United States venture capitalist Brad Harrison is planning to launch a $40 million Australian division of his Scout Ventures fund to invest in local early stage start-ups, after being encouraged by recent legislative changes, such as employee share scheme reforms.
Scout Ventures was the first investor in tech start-ups such as Signpost and Olapic and is highly regarded for its ability to pick promising companies, with early stage or seed investments. Mr Harrison said he had been following the start-up scene in Australia for a few years. 
He said he was getting exposed to Australian start-ups through a relationship with elevate61, a new business growth program for entrepreneurs run by KPMG and Advance, which takes local ventures across to the US. 
"We really liked them for a few reasons, they had a similar cultural fit ??? exhibited traits similar to the best in the US and we saw Australia as at the beginning of building a tech ecosystem," Mr Harrison said.
"This ecosystem involves government supporting start-ups through regulation, incubators and programs to support that and professional organisations like PwC, KPMG and the banks wanting to help support the ecosystem."

Getting a feel for the scene
Mr Harrison, who is in Australia to speak at the elevate61 launch event, has spent the past two years meeting local entrepreneurs and getting a feel for the market.
"We've looked at several deals over the last few years but we just haven't pulled the trigger on them. The number one reason is because there had been a structural issue in Australia which meant employees were charged tax upfront on share options, but that has now changed," he said.
"Now that the landscape has changed from a tax basis, we're interested and we're here. We want to establish Scout and build it into a real fund based in Australia."
Australian tech successes such as Bigcommerce, Canva and Campaign Monitor, all tipped to become $1 billion-plus companies, have backing from US venture capitalists.
US firm Insight Venture Partners' $250 million investment in Campaign Monitor in 2014 made up most of the venture capital raised by Australian companies in 2014.

Follow-through on investments
Scout Ventures won't be making a $250 million investment any time soon, as it focuses on early stage companies. But Mr Harrison said it was important for the fund to have enough money to be able to follow its initial investments through to series A rounds.
 "You don't only need money to write the first cheque, but you need the follow-on capital to support the company as it goes through its cycle," he said.
"A lot of times, series A investors won't write a cheque unless the seed investor is also writing a cheque."
In the US, Scout Ventures' initial investments range between $US50,000 and $US500,000 ($70,000 and $700,000). However, once successful companies reach series A, B and C rounds, it will sometimes make larger investments.
The fund is particularly interested in software-as-a-service companies with recurring revenue models, virtual reality start-ups and data businesses. In all of the companies it invests in, the technology is built inhouse. 
"We've created a screening process with 40 to 45 things we look at," he said. "We look at the range of experience of the team, if they have a tech and non-tech founder to add more balance to the business and some level of bootstrapping that's led to the development of a beta product at least."