Wikipedia
ESICS are known in Australia as Early Stage Innovation Companies. These companies are able to attract a special form of investment capital that is provided by investors who are able to attract various taxation incentives.
A summary of the tax incentives can be found on the Australian Taxation Office's web site. In summary, it states " The new tax incentives will provide eligible investors with: •a 20 per cent non‑refundable carry-forward tax offset on amounts invested in qualifying ESICs, with the offset capped at $200,000 per investor per year (on an affiliate-inclusive basis); and •a 10-year exemption on capital gains tax for investments held as shares in an ESIC for at least 12 months, provided that the shares held do not constitute more than a 30 per cent interest in the ESIC.
The tax incentives are designed to promote this culture by connecting relevant startup companies with investors that have both the requisite funds and business experience to assist entrepreneurs in developing successful innovative companies, particularly at the pre-commercialisation phase where a concept is in development, but the company requires additional investment to assist with commercialisation. To target the incentives to innovative activities, the startup receiving the funding must satisfy two limbs: •The first limb determines that the company is early stage, against criteria related to expenditure, assessable income, stock exchange listing and incorporation. •The second limb determines that the company is involved in innovation, by allowing the company to self‑assess against either a principles-based or objective test, or by receiving a determination from the Australian Tax Office.
To pass the objective test a company must secure 100 points from a range criteria including; the prior year research and development ratio, receipt of an 'Accelerating Commercialization Grant', completion or undertaking an eligible accelerator program, receipt of $50,000 or more in share investment to a 3rd party, registration of an innovation or standard patent or plant breeders right or license thereon, co-development and commercialization of an innovation with a listed higher education provider or research and development partner.
Allowing companies to self-assess against one of two tests provides startups with choice, accommodates the unique circumstances of different innovative start-ups, and reduces the uncertainty and costs involved in determining whether a startup is involved in innovation. Further, these tests have been designed with stakeholder feedback in mind, to ensure they reflect industry concepts and remain flexible to new innovation.
As a new category of company and investment capital type a range of information and guidance for innovators and investors can be found at an ESIC Hub or ESIC.Directory.