The $100 million boost to the Australian startup economy
Monday, October 20, 2014/
Venture capital firm OneVentures has announced the first close on its Innovation and Growth Fund II, which is set to inject $100 million into the Australian Series B and Series C venture capital landscape.
The company has raised $60 million to date on this round and is ready to start investing. OneVentures managing director and chief executive officer Michelle Deaker says it’s well on the way to its $100 million target.
The fund will focus on startups in the fields of healthcare, education, mobile, media, cloud computing and data, sensors and robotics, and food security, that are looking to raise between $5 and $20 million.
The investors, high net worth individuals and family offices, are mostly from Australia. Deaker says that is evidence that these types of investors are acknowledging a “dearth of capital” in this section of the market.
“The rapid rate at which the fund has attracted investment from high net-worth individuals and family offices reflects the strong appetite for opportunities in high growth-technology companies in Australia,” Deaker says.
“What often happens in Australia is family offices and high net worth individuals; they go where they see a market opportunity left behind by someone else.”
The market opportunity, she says, is created by the fact that there are barriers to superannuation funds investing in venture capital.
She adds that investors were also attracted by the results of OneVentures first fund, the OneVentures Innovation Fund.
“The carrying value of the investments of that fund is two-and-a-half times (initial investment) and that doesn’t include the fact we have a likely exit for one company, that will likely return whole of investment,” Deaker says.
That fund, worth $40 million, differed slightly from this latest fund, focusing on earlier stage companies.
“OneVentures is intent on supporting innovation beyond the startup stage where there is a significant structural gap in the market caused by a lack of capital; meaning value investing is still possible,” Deaker says.
“Capital raised by Fund II will be focused on investing in Series B and C stage funding where businesses are generally approaching profitability but need capital to build scale and fuel growth.
“Often the entrepreneurs who run such companies are forced to move offshore in their search for this funding. At OneVentures we want them to have a quality onshore professional investment alternative.”
According to the Australian Private Equity and Venture Capital Association Limited, venture capital and private equity funds have invested $30 billion into Australian businesses over the past 10 years. Deaker says that’s a small fraction of the money sitting in superannuation funds and with high net-worth individuals.
“There is huge potential for Australia’s economy to enter a new and innovation-based era of growth as more of the money is mobilised through vehicles like Fund II.”