Australia's Acorn raises $39m VC fund

"There are a lot of VC funds in the early stage, seed and angel and up to Series A, but not as many doing Series B and onwards," James Douglas, an investment director at Acorn focused on private markets, told The Australian Financial Review. "I wouldn't call it a gap but there is an obvious lack of focus."

Backers include high net worth individuals and family offices, while Acorn holds almost a 10% interest. It is expected to back 10-12 companies with a view to helping local start-ups stay private longer. Its made its first investment in August by joining a A$21 million round for staff management technology provider Flare alongside US-based Point72 Ventures. 

Acorn was founded in 1998 with a focus on making domestic micro-cap investments through a research-driven approach. Micro-cap is defined as companies that lie outside of the top 250 companies listed on the Australian Securities Exchange, which has been estimated to encompass more than 1,000 businesses.  

The firm expanded its mandate to include private companies 10 years ago, and about 29% of its portfolio is now unlisted. Douglas joined the firm earlier this year to head the private markets strategy, having previously worked for 16 years as an investment banker in Australia and the US with the likes of UBS, Merrill Lynch, and Citibank. 

Acorn recorded a 299% increase in revenue during the 2018 financial year to A$18.4 million and a 375% increase in profit to A$11.9 million. Activities during the 12 months included the acquisition of a portfolio of assets from Washington H Soul Pattinson & Company. Strong returns were reported for portfolio companies in the energy, consumer staples, materials and healthcare sectors. 

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• Topics
• Australasia
• Fundraising
• Venture
• Australia