Fund focus: Super funds flock to Blackbird

Initial signs that Australia's superannuation funds were renewing their interest in domestic venture capital came earlier this year when Brandon Capital closed its latest life sciences vehicle at A$200 million ($143 million). AustralianSuper, Statewide Super, HESTA and HOSTPLUS were among the LPs.

The change in sentiment now appears confirmed as First State Super and HOSTPLUS contributed A$110 million and A$35 million, respectively to Blackbird Ventures' $200 million second fund.

"Obviously it's helped by the vibrant tech market at the moment. The start-up environment in Australia is becoming more mature," says Rick Baker, co-founder of Blackbird (pictured, far right). "It's also because of the track record we got in the first fund and the fact that the structure is right for super funds to invest."

Over the last two years, GPs have struggled as super funds scaled back their commitments and several government-backed start-up support programs were discontinued. Australia venture capital fundraising reached A$158 million and A$100 million in 2010 and 2011, respectively. In 2012, the total soared to A$240 million but a year later it was back at A$152 million and then reached A$120 million in 2014.

It helps that VCs have increased their target fund sizes in order to accommodate the super funds and their typically large checks. This is where the structuring comes in.

Blackbird's second fund comprises two vehicles: A$75 million main fund and a A$125 million vehicle for follow-on investments. First State and HOSTPLUS are in both vehicles. The remaining capital came from Australian tech entrepreneurs, including Atlassian founders Mike Cannon-Brookes and Scott Farquhar, Aconex's Leigh Jasper and Bob Phipot, and Retailmenot's Bevan Clark. They offer start-ups advice and access to their industry networks.

Blackbird was set up three years ago and its debut fund was closed last year above target at A$30 million, with founders of Australian start-ups and Silicon Valley investors accounting for the bulk of LP commitments. The fund invested in 20 companies and another 21 through its accelerator - Startmate. Several portfolio companies have secured post-seed stage rounds, including marketing platform Autopilot and crowd-based web design platform Canva.

The main fund continues the strategy of its predecessor, providing seed and Series A rounds to companies. The follow-on vehicle enables the firm to continue supporting successful start-ups well beyond the Series A round. For the super funds, there is also the possibility of deepening their exposure as these companies mature by making direct investments.

"We're broadly investing in software and internet, and we will also invest in internet-of-things," Baker adds. "When we think about the internet-powered businesses, one particular focus in Blackbird is that - the company forming in Australia but it should attack the global market from day one, in terms of the scale of marketing and distribution channel."

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• Topics
• Fundraising
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• Australasia
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• Technology
• TMT
• Australia
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• Blackbird Ventures