Blackbird Ventures launches $225 million fund, bringing on investment from government’s Future Fund
Australian venture capital firm Blackbird Ventures has announced the closing of its third fund, having raised $225 million from industry super fund Hostplus, the cornerstone investor, First State Super, the government’s Future Fund, and 100 high net worth individuals.
The figure is another jump for the firm, which launched its inaugural fund of $29 million in 2012. The second saw Blackbird raise $200 million and bring on the two super funds; launched in 2015, the raise had come following strong calls from the startup sector for super funds to look to venture capital.
Taking to Medium, Blackbird cofounder Rick Baker wrote the firm launched with the dream of finding “Australia’s most ambitious founders” and in turn its own ambition has increased significantly over the years.
“The greatest businesses of our time will be technology companies. Seven of the ten largest companies in the world today are technology companies. Inevitably the day will come when Australia’s largest company will be a technology company too,” Baker wrote.
“We set up Blackbird to be partners to the most ambitious Australian founders, believing in them early and supporting them through their entire life.”
As such, part of the firm’s four step ‘master plan’ is to invest in companies at each stage of their growth.
The firm has already been following this strategy with the likes of Canva, which it first backed with $250,000 in its seed round. Blackbird has since invested almost $50 million into the company, in January leading the startup’s US$40 million raise.
“The venture capital industry is usually segmented into round sizes and stages. For example, a firm in Silicon Valley will choose to invest in just the seed round, with a small amount saved for future rounds. Many firms choose just to invest in later rounds,” Baker wrote.
“The logic has never made sense to us. Why would you invest before you know a company is successful and nothing after it?”
Bringing on the Future Fund is an interesting development for the wider Australian startup sector; Australia’s sovereign wealth fund, the Future Fund was founded in 2006 and is worth $139 billion.
The investment into Blackbird is the first time the fund has looked to the startup sector. Speaking at an event last month, Dr Raphael Arndt, Chief Investment Officer at the Future Fund, said the organisation had been working with the US-based Greenspring Associates to look at how it could support Australian VCs and operate in the Australian VC space.
“There is no shortage of growing small and medium Australian businesses requiring capital. Their success is important to the development and diversification of the Australian economy, including ultimately our listed market should they go on to IPO,” Dr Arndt said.
“Given the large size of the Future Fund, and our model, which involves a relatively small investment team, it has always been challenging for us to find an efficient way to invest in these types of businesses.
“We believe there are attractive investment opportunities in this sector in which the Future Fund can invest. This will have the added benefit of supporting small and medium Australian businesses to realise their growth potential.”
With the launch of Blackbird’s third fund, the local VC sector now has a handful of $200+ million funds and an array of others at its disposal.
AirTree Ventures in 2016 raised Australia’s largest-ever VC fund with $250 million, while Square Peg Capital raised just over $233 million early last year; the Australian Financial Review recently reported the firm is looking to raise a further $200 million.
Meanwhile, Tempus Partners last week announced the close of its second fund, a $40 million fund looking to invest at the seed and Series A stage.
Image: the Blackbird Ventures team. Source: Blackbird Ventures.