Thirty days is a long time to wait,” he said. “This only benefits lawyers and those future employees of the ACCC who will need to be hired to move all that paper.”The industry is also fearful the ACCC’s new powers to block deals that will entrench market power will limit the ability of smaller firms to sell themselves to tech giants. For venture capital-backed firms, these exits create returns for investors that are often ploughed back into the start-up ecosystem.
“These clean, liquid exits are necessary to recycle capital back through the system to fund the next generation of start-ups,” Mr Smalley said.