Australia's AirTree collects $494m for fourth fund
AirTree Ventures has completed the largest-ever venture capital fundraise in Australia and New Zealand, gathering AUD 700m (USD 494m) across three vehicles.
In addition to raising AUD 450m for its fourth core VC fund – up from AUD 275m in the previous vintage – the firm has established a seed vehicle of AUD 200m and secured AUD 50m for AirTree Web3, which will invest in next-generation crypto companies and protocols.
AirTree is one of three venture capital firms in Australia that have peeled away from the pack in terms of fundraising, becoming larger with each vintage. This scaling-up process has been supported, in part, by superannuation funds that want to deploy more capital in the technology sector.
The other two players, Blackbird Ventures and Square Peg Capital, closed their most recent funds in 2020. Blackbird raised AUD 500m and claimed the mantle of Australia’s largest VC firm with AUD 1.2bn in assets under management (AUM). A few months later, Square Peg secured AUD 600m for its third fund, taking its AUM to AUD 1.4bn.
With global venture capital firms also increasingly looking for deals in Australia, early and growth-stage technology investment in the country reached USD 3.9bn in 2021, more than the previous two years combined, according to AVCJ Research. Sentiment has been buoyed by the likes of design collaboration platform Canva, which is now valued at USD 40bn, up from USD 3.2bn in 2019.
Craig Blair, a partner and co-founder at AirTree, told the Australian Financial Review that existing LPs, on average, wanted to put three times as much into Fund IV as they committed to Fund III. AustralianSuper, Sunsuper, Telstra Super, and Statewide Super were among those that re-upped. The fundraising process took three months.
“The lovely thing right now is that the ecosystem is working so well that there are just thousands of entrepreneurs out there bringing us ideas. So our job is not to be futurists, but to stay across those trends and pick them when they emerge,” Blair added.
AirTree is an investor in two of the six Australian start-ups classified as unicorns at the end of last year: Canva and workforce training platform Go1. Other portfolio companies include Employment Hero – valued at USD 800m on closing its Series E last year – social media services provider Linktree, financial technology start-up Grow, and telehealth platform Eucalyptus.
Of all the investments made by the firm last year, 70% were at the seed stage, and half involved pre-revenue start-ups. James Cameron, a partner at AirTree offered two reasons for having a dedicated seed fund: to double down on a commitment to support founders from the very beginning; and “to dispel the myth that established VCs in ANZ don’t do seed deals.”
AirTree has been tracking the crypto ecosystem since 2013 but didn’t feel it was suitable for an institutional fund until 2020. The firm avoided Bitcoin because it was interested in technology platforms rather than stores of wealth and passed on early opportunities involving Ethereum due to concerns about regulatory and reputational fallout, according to a blog post.
The rise of decentralised finance (defi) – the total value locked in defi projects rose from less than USD 10bn to more than USD 100bn in less than 12 months in 2020 – was the clincher. Since then, AirTree has made five investments in infrastructure, tooling, and projects across defi, non-fungible tokens (NFTs) and decentralised autonomous organisations (DAOs).
The current portfolio features Immutable, which has developed a scaling solution for NFTs, and Zeta Markets, a decentralised derivatives platform built on the Solana public blockchain platform.
“We’re interested in Web3 because taking the internet back to its decentralised roots is a very disruptive idea. Web3 is all about open, permissionless innovation. It runs on the currency of tokens – digitally native assets which confer property rights – giving builders and users the ability to “own” a piece of the new internet,” the blog post said.
Blair established AirTree in 2014 with Daniel Petre, who stepped back from the firm last year. There are now three partners – Blair, Cameron, and John Henderson.
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