Investec to launch emerging companies fund

Having backed over a dozen companies already, investment bank Investec is raising a dedicated fund to invest in Australian startups.

The Investec Emerging Companies Australia Fund 1 (IEC Fund) will look to raise $50 million to $70 million. Aimed at companies worth between $10 million and $200 million, the fund will invest between $1 million and $5 million in each business.

With Investec itself to be the largest investor in the fund, it is looking to raise from the likes of high net worth individuals and family offices.

The fund will be managed by David Phillips and Hein Vogel, who developed and head up the Investec Emerging Companies division. While the bank is global, founded and headquartered in South Africa, the  Emerging Companies arm was founded in Australia two years ago to look at developing Investec’s startup investment arm and strategy.

Cliff Rosenberg, former boss of LinkedIn across Southeast Asia, Australia, and New Zealand, Myer board member Garry Hounsell, and Ben Sebel, former managing director of Champ Private Equity, have come on board as committee members for the fund.

According to Phillips, the IEC Fund is expected to reach its first close over the next few weeks, and will be an extension of the existing Emerging Companies business.

“As a group, Investec has recognised that emerging companies are a growth sector globally and we are covering this space on a coordinated basis with our peers in each of our key geographies,” he said.

“There are many passionate and innovative entrepreneurs in Australia. Many founder-led companies are looking for financial partners who can help them grow both locally and globally, with some now into their second or third venture. For some of those we believe Investec is the ideal business partner.”

The bank’s startup investments vary: among its portfolio companies are rental management startup MadeComfy and Dresden Optics, which raised $4 million from Investec earlier this year. Producing low-cost, easily customisable glasses, Dresden has a growing retail footprint in Australia and is expanding overseas, with a store launched in Canada.

The announcement from Investec follows local investment management firm Acorn Capital earlier this week launching its $55 million venture capital fund, to be invested in Series B and later-stage companies.

Startup Daily spoke to Hein Vogen about the development of the Investec Emerging Companies division, what it’s looking for in portfolio companies and what, in turn, it can offer them, and the Australian startup landscape on a recent episode of the Startup Meet Corporate podcast:

Startup Meet Corporate is also on iTunes, Stitcher, and Spotify.