The Australian government has thrown another $60 million at venture funds across the country, yesterday announcing the successful applicants for the second tranche of the third round of its Innovation Investment Fund scheme.

Innovation, Industry, Science and Research Minister Kim Carr said that Andover Venture Partners, Yuuwa Capital, and Intersuisse’s IB Australian Bioscience Fund would be the new managers of the venture capital investment funds.

All three plan investments in the life sciences, although only the Intersuisse fund will be specifically dedicated to life science investment.

Intersuisse, which is still to close its separate $100 million life science investment fund, will match the $20 million in federal money with $20 million in private money before opening its investment in the sector.

Intersuisse’s Matt McNamara told BioTechnologyNews (BTN ) the fund would be structured as an early stage venture capital limited partnership (ESVCLP) and therefore investors would be entitled to flow-through income tax treatment and a complete tax exemption for income from the fund.

He said the ESVCLP structure would mean that the fund’s investments will be limited to early stage privately held companies, and fund managers would be investing $2-5 million a time in companies needing seed, start-up and follow-on capital.

The federal government decision also opens the opportunity for Intersuisse to play a longer-term strategic role within the sector, with the separate $100 million fund potentially available for follow-on capital for Intersuisse investees.

Western Australia-based Yuuwa Capital IIF Fund will also be a $40 million ESVCLP fund, planning to invest in seed-stage life sciences and information and communications technology ventures, and the fund said it has already received $20 million worth of private commitments to get up and running.

Yuuwa partner Liddy McCall told BTN she believed that the fund’s investment mix would skew towards the life sciences sector, and would most likely be focused on projects originating in WA.

She said the fund managers expected to bring more than just finance” to investee projects, and expected Yuuwa would be formally up and running within the next six months.

The third $20 million tranche will be managed by Andover Venture Partners, which is seeking a total raise of $80 million, with a first close of $40 million.

Led by IT specialist Dr Michelle Deaker, the Andover fund will be investing in early and expansion stage companies operating in the clean-tech, new media, IT&T and life sciences sectors.

Andover said its investment focus would be on businesses that have the potential high free cash flow, with exits and returns expected within the first four to five years.