Australia’s top startup founders invest in the next generation of entrepreneurs
Founders and operators from Australia’s most successful startups including Canva, Culture Amp, LinkTree, Adore Beauty and Safety Culture are joining together to fund the next generation of Australian entrepreneurs.
US-based venture capital fund, The Fund, today announced the launch of its Australian-focused early stage fund, to add to its growing network of international funds in New York, Los Angeles, The Rockies, Midwest and London.
The Fund, which invests at pre-seed and seed stage, first started as an experiment in NYC in 2018 on the back of three key insights:
- A genuine belief that local founders and operators understand best and see first the exciting startups and investment opportunities in that market;
- talented founders raising seed and pre-seed rounds are being missed by VC funds as they raise larger later stage focused funds;
- and diversity on an investment committee leads to diversity in investments.
The Fund has proven that building a diverse community of founders and operators who personally invest in and deeply care about the next generation of local entrepreneurs is a successful funding model. The Fund has now made over 130 investments over the last 3 years, with 43% of the portfolio led by female founders.
“This was one of the major drivers for me personally becoming a Partner of The Fund and member of its Investment Committee in Australia” said Georgia Vidler, former head of product at Canva. “Female founders are significantly underrepresented when it comes to raising money from VCs – it’s pretty simple, when you have equal representation of women as partners, your investments tend to reflect that. We believe this diversity – at the decision making table, across our community and through our portfolio – is a direct input into our success as a fund measured by financial metrics. That has been the experience in every other market for The Fund, and we intend to do that here in Australia as well.”
The Fund’s model is particularly powerful for early stage founders in Australia and NZ. In each market there is a community of 50 founders and senior operators that personally invest in The Fund and support the portfolio. In Australia this includes a startup rockstar lineup with names like Rod Hamilton, founder of Culture Amp, Kate Morris, founder of Adore Beauty and Alex Zaccaria, founder of LinkTree.
“We believe that founders make better investors as they have lived the life many of these founders are about to embark upon” said Todd Deacon, Partner of The Fund. “Founders that are just starting out need all the advice and help they can get. We wrap these founders with a community full of experience, and a massive global network. We only write small cheques but that comes with a lot of value.”
The early stage funding gap is very real in Australia. Some research published by startup advocacy group, StartupAus, suggests a significant decline in the volume and aggregate value of deals over the last few years. In 2018-19 there were only 138 deals totalling US$75m at the seed and pre-seed stage – a significant fall from 273 deals and US$180m invested in 2015-16.
“Getting accurate data on early stage funding deals is notoriously difficult” said Adrian Petersen, Partner of The Fund and AfterWork Ventures. “However we think this data is certainly indicative of the lived experience of early stage founders in Australia, as larger VCs raise larger funds and focus at later stages. There is certainly an opportunity to help bridge this funding gap and invest in the globally-leading innovation that Australia is now creating at these early stages.”
Community is at the heart of The Fund which now represents over 400 founders and operators globally across the group. “The founding journey can be incredibly lonely. I’m excited about the opportunity to connect founders early in their journey to our experienced local founder and senior operator LPs as well as a global network of world class founder members” said Elicia McDonald, Partner of The Fund and Principal at AirTree Ventures. “Internationally The Fund community includes an incredible line-up of founders from companies like Warby Parker, Classpass, Zillow, Soundcloud, Meetup and InVision. It’s awesome to see this engaged community willing to give back to the next generation of great Aussie and Kiwi founders.”