Melbourne-based venture capital firm Rampersand has today announced it is in the process of raising up to $50 million for its second fund, with almost half raised. Structured as an Early Stage Venture Capital Limited Partnership (ESVCLP), Rampersand’s focus in its second fund will continue to be on early growth stage tech startups.
The fund’s first investment has already been made, with Rampersand participating in payment startup PromisePay’s recent $14 million Series A round, and two other opportunities “at an advanced stage”.
Cofounder Paul Naphtali said the firm is focused on this growth stage as it likes to see the commercial capabilities of startups once they’re in the market.
“We love backing founders who are commercial, where you can see some kind of product market fit. The journey is still all ahead of the and it’s a very difficult path, but because we’ve been down that path before, we can help them. For us there it’s a real combination of bringing value to investors and value to founders,” he said.
Founded by Naphtali and Jim Cassidy in 2013, Rampersand counts the likes of Expert360, Skedulo, School Places, and Stackla in its portfolio. Naphtali said they took five weeks to raise their first fund of $6 million three years ago and, as the jump to $50 million shows, are having “very different and advanced conversations now”.
He said, “There’s a much warmer risk to back Aussie innovation and obviously, the focus on startups and the tax incentive, and the commentary around tech and innovation, has been really useful.”
This conversation has led to a significant change in sentiment from family offices, the fund’s main backers. Three years ago, Naphtali said, these investors wanted to venture into startup investing on their own; now they recognise the need to have a systematic approach to tech investment and the value of backing a fund managed by those with experience in the space.
Rampersand’s new fund is just the latest to launch as the pool of VC money in the Australia continues to grow. The last month or so alone has seen Start Mesh announce it is raising its first VC investment fund, looking to raise $20 million, and Australian fund management firm Aura Group announce the launch of its $30 million Aura Venture Fund.
These too are structured as ESVCLPs, and both operated according to criteria that allows for foreign investors to come to Australia through a Significant Investor Visa.
These funds come as conditions for investors continue to improve, with the tax incentives for early stage startups cited by both Aura Group and Start Mesh as a contributing factor in the launch of their VC efforts.
These incentives will give tax concessions to eligible early stage investors who invest in qualifying companies. The concessions include a capped 20 percent, non-refundable tax offset, and a 10 year capital gains tax exemption on investments that are held for 12 months or more.
In terms of what companies it is looking to invest in, Rampersand is not focused on any particular industry or sector, with Naphtali saying that it is important for the firm to support a diverse range of both companies and founders.
Looking at how it can encourage more female founders, the firm has been collecting a range of statistics about the companies it has seen since the start of the year – just 13 percent over the last six months have been female-led startups.
Analyst Eloise Watson – the firm’s “chief engine room”, according to Naphtali – said, “Any time we do see a female founder or are approached by a female founder, we make sure to have a double look over their deck. We’ll often take meetings with female founders who are perhaps a little too early stage for us so we can give them that guidance of what next steps they need to take to come back to us, and what growth targets they need to hit.”
Naphtali believes this is key to the growth of the local startup landscape.
“The last three years have been a very exciting time, but the ecosystem’s still radically underdeveloped. We’re really pleased with the deal flow and the calibre of our investors and the quality of the companies we’ve invested in, but it takes a village to raise a startup, and our village is pretty young and immature. Bringing in people from diverse backgrounds and perspectives, and diverse sets of skills, is really important if we’re going to have a long term sustainable ecosystem.”
Image: Rampersand team. Source: Supplied.