Much has been made of the so-called funding gap that faces Australian startups but, to paraphrase Malcolm Turnbull, there has never been a better time to be an Australian startup looking for funding, with the newly-launched Signal Ventures this week announcing a $10 million fund for early-stage ventures.
Formed by Melbourne-based startup backer Atlanta Daniel and Colorado-based Niel Robertson, the fund will look to contribute between $150,000 to $250,000 to larger seed rounds, with Daniels and Robertson explaining that while existing Australian VC firms are doing good work, they saw a gap in the seed funding stage.
The idea for the fund came when Daniel and Robertson met almost a year ago and started “comparing notes” about what they could do to help the Australian startup community.
“We came up with a few ideas but decided given our mutual strengths that an early stage venture fund would be one of the most valuable things we could add to the ecosystem. We started actively putting the fund together at the end of last year,” Robertson said.
Foreign firms including Ribbit Capital and Techstars are contributing to the fund, with Daniels and Robertson also seeking participation from family offices and high net worth individuals in Australia.
Robertson said the pair have seen a lot of interest in Australia, with people eager to learn more about how early-stage venture investments are evaluated and how venture deals are done on a global basis. Potential backers are also excited to gain access to experienced VCs both through the fund and via the firms it plans to syndicate with, he said.
“A big part of our strategy was to pull together an incredible set of investors and commit to doing as much as we can to share experiences across both portfolio companies and LPs. We also find a lot of LPs have specialized knowledge in the AsiaPac region and within Australia, which is incredibly useful to us as we continue to learn ourselves and help our portfolio companies,” Robertson said.
Daniel added that the response from US backers too has been fantastic, with many excited to be investing in Australian companies.
She said Signal Ventures will be looking to invest in full stack teams, with technical and commercial expertise on the core team, building a globally scalable company.
“We focus on high growth business models in areas of B2B and prosumer SaaS, technologies that connect communities and enable communication, and mobile app disruption of web incumbents,” she said.
Beyond just investment, Signal Ventures will also look to provide its portfolio companies with mentoring and advice, with Robertson explaining that, fundamentally, the greatest value the fund can give entrepreneurs is a supportive relationship.
“We invest in founders because we believe in the them as key to building a successful business. Past that, having built and exited numerous companies gives us a lot of data to help our companies avoid common mistakes,” he said.
“We’ll never be able to remove all pitfalls that companies will come across but learning is expensive – if we can reduce that learning time and cost we can do a lot to help our companies be more successful.”
The launch of Signal Ventures comes after a banner 2015 for Australian venture capital. Four $200 million funds launched last year, while female-focused investment network Scale Investors announced last month that it is looking to raise $25 million for its first closed-end fund, through which it will look to provide up to 20 early stage women-led businesses with funding.
Daniel and Robertson expect to close the raise by the end of April.
Image: Atlanta Daniel and Niel Robertson.