Venture technology investor and accelerator Blue Chilli has announced a $10 million fund to invest in the early stage tech start-ups moving through their program.
The fund will match any angel investment of over $100,000 made by three or more investors received by a Blue Chilli company.
Blue Chilli founder and chief executive Sebastien Eckersley-Maslin told StartupSmart the fund was designed to complement and build out the existing model.
“The idea of the fund was to complement the existing model and sits at the end of the Blue Chilli process,” Eckersley-Maslin. “We make the initial investment into a start-up, and provide the skills, tech and resources to enable that founder to go through our education program, launch the business, prove the model and raise angel funding.”
The Blue Chilli team have been planning the fund since December 2012. They were given approval from federal government body AusIndustry to set up an early stage venture capital fund (limited partnership) on August 16.
The fund is being raised entirely from private investors. Eckersley-Maslin says they’ve confirmed $2.2 million, and have a further $14 million in negotiation.
“We anticipate it won’t take long to lock in the rest, it’ll be closed in two months. That’s very fast, but the fund is backing Blue Chilli’s process, and because we have a good story, good strong process and a mechanism for mitigating all the key risk areas of start-ups,” Eckersley-Maslin says.
The fund will work based on a veto system. Any Blue Chilli company that raises over $100,000 from three investors will receive matched funding unless vetoed by the investor committee.
The investor committee is made up of Eckersley-Maslin, start-up thought leader Dr Jana Matthews, entrepreneur and investor Simon Hackett and Alexander van der Laan, as well as Jeremy Colless and Tim Healy from Artesian Ventures. Artesian Ventures will be managing the fund.
Eckersley-Maslin says the addition of funds at the end of the start-up’s journey with Blue Chilli should see a boost in deals signed. Start-ups will also receive $25,000 in seed funding.
“It’s going to increase our deal flow. Because we require start-ups to contribute capital on commencement in the program, the fact we can now say we’ll kick in a couple of hundred thousand at angel round will mean they’re more confident we’ll back them the whole way,” Eckersley-Maslin says.
He adds that one of the most exciting benefits of the fund is offering a diverse portfolio of tech companies to angel investors new to the tech scene.
“Investors in the fund can choose to invest in our companies, directly as well. It’s about education, so non-technological angels who want to get started in the world of tech start-ups but don’t know where can have a diverse portfolio. They can pick one or two companies to invest in personally if they decide to,” Eckersley-Maslin says.