University of Melbourne VC fund hits $70m first close

The fund is managed by Tin Alley Ventures, a joint venture between the university and Tanarra Capital, a local private equity firm with AUD 3bn in assets under management. It is described as Australia’s first large-scale university-specific VC fund.

LPs include Tanarra, family offices, University of Melbourne alumni, and Breakthrough Victoria, a AUD 2bn state government investment fund focused on fostering innovation. The university provided AUD 25m. Breakthrough recently established a AUD 100m platform specifically for commercialising university technologies.

Tin Alley will make seed to pre-IPO investments in researchers, students, and alumni, as well as related organisations, medical research institutes, and hospitals affiliated with the University of Melbourne. It will be supported by a AUD 15m pre-seed fund called Genesis that was launched last year by Tanarra, Breakthrough, and the University of Melbourne.

Tanarra said a material portion of Tin Alley’s net profit will be invested in university research, early-stage commercialisation, and social enterprises. The GP added that up to 20% of Genesis was earmarked for “social purpose ventures.”

Universities represent a relatively bureaucratic setting for start-up creation. Entrepreneurs seldom have control over their innovations, which raises concerns about alignment. There can be added layers of regulation, a lack of commercial skills, and the egos of scientists who are already peer-recognised as experts.

Biotech is a significant category in this theme but it is also subject to higher costs in terms of clinical trials. Hardware, cleantech, mobility, food tech, and agricultural science are also popular segments.

Much of the rationale for investing in university talent comes down to the idea that the intellectual property (IP) developed is more defensible. Entrepreneurs are often key opinion leaders in their industries, they have better access to resources for experimentation, and they receive much more government funding, which is non-dilutive and helps protect alignment.

The University of Melbourne claims to be the first school in Australia to introduce a funding platform that covers the full research commercialisation pathway, from start-up to exit, and at this scale. Its most recent efforts in this vein also include a AUD 10m proof-of-concept fund for accelerator-stage projects.

Australia has a substantial university-focused VC scene, including the likes of Stoic Venture Capital and Uniseed. Stoic and Uniseed were active as recently as last month when they backed a AUD 11m round for medical devices developer Ferronova. The company combines technologies drawn from the University of South Australia, Victoria University of Wellington, the University of Sydney, and the University of New South Wales.

“We look forward to making further investment announcements this year as we work with all Victorian universities to establish new funds through our Breakthrough Victoria University Innovation Platform,” Breakthrough CEO Grant Dooley (pictured right with Duncan Maskell, vice-chancellor at University of Melbourne, left, and Anna Shave, head of capital partnerships at Tanarra, centre) said in a statement.

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• Topics
• Australasia
• Venture
• Fundraising
• Australia
• Tanarra
• seed