Australia's NextGen launches AI fund
NextGen Funds Management, a newly established GP in Australia, has launched what it is calling the country’s first dedicated artificial intelligence (AI) fund.
The vehicle will target AI start-ups locally and internationally where the technology is being used to address environmental, social, and industrial challenges. Core areas include health, infrastructure and transport, environment and natural resources, cybersecurity, smart cities, and financial services.
Investment activity will feature a mix of debt and equity funding from the seed to pre-IPO stages. NextGen claims that it will be able to leverage a strong network of partnerships to provide commercialization support to early-stage companies. There is no floor or ceiling on deal size.
No target corpus has been confirmed. NextGen hopes to attract high net worth individuals, family offices, and institutions with a projected net IRR of 13-15% on a three to five-year investment period. The management fee is 1.6%, with carried interest of 20% subject to a hurdle rate of 7%. The fund will accept commitments as low as $100,000.
“With innovative technologies, including AI, forecast to be worth A$315 billion ($232 billion) to the Australian economy by 2028 and A$22.2 trillion to the global economy by 2030, AI represents a significant new opportunity to enhance economies domestically and internationally,” Samuel Mullavey, head of distribution at NextGen, said in a statement.
“As a result, there are unprecedented levels of global activity and investment in AI. In recent times we have seen a total of A$86 billion dedicated to AI programs and activities from 14 of the world’s most advanced economies. Locally the Australian technology industry will require up to 161,000 new expert AI professionals by 2030.”
Mullavey, who has 10 years’ experience in various roles at Vanguard and National Australia Bank, set up NextGen in June. His investment committee includes Gary Cakir, who is also CFO at local IT, cloud, and AI advisory firm Consultel Group, and Michael Wang, an AI specialist who has worked on high-performance computing systems and algorithms.
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