The measures were announced in December - just as Birch Finance's founders, Alex Cohen and Alex Whiteside, were considering H2's third round of start-up grants. Mr Heap and his brother, Toby, formed H2, based at Sydney fintech hub Stone & Chalk, last year to raise $10 million to help fund 100 start-ups over 10 years, and have attracted backing from First State Super and Investec Australia.

The start-up measures form part of the Turnbull government's effort to kickstart the post-mining boom economy with innovation. Some economists think they will be ineffective and prone to rorting.

But people who work with start-ups say they are already boosting the sector.

Venture capital firm Artesian Investments is seeing increased interest from wealthy investors, chief operating officer Tim Heasley said.

Artesian Investments chief operating officer Tim Heasley is seeing more interest from wealthy investors as a result of budget changes to the taxation of start-ups. Pictured in Fitzroy, on July 14, 2014 in Melbourne, Australia. (Photo by Luis Ascui/Fairfax Media via Getty Images) Luis Ascui

Treasurer Scott Morrison said on Thursday that instead of moaning about changes in last year's budget to crack down on superannuation contributions, the rich should target start-ups.

Mr Heasley said interest was already there thanks to Prime Minister Malcolm Turnbull's constant talk of start-ups, as well as falling returns on conventional investments.

"We are seeing a lot of interest from high-net-worth individuals," Mr Heasley told The Australian Financial Review.


"We were seeing good interest anyway but we are seeing increased interest as a result of the tax changes."

Start-ups are on everyone's lips under Prime Minister Malcolm Turnbull, pictured with Treasurer Scott Morrison in discussions with the fintech industry in Canberra in January 2016 Alex Ellinghausen

Fitzroy-based Artesian has six $10 million venture capital limited partnerships (VCLPs) invested in start-ups culled from candidates offered by five incubators in Sydney Melbourne and Brisbane, as well as a fund of funds that invests in all six.

Only VCLPs established after the December announcement of the Turnbull government's innovation statement qualify for the 10 per cent up-front tax credit, but all VCLPs are CGT exempt.

Artesian encourages investors who like particular start-ups in its funds to make additional direct investments in those companies, Mr Heasley said.

Blue chips 'disrupted'

Falling returns on stalwart investments like blue chip equities are also sparking more interest in venture capital investments, Mr Heasley said.

MELBOURNE, AUSTRALIA - JULY 14: Artesian Investments co-founder Tim Heasley says wealthy investors are also increasingly attracted to start-ups by new tax breaks. Pictured in Fitzroy, on July 14, 2014 in Melbourne, Australia. (Photo by Luis Ascui/Fairfax Media via Getty Images) Luis Ascui


"Then we have the tax benefits on top of that so it's a triple whammy."

Blue chip stocks are being disrupted, Mr Heasley said, and investors are seeking to diversify their portfolios more.

VCLPs are only available to "sophisticated" investors - those with $2.5 million of net assets or gross annual income of more than $250,000.

Artesian's experience parallels that of law firm DLA Piper, which says it is being being asked to advise wealthy investors and start-up founders on how to use the tax breaks to better access start-up opportunities and venture capital.