Fund focus: AirTree goes full service

The A$275 million ($188 million) AirTree Ventures has raised for Fund III represents a 10% increase on the previous vintage, but over the same period, the Australia-based GP's team has more than doubled in size to 16. Half of the talent resides in the investment team and this is where the firm has been recruiting most actively, notably in the junior ranks. 

"We want to build a platform that can persist for multiple funds, but we can't just go out and hire experienced VCs in Australia because there aren't many," says Craig Blair, who co-founded the firm in 2014 with fellow serial entrepreneur and investor Daniel Petre. "We have to develop them."

Other significant hires have come at the operations level. AirTree claims to be the first VC firm in Australia to recruit functional specialists for human resources, community, and portfolio services functions. While the community role involves driving advocacy and networking efforts, portfolio services is about developing tools and sharing best practices for use across the portfolio. "That could be AirTree-to-founder or founder-to-founder," Blair explains. "We regularly bring together the CMOs of our portfolio companies to talk about best practice growth. We do the same for product and engineering."

The new fund follows the structure of its predecessor with a core fund of A$150 million and a top-up vehicle of A$125 million. The strategy is also unchanged. AirTree will target start-ups at the seed and Series A stage and look to back them through later rounds. 

Demand for fund allocations far outstripped supply, so there is a willing pool of co-investors ready to participate in follow-on rounds should opportunities arise. Five superannuation funds were among those writing sizeable checks, including AustralianSuper, SunSuper, and Statewide Superannuation Trust. The first two invested in Fund II as well.

AirTree has backed 50 companies across the three funds, with a significant number progressing to Series C and beyond. Blair estimates there are three or four investments in Fund I – which closed at A$60 million in 2014 – that could return the entire corpus on their own. Canva is the standout example, having recently achieved a valuation of $3.2 billion.

At the same time, the businesses AirTree is backing are changing as software solutions find their way into areas such as education, health, and food. Recent investees include Secure Code Warrior, operator of a training platform that helps developers better understand how to write secure code, and A Cloud Guru, which teaches a primarily business audience about cloud computing.

"These companies are focused on cybersecurity, retraining, education and the future of work. We wouldn't have spoken about these topics in Australia five years ago," Blair observes. "Software is becoming easier to deploy and there are new use cases. Previously, it was media and retail, but now founders are identifying more interesting societal problems to tackle."   

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• Topics
• Australasia
• Venture
• Fundraising
• Technology
• Australia
• AirTree Ventures
• TMT