Australia's Blackbird raises $357m for fourth fund
Australia’s Blackbird Ventures has raised A$500 million ($357 million) for its fourth fund and named Atlassian co-founder Mike Cannon-Brookes as chairman.
Blackbird claims the fund positions it as Australia’s largest VC with some A$1.2 billion in assets under management. The firm’s closest competitor, Square Peg Capital, raised A$350 million for its third fund in June and is estimated to have around A$1 billion in assets under management.
LPs include AustralianSuper, HESTA, First State Super, and TelstraSuper, confirming industry observations that growing appetite for venture capital among local pension funds is supporting a more robust fundraising environment. They were joined by Future Fund, Cambridge Associates, Cendana Capital, Greenspring Associates, and Pavilion Capital.
Blackbird's third fund raised A$261 million in 2018 across two vehicles and achieved a net IRR of 52.5% with a total value to paid-in (TVPI) of 1.6x. Fund II, which raised about A$200 million in 2015, realized a net IRR of 39.9% and a TVPI of 3.4x.
Fund I raised A$30 million in 2012, achieving an IRR of 55.7% and a TVPI of 11.9x. Last year, the firm completed a GP-led secondary transaction whereby HESTA and StepStone Global acquired interests in the debut fund for about A$100 million, facilitating distributions to LPs. Blackbird claims that its net IRR for every dollar invested across all its funds to was 46.7% as of the end of June.
Fund IV will follow a similar strategy as its predecessors, targeting early-stage technology start-ups across Australia and New Zealand with a view to participating in follow-on rounds throughout the life of the company. As with other Blackbird funds, it will be split into two vehicles, with a A$150 million core fund and a follow-on fund.
The firm believes this model sets it apart from typical VCs, which only invest in rounds at certain stages of development instead of throughout the lifespan of the company. For example, Blackbird invested A$250,000 in the first round for Australian graphic design platform Canva and went to on to invest more than $165 million in the company across several rounds. Canva raised $60 million in June at a valuation of $6 billion.
“As a result, Blackbird holds a 14% ownership stake in Canva, by far the largest of any investor,” Niki Scevak, co-founder of Blackbird (pictured), said in a statement. “We want to invest hundreds of millions, if not billions of dollars, in each world-leading company, starting right at the beginning. As investment partners at Blackbird, we are not allowed to tell a start-up that they are too early as a reason for not making an investment.”
Blackbird claims to have at least 10 portfolio companies that are worth more than A$100 million. These include SafetyCulture, a software provider for safety compliance inspectors that has raised around A$150 million to date, and Culture Amp, an enterprise technology supplier focused on human resources that has raised $158 million as of its $82 million Series E round last year.
Cannon-Brookes is a longstanding LP in Blackbird funds and has co-invested alongside the firm through Grok Ventures. Blackbird portfolio companies also backed by Grok include Culture Amp, satellite developer Fleet, and robotics developer Zoox.
His appointment as chairman comes as part of a broader talent build-out that has seen Blackbird’s team grow from five people at the time of the launch of Fund III in 2017 to 24 across offices in Sydney, Melbourne, and Auckland currently. More than half of the team is now women. The plan is to have a staff of 40 by the end of 2021.
Blackbird said that as of the establishment of Fund IV, all its employees were owners in the Blackbird management company in addition to receiving carried interest in the funds. Furthermore, existing partners Samantha Wong and Nick Crocker are now being incentivized on the same terms as Scevak and fellow co-founder Rick Baker.
“If we are going to flourish as a firm for decades, we need to empower the next generation of Blackbirds to succeed here,” Scevak added. “Just like we encourage our portfolio companies to have generous employee share schemes, we want everyone at Blackbird to be an owner of the business and share in its success.”
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