Venture capital firm MH Carnegie & Co has invested a “significant amount” in the new Sydney Angels Sidecar Fund, which plans to invest in 25 to 30 early-stage companies over the next five years.
The fund is managed by Proto Investment Partners, which – along with Sydney Angels – recently reached the first close of $10 million for the fund.
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The fund will remain open for another three months and will close with a maximum of $15 million capital, and is expected to approach Innovation Australia in several weeks to seek unconditional registration as an early stage venture capital limited partnership.
Proto and Sydney Angels have since welcomed MH Carnegie & Co as an investor in the fund, and as a partner targeting larger co-investments.
“The participation of MH Carnegie & Co as an investor in the fund is a validation of the Sydney Angels’ ability to attract, mentor and invest in the highest quality Australian early stage ventures,” Proto director Jeremy Colless says.
“The fund will commit around 50% of its capital to second round investments in early-stage ventures.”
“The added draw of larger co-investments by MH Carnegie & Co, in addition to the fund’s investments, will provide a compelling alternative for Australian early stage ventures that currently are forced to head offshore for later capital rounds.”
Proto partnered with Sydney Angels to capitalise on the angel group’s deal organisation, deal evaluation and deal management processes. Such an arrangement between a fund and an angel group is commonly referred to as a sidecar fund.
Vivian Stewart, co-founder of Sydney Angels and director of Proto, says it is a landmark event for the angel sector in Australia.
“One of the challenges entrepreneurs typically face is simply raising enough money to reach relevant milestones,” she says.
“A second challenge lies in trying to source follow-on funding without being distracted from executing the business plan. We believe the fund will address both these issues by increasing the available pool of capital at the angel stage.”
The fund expects to invest in 25-30 early-stage companies over the next five years, with investments ranging in size from $100,000 to $500,000.
The fund will also encompass the following:
- Provide investors with access to a unique flow of early-stage business investments that are sourced, screened and co-invested by Sydney Angels’ members.
- Provide investors with portfolio diversification from traditional equity and fixed income investments.
- Support entrepreneurs, job creation, innovation, new business ventures and economic growth, and a vibrant early stage venture community in Australia.
- Achieve unconditional approval as an ESVCLP from Innovation Australia, providing investors with tax-free returns.