Fund focus: EVP mines Australia’s budding VC space

Fundraising in Australia’s rapidly growing venture capital market has been propelled by supportive trends in policy reform and entrepreneurship. Recent tax rule changes have sparked a surge in the creation of VC funds, which has in turn targeted an emerging class of local start-ups. Perhaps most strikingly, the 100 wealthiest self-made Australians under 40 years old – a list historically dominated by the banking sector – is now being led by technology business founders.  

It may therefore come as some surprise that spreading a good word about the asset class remains one of the key obstacles to ecosystem creation. This is because high net worth individuals (HNWI), who are easily spooked by capital market movements and often unaccustomed to the industry’s formalities, remain the core LP base for most of country’s growing field of fund managers.  

Equity Venture Partners (EVP), for example, closed its second fund this week with A$35 million ($25 million) in commitments from about 200 HNWIs and small family offices. The firm, which raised A$25 million in partnership with Microequities Asset Management for its debut in 2016, sees HNWIs as well aligned with its angel style of investment – but still climbing the VC learning curve. 

“As venture re-establishes itself in Australia post the major down period of the early 2000s, investors have needed to be re-educated on the fact that VC is not just a moonshot high-risk type of investing equivalent to gambling,” says Daniel Szekely, an investment director at EVP. “But when we’ve had a chance to explain why our investment style is potentially lower risk than some others, it’s been well received.”

That investment style is an essentially exclusive focus on local B2B software-as-a-service (SaaS) companies. Les Szekely, a co-founder at the firm, has been investing in the segment since 2008, when he provided seed funding for a hotel room inventory platform operator called Siteminder. 

The firm’s flagship investment, however, is Deputy, a workforce management services company that raised $81 million in December last year in what was said to be the largest Series B ever raised in Australia.  

Fund II has made four investments to date, including Deputy, athletics industry software provider Fusion Sport, customer service technology player Pendula, and property sector compliance platform Uptick. 

“Those types of businesses [B2B SaaS] have really stable and reliable revenue streams that make forward-looking projections predictable and, to a degree, recession-proof,” Daniel Szekely explains. “That sort of model and the lower-risk nature of the businesses we back are attractive to our investors. Some of them are skeptical about models that might have potential for higher returns but are highly technical and carry risks that aren’t inherent in B2B software.”   

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• Topics
• Australasia
• Venture
• Technology
• Fundraising
• GPs
• Australia
• TMT
• Venture