19-05-2025
Startup investors 'delaying deals' over Labor's proposed superannuation tax, Stone & Chalk CEO Chris Kirk warns
Investors and venture capitalist are delaying deals and pulling back from startups due to uncertainty over Labor's proposed super tax changes, a leader in startup sector has warned.
The Albanese government's controversial plan to double the tax rate on funds in super accounts above $3 million and go after unrealised capital gains could soon be passed as approval from the Greens is likely to be the only barrier for the legislation under the new parliament.
Labor's tax will force Aussies to pay taxes on assets in their super – such as a farm, property or shares - as they increase in value despite not reaping the material gains.
The ramifications this could have for self-managed super funds (SMSF), which are used to invest in startups, has sparked concerns from the CEO of Stone & Chalk Chris Kirk who said investors were shying away due to Labor's proposed tax.
'We've seen countless examples, unfortunately, right across the startup ecosystem right now of particularly high net worth angel investors and investors that are currently invested in tax-friendly structures to invest in the startup community… pulling back or delaying deals because of the uncertainty,' Mr Kirk told
He warned that investment into startups could be put on hold or 'disappear completely' from the venture capital ecosystem as investors are offput by the threat Labor's tax on unrealised gains poses to the startup sector.
This comes as the investment timeline for a startup can be about 10 to 15 years and the risk rates for these businesses is 'incredibly high'.
'Investors are looking at a portfolio of 20 companies for one to make it,' Mr Kirk said.
These businesses can see their valuation balloon from between $1 million and $5 million to upwards of $100m.
This can compound the risk of investing in startups when there is already such a low success rate.
'In an environment where (investors) potentially are up for paying tax on a significant paper gain, and then that business ultimately (is) unsuccessful and (has) been marked down to zero, it's just incredibly problematic and means… that money is just going to be put on hold or disappear completely from the venture ecosystem,' Mr Kirk said.
The Stone & Chalk CEO predicted about 20 per cent of the capital invested into early-stage startups come from the SMSF industry.
He said that changes to taxing superannuation that thwarts Aussies from SMSFs could have knock-on effects to Australia's competitiveness if it hurts the startup space.
'It will impact all of the critical capability areas that the government is targeting to grow from the sovereign capability area,' Mr Kirk said.
'These are things like space, like robotics, like agriculture, like artificial intelligence and for businesses in Australia that are already struggling to keep up with global counterparts, it just makes the Australian environment markedly less attractive.'
Similar criticisms of Labor's proposed super tax changes came from Wilson Asset Management founder Geoff Wilson who said the move would destroy innovation and entrepreneurialism.
He recalled a discussion with an investor who expressed grave concerns about what the proposed legislation could mean for Australia's tech industry.
'I was talking to someone that works in a technology hub recently and he said 50-60 per cent of the money that comes into those small technology companies comes from our self-managed super funds,' Mr Wilson said.
'So even though Mr Albanese is correct in terms of the tax only affects a very small number of people in terms of paying extra tax, it actually affects every Australian in terms (of the fact) the $4.2 trillion is not going to be productively invested.
'I actually think it's a disaster.'
Mr Wilson's fund sent a note to shareholders where they used the example of major Australian tech startup Canva, now valued at US$40 billion, as an Aussie innovation that would be under threat from the tax on unrealised gains.
Canva achieved this high valuation after 18 funding rounds, but if the unrealised gains were taxed the founders would have struggled to build a strong future, according to the note.
'Under taxing of unrealised gains every funding round would require tax to be paid on a hypothetical valuation,' the report reads.
'Most startups operate with negative cashflow and when capital is raised it is to fund growth, not to provide liquidity to investors.
'Therefore, there is no liquidity to pay tax on an unrealised gain. If this tax is implemented, the Australian Venture Capital industry will be permanently and negatively impacted. Startups will move offshore.'
