Foundry makes two start-up investments, looks to morph into VC fund
Monday, November 19, 2012/
Sydney incubator Foundry has revealed investments in two further start-up ventures, announcing that it is looking to raise up to $20 million to turn itself into a fully-fledged venture capital fund next year.
Since being launched by a group of Microsoft, Fairfax and Network Ten executives late last year, Foundry has built a portfolio of four start-ups, including ProductionParty.com, its first co-founded business.
The incubator, which works by investing in and providing technical help and infrastructure to new ventures, is now set to expand beyond the start-up market by taking on funding itself.
“We are looking to raise $10 million to $20 million to evolve Foundry into a venture capital fund,” Dale McCarthy, founder of Foundry, tells StartupSmart.
“We are looking to raise the money early next year and are currently bedding down the investments we have. There’s a couple (of start-ups) that we’re still discussing terms with.”
“This move will allow us to focus more on growth businesses, rather than just seed and pre-seed stage businesses. All our investments so far have been for under $500,000. We want to start to play in the stage beyond that, although obviously we are currently also limited by the fact we play a hands-on role with start-ups.”
McCarthy says that she sees strong growth opportunities in Australia and Asia for both LittleRascals and SKUVantage.
The former business was created by tech entrepreneur James Osborn, after he realised the cost and inconvenience of buying nappies online. Foundry won the right to invest in the business following a competitive pitch against other business angels.
LittleRascals sources its nappies from Canada, rather than local distributors, allowing it to provide a lower price point than rivals. It has plans to expand and move into other baby products, with McCarthy saying that it has aspirations to mirror the success of US venture The Honest Co, which was founded by actor Jessica Alba.
SKUVantage was created by Dan Roberts, previously head of online at Woolworths. The business works with FMCG (fast-moving consumer goods) producers to create online photography and other content for their products, so retailers can populate their websites.
Roberts has already landed Coles as a client and has plans to grow the business into new product categories.
“We are definitely seeing a lot of interest in start-ups from people in the corporate world, to both create them and, even more so, to work in them,” says McCarthy.
“A lot of them see a pot of gold at the end of the rainbow and not realise the amount of work involved in a start-up. But we are definitely seeing a lot of people who want to make the move away from corporates.”