The Victorian government will wind down startup support agency LaunchVic and rework technology investment fund Breakthrough Victoria as part of broader public sector reforms set to save the state $4 billion.
The decision has rattled the state’s startup sector, and spells an uncertain future for state-backed accelerators, grants, and investment funds tailored to local talent.
Months after commissioning former Premier and Cabinet secretary and Allianz Australia deputy MD Helen Silver to find inefficiencies and potential cost savings in the public sector, the government tabled her final report, and its response, on Thursday.
The Silver review found significant cost-cutting opportunities, focused on reshaping a “top-heavy” public sector and shedding around 2,000 full-time equivalent workers.
Instead, premier Jacinta Allan and treasurer Jaclyn Symes flagged shedding 1000 jobs, including 330 senior executive and technical specialist roles to save $359 million. Victoria’s public service wages bill has more than doubled over the past decade to $38 billion in 2024-2025.
Victoria’s net debt is predicted to hit $194 billion in three years – nearly 10x the $20bn figure when Labor came to power a decade ago. State debt is now around a quarter of the total Victorian economy.
The Silver review said there are “substantial opportunities to reduce and streamline entities and their staff numbers through carefully targeted cessation, merging and streamlining.”
Among its key recommendations is abolishing LaunchVic — the government-backed startup support agency founded in 2016. The organisation created the women founder-focused co-investment VC the Alice Anderson Fund, and backed the award-winning entrepreneurship programs for women such as Press Play Ventures, as well as funding startup accelerators, including Startmate and VC funds. It also helps local startups build to unicorn status (a $1 billion valuation). It has 19 staff and a budget of around $10 million, most of which is invested in the local startup community.
LaunchVic CEO Dr Kate Cornick
The state is home to more than 3,800 startups, valued at $143 billion – a 29-fold increase since LaunchVic began.
But just 12 months after being promised $40 million over four years, by former treasurer Tim Pallas, LaunchVic’s grant funding was cut from $12.26m in FY24 to $9.4m in FY25, amid leadership changes and departures in the government. It went from posting a $143,000 deficit in FY24 to a $4m loss in FY25.
The Silver review recommended the state government “consolidate department and entity industry support functions, expertise and activities” under Invest Victoria. It also called for the management of LaunchVic’s existing equity investments, and those held by the Department of Treasury and Finance, to come under the government-backed startup fund Breakthrough Victoria.
Overall, the state government should cut its overall investments and reduce risk exposure, the report said.
Rethinking Breakthrough Victoria
The state government shared in-principle support to replace LaunchVic as a standalone entity.
Under its plan, LaunchVic’s existing startup sector support activities will come under Invest Victoria — which the government championed as a future one-stop shop for “dedicated facilitation support to businesses looking to invest in Victoria”.
The government offered partial support for the Silver review’s investment consolidation plan, saying the “ongoing management of existing investments, will be consolidated — bringing together the capabilities of Breakthrough Victoria and LaunchVic”.
And the government confirmed it will cut the risk profile of its direct equity investment funds, with reduced funding offered to the new-look Breakthrough Victoria.
Startup support in focus
Plans to abolish LaunchVic come after a busy year for the agency.
In 2025, it offered grants of up to $300,000 to lure new angel groups and VC funds to the state, and launched Basecamp, a program connecting advanced startups to senior executive talent, on top of its existing services.
LaunchVic in July announced $3.75 million in investment to the state’s startup sector, through support for VC funds setting up shop in the state, grants for university pre-accelerator programs, and startup founders’ community events.
Its Alice Anderson Fund invested in pet health startup Elita Genetics, and medtech GonGlobal, adding to an investment portfolio that includied urban data startup Neighbourlytics — which was recently acquired by REA Group.
Elita cofounders Paloma Newton and Jackson Gritching
In January, LaunchVic CEO Kate Cornick said the state’s startup ecosystem had a pressing need for its services and investment capabilities.
“This isn’t just a nice little innovation thing on the side,” she said.
“This is about reshaping Australia’s economy and Victoria’s economy in our context.
“Normalising startups is a really important phase that we need to go through in Australia.”
The Department of Jobs, Skills, Industry and Regions, which oversees LaunchVic, was unable to comment at the time of publication.
The decision to reduce Breakthrough Victoria’s funding allocation comes after a difficult year for the government-backed private investment company, which booked a $5.7 million loss in 2024-25.
Well before the Silver review, the Victorian government used its 2024-25 budget to cut its funding by an average of $90 million a year over four years.
Breakthrough Victoria appeared to defend its record on Thursday, reflecting on its investment in firms like Quantum Brilliance and RayGen.
“As Victoria moves to a new structure for innovation support, the mission remains clear: turbocharge investment, build future industries, and deliver lasting economic transformation for the state,” it said in a statement posted to LinkedIn.
Industry reaction
The news has appalled many in the startup sector.
UTS head of entrepreneurship Murray Hurps, who is launching the annual Startup Muster report tonight – for the first time without any state or federal financial report – said closing LaunchVic should only be a last resort for the government.
Murray Hurps
“LaunchVic has set the highest bar possible in terms of ambitious, relentless and community-engaged support, the envy of every state and with results to be proud of in terms of investment attracted and ecosystem growth,” he said.
They should be the last thing shut down during difficult financial times, if we have any hope of getting to better times.
I remain hopeful that this decision can be reversed, and the capacity that has been built in this structure can be retained for further impact.
Climate Salad founder Mick Liubinskas, who received funding from LaunchVic called the news “devastating”.
“LaunchVic was the absolute best national program for genuine ecosystem building, a model we’d hope every state would follow,” he said.
“They were Climate Salad’s first major grant provider and the national industry would not be at its current strength without it. Thank you to Kate and the whole team.”
Rampersand partner Paul Napthali praised LaunchVic as “a powerful force for the development of a thriving ecosystem” in the for many years.
It has delivered huge impact that is measurable in the number and the value of companies started here and the number of active investors empowered by its programs,” he said.
“Everyone in the ecosystem has benefited from their work – it’s a real shame to see it come to an end but its impact will be felt for years, perhaps decades, to come.”
Startup Daily gaming columnist Harrison Polites said he was in disbelief
At just about every startup event I’ve gone to in Victoria, someone from LaunchVic was in the room. They attracted interest from interstate investors, overseas investors, helped solved issues in the ecosystem around diversity, equal opportunity. They funded and supported aspects of the ecosystem others wouldn’t, and did so prudently. Without excess,” he said.
“It also, smartly, invested in other funders and programs, as opposed to pouring funds startups directly. We have some brilliant investors in Australia, and LaunchVic used government money to harness their expertise to back winners. Rather than creating a political mess – and transparency nightmare for the company receiving backing – by directly backing founders from government coffers.”
Startmate’s former CEO Michael Batko, who stepped down this week after 8 years at the helm, was succinct.
“This is crazy,” he said.
“LaunchVic is the best thing that happened to Victorian startups in the last decade.”
