Australia's First State Super to invest in fintech start-ups
First State Super has teamed up with VC firm H2 Ventures to support financial technology start-ups. The Australian superannuation fund expects to deploy around A$250 million ($182 million) in technology innovation.
The partnership was announced by Australian Prime Minister Malcolm Turnbull. It is part of the government's push to boost local innovation and entrepreneurship. This has also seen an assortment of tax incentives and co-investment funds introduced to encourage early-stage investment.
H2 Ventures specializes in financial technology, backing nascent business models through a dedicated accelerator program. First State Super's support will allow the firm to provide ongoing funding for the best-performing participants in the accelerator.
"We believe that the superannuation industry has a role to play in deploying capital in ways that support and encourage innovation in new technologies while delivering attractive returns for fund members," Richard Brandweiner, CIO of First State Super, said in a statement.
Many superannuation funds pulled back from venture capital after the global financial crisis, unhappy with the performance of portfolio managers.
However, in the past year interest has revived as Brandon Capital Partners and Blackbird Ventures both won superfund support for their most recent funds. First State Super joined HOSTPLUS as an LP in the Blackbird vehicle, while AustralianSuper, Statewide Super, HESTA and HOSTPLUS made commitments to Brandon.
Australia is also placing particular emphasis on fintech, with the First State Super-H2 Ventures announcement made at Stone and Chalk, a fintech hub recently set up in Sydney's central business district. A string of domestic banks, property and technology firms provided A$2 million for the initiative, working in collaboration with the New South Wales government.
KPMG earlier released a government-backed report that found Sydney is underperforming in terms of fintech investment, warning that this could harm the city's financial services sector. Recommendations included the creation of a non-profit fintech hub in order to encourage collaboration between technology start-ups, venture capital and established financial services firms.
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