Australia's Telstra Ventures raises $336m for latest global fund

Telstra Ventures was established in 2011 as a captive corporate VC arm of Australian telecom giant Telstra. It went independent in 2018 with support from HarbourVest Partners, which put at least USD 55m into Fund II. Telstra remains a close partner, having made significant LP commitments to all three funds.

Fund III has received backing from more than 35 new LP relationships. These include superannuation funds, according to The Australian Financial Review. It brings total assets under management to about AUD 1.3bn.

Telstra Ventures claims to have returned more than AUD 800m to its existing LPs to date. Of its 88 investments in total, 33 have generated liquidity events through IPOs or M&A. The portfolio has produced 17 unicorns and five companies with valuations in excess of USD 10bn.

The new fund will follow a similar strategy to its predecessors, targeting what Telstra calls the “Cs,” including cloud, cyber, crypto, carbon, climate, coders, creators, and consumers. Investees will be well established with millions of dollars in revenue. Historically, more than 70% of deals have been in the US, with Asia dominating the remainder. Cheques range from USD 5m to USD 50m.

Deal sourcing is data-driven to a significant degree, with Telstra describing the process as a combination of Silicon Valley experience with quantitative Wall Street hedge fund acumen. Data science is used to identify, source, and benchmark every opportunity.

Companies sourced this way are said to significantly outperform, both in valuation uplifts and the likelihood of raising more capital. Data is also used to help portfolio companies source talent and identify new sales opportunities.

Operational support is otherwise strongly focused on leveraging Telstra’s strategic network, including some 2,000 enterprise customers and IT players the likes of Infosys, NextGen Group, Sparx Solutions, and Advent One. Much of this work is around helping bridge Asian and US companies to foreign markets.

There is also a strong focus on developing partnerships that translate into revenue improvement. The strategy is said to have driven AUD 640m in revenue for portfolio companies to date.

“Raising capital and attracting top talent is not hard for extraordinary entrepreneurs. The number-one challenge entrepreneurs face at Series A and Series B is meeting growth expectations and attracting top talent to help them scale,” Telstra Ventures said in a statement.

“Entrepreneurs want to work with partners that can share the accountability of their growth targets and help them grow into new markets – not partners that do not have a direct impact on their efforts.”

Standout investments in Asia include India-based gaming platform Mobile Premier League, which raised a USD 150m Series E round last year at a valuation of USD 2.3bn. Telstra had a major win in this category in the US, having exited Skillz, a leading sports betting platform, at the time of IPO in 2020.

Fund III has invested in 15 companies to date, although the pace of investment has slowed to only two deals in the first half of 2022. Among the 15 is Hong Kong-based crypto exchange FTX, which has raised more than USD 1.7bn since the start of 2021, according to AVCJ Research. The company is estimated to be worth about USD 32bn.

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• Topics
• Australasia
• Fundraising
• Venture
• Technology
• Australia
• USA
• Telstra Ventures