The biggest Aussie VC firm just got a bit bigger, with Blackbird Ventures raising $500 million for investment in Aussie startups.
Founded in 2012 by Niki Scevak and Rick Baker, Blackbird is one of Australia’s most successful and most revered investment firms.
Its 66 investments so far include early stakes in Aussie unicorns Canva, SafetyCulture and Culture Amp, as well as self-driving car startup Zoox, which was acquired by Amazon in June for a reported $1.45 billion.
The fourth funding round is led by local institutional investors including the Future Fund, Australian Super, HESTA, First State Super, Telstra Super and institutional clients of Cambridge Associates. International investors Cendana Capital, Greenspring Associates and Pavilion Capital also contributed.
Atlassian co-founder and Aussie billionaire Mike Cannon-Brookes has joined the board of directors as chair of the Blackbird management company.
Speaking to SmartCompany, Scevak says while the VC firm’s funds have got increasingly larger, that doesn’t mean the team is necessarily writing bigger cheques.
“Our first investment cheques have gone earlier and earlier,” he says.
To early-stage founders, he says it would be a mistake to assume Blackbird wouldn’t be interested.
“We want to be the first cheque in to a company. We want to invest hundreds of thousands of dollars in the beginning. We want to invest in startups that don’t have product and don’t have revenue,” he says.
“What we’re really doing is trying to find the most ambitious and the most courageous,” he adds.
“We want people who are doing their life’s work and trying to tackle seemingly impossible challenges.”
Scevak is also not looking for investment opportunities in any particular sector, industry or category, he says.
Rather, when you’re investing in an ambitious venture at such an early stage, it’s almost better that there isn’t a category for it to slot into. Categories tend to be defined once there are a few businesses that can be grouped, he notes.
“If it is so fresh and strange and unique that it doesn’t fit a category just yet, that’s often a great signal,” Scevak explains.
On a practical level, what he’s looking for in a founder is ambition.
“We want ambition to be the best in the world, not just the best in Australia,” he says.
“Entrepreneurs who are attacking a global market, who have original ideas as to products that will reshape or reimagine those global markets.”
A Jekyll and Hyde environment
The fund comes at a time when the COVID-19 crisis is deepening in Australia, with many businesses brought to a standstill and the economy in tatters.
Raising $500 million was no mean feat, Scevak says.
“It was not easy at all.”
Blackbird raises a fund every two-and-a-half to three years, he explains. So it wasn’t so much a choice to raise now as simply the right time. And it was the firm’s track record and strength of portfolio that made it possible, he says.
“It’s a real testament to the belief of our investors and the founders that we’ve been fortunate enough to partner up within the current portfolio.”
But, Blackbird isn’t the first VC fund to cash in in the past couple of months.
In June, Square Peg raised $350 million ahead of closing its fourth fund, pushing its total assets under management over $1 billion. Last month, Tidal Ventures raised $30 million for investment into Aussie seed-stage startups, and today Our Innovation Fund announced its $75 million second fund.
All of this goes to show that Australia and New Zealand have built strong startup ecosystems, Scevak says. There’s a whole generation of new businesses — think Canva, CultureAmp and Airwallex — that have become impossible to ignore.
But in the COVID-19 environment, all of this activity becomes even more interesting.
The pandemic has created “a strange Jekyll and Hyde economic environment”, Scevak says.
While we’re facing a “deeply negative health and economic event”, there are some areas of technology that have seen a steep uptick in usage, and in revenue.
Social distancing, stay-at-home orders and a mass move to remote work have led to forced adoption of technology, including in industries that have traditionally resisted it.
“There was no choice to be a laggard. You had to adopt this new online environment.”
The technology sector has been resilient, he says. And for those startups at the forefront of new tech innovation, there’s all to play for.
“Crisis brings about change at some sort of abstract level,” Scevak explains.
“Crisis leads to the great changing of so many areas of the economy. If those areas are changing rapidly then there’s an opportunity for startups.
“If things are not changing rapidly then it’s usually the incumbents that continue to sit pretty.”
COVID-19 is “one of the greatest fireworks of change”, he adds, and that will lead to opportunities for new companies catering to the new world.
Of course, such tech startups will also be instrumental in the economic recovery.
In the long term, Scevak says, “the only path for Australian success is to create global technology companies”.
Atlassian is one of Australia’s most valuable companies, Canva is a success story still in its early days, he adds.
“Hopefully there will be a handful more [and] all of the largest companies in Australia will be technology companies, not banks and mining companies.”
When Scevak and Baker raised their first $30 million fund some eight years ago, Scevak admits their ambitions were more modest than what they’ve actually achieved.
But, he says the founders were always dreaming big, and that doesn’t change now.
“We always wanted to be the best in the world, just like the companies we back want to be the best in the world,” he says.
“We think we can do that because Australia and New Zealand will produce these gold medal-winning companies in the business Olympics, and there will be enough of them that our returns will be way better than Silicon Valley venture capital firms’ returns,” he adds.
“We’re at a midway point to proving that out, but we still wholeheartedly believe that we can create one of the best investment firms in the world.”