Early-stage venture firm The Fund launches in Australia
Early-stage venture firm The Fund launches in Australia
The Fund, an early-stage investment firm specializing in pre-seed and seed-stage companies, is expanding to Australia. The Fund was founded in New York in 2018 and has since expanded to Los Angeles, London, the Rocky Mountains, and the Midwest.
Jenny Fielding, co-founder and managing director of Techstars New York, explained that The Fund chooses new areas to expand based on demand from the local startup ecosystem, and earlier this year, it heard from a group of founders and operators interested in launching it in Australia as well.
Along with participating in initial check rounds, The Fund cultivates communities of founders and other leaders from successful startups who provide mentorship and capital as limited partners. The Fund now has a network of approximately 400 founders and has invested in approximately 120 companies through its various funds.
The Fund is led by a four-person investment committee in each of its regional offices. They are: Todd Deacon, managing director of Techstars; Elicia McDonald, principal of venture capital firm AirTree; Adrian Petersen, co-founder of AfterWorks Ventures; and Georgia Vidler, former Canva head of product. The Fund Australia's limited partner base will consist of 50 individuals, including founders of startups such as Rod Hamilton of Culture Amp, Alex Zaccaria of Linktree, and Kate Morris of Adore Beauty, as well as executives from Canva and Safety Culture. The Limited Partners of the Fund Australia will assist in identifying promising startups through their networks and referring them to the investment committee for review.
The Fund will invest approximately $3.5 million USD in approximately 40 startups over a 24-month period, writing checks ranging in size from $50,000 to $100,000 USD. Limited partners and other members of the firm's global community will advise portfolio companies as they grow.
Todd Deacon
According to Deacon, The Fund Australia's emphasis on very early-stage startups is critical given the growing gap between pre-seed and seed funding. He cites a report by StartupAus, an advocacy group for Australian startups, which indicates that angel and seed investment in Australia has declined in recent years, both in terms of deal volume and aggregate value.
The Fund's hypothesis is that as early-stage funds raise larger sums in Australia and other parts of the world, they shift their focus to later stages, Deacon added. This occurred in New York City as well, and was one of the factors that contributed to The Fund's inception.
“There has been a funding gap for early-stage ventures. There are two components to developing a truly strong community: assisting founders and bridging the funding gap, which we can assist with to a certain extent. We're introducing checks at an early stage that have a lot of clout in terms of granting founders access to that network," he explained.
The Fund can see deal flow ahead of other venture firms and limited partners by writing early checks, and its small check sizes give it an advantage with startups.
“We don't take a large percentage of their raise, but we bring really high-quality capital,” Deacon explained. “We have an investor network. The primary reason some of our [LPs] are interested is to earn a profit, but they also want to contribute to the prosperity of Australian and New Zealand businesses.”
Being able to leverage The Fund's international network benefits startups in Australia, where many businesses plan to expand internationally from the start.
Australian unicorns such as Atlassian and Canva also contribute to the country's startup ecosystem's strength, according to Vidler. “It feels like an inflection point for me in the startup ecosystem, with all these original founders and a community of senior operators eager to contribute and help build and strengthen the ecosystem here.”
The Fund Australia is sector agnostic and seeks to diversify its holdings. Since its inception, the Fund has placed a premium on gender parity. Each region's investment committee is made up of two men and two women, approximately half of its limited partners are women, and more than 40% of its total capital has been invested in female founders. Vidler states that this was a significant factor in her decision.
“The attraction for me, and I believe for a large portion of the network in Australia, as well as a significant number of women in technology in Australia, is that they will be extremely interested in investing in the next generation of female founders as well,” she explained.
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