Australian venture capital firm Artesian has secured an $85 million boost from industry superannuation fund Hostplus as it looks to back even more early-stage startups Down Under.
“We’ve been talking to Hostplus for sometime,” Artesian managing partner Jeremy Colless tells StartupSmart.
According to Colless, the superannuation giant wants to invest 4% of the $20 billion it manages into venture capital and has already injected $350 million into the sector, which includes this deal with Artesian.
“They thought we had an interesting and complementary model to other VCs they’ve invested in,” says Colless.
“They also liked the fact that we were a seed-stage fund … and we’ve been investing in China.”
Colless says the $85 million boost will enable Artesian to expand its portfolio across seed, early-stage and later-stage investments in Australia. In addition to backing Australian startups, Colless and his team will continue searching for “remarkable startups” and investment opportunities across China.
Artesian generally spends $25,000 to $50,000 on seed-funding deals, $100,000 to $250,000 on angel investments and $1 million for later-stage ventures, says Colless. The funds from HostPlus will allow Artesian to take this up a notch.
“This will allow us to do $2 million plus investments into later stage startups,” he says.
Artesian, which recently led a $525,000 investment in Sydney event promotions startup Audience Republic, backs 100 to 150 startups each year through a range of accelerator, incubator and university program partners. These include BlueChilli, SproutX and EnergyLab.
“There are now more than 10,000 startups being formed in Australia over a five-year period,” says Colless, who believes the key challenge for VCs is avoiding “univestible startups”.
“Picking what’s going to happen in the future is difficult and therefore we’ve remained focused on picking the best businesses,” he says.
Artesian only backs 5-10% of the 2000-plus startups it screens each year, says Colless.
While Artesian’s program partners have traditionally been focused on high-growth tech startups, Colless says the landscape is changing rapidly with the emergence of new programs focused on areas like clean energy and ag-tech as well as the emergence of corporate-backed accelerators.
“Corporates are now identifying areas where they want to develop and open innovation and that’s bringing in a whole lot of new focus [areas],” he says.
“The focus for our fund remains on potentially high growth startups, we’re interested across a range of verticals.”