Melbourne investment firm NextGen Funds has launched an AI fund for startups

Melbourne-based NextGen Funds Management has launched the country’s first Artificial Intelligence (AI) Fund.

The fund, for sophisticated investors, will invest in a mixture of debt and equity in ventures ranging from startup to pre-IPO.

NextGen Funds Management Head of Distribution Samuel Mullavey said the fund will take a sector-neutral approach in areas are where AI will provide the greatest benefits economically, environmentally, and socially.

“These include sectors such as health and wellbeing, infrastructure and transport, environment and natural resources, cybersecurity, smart cities and buildings, and financial services,” he said.

“We believe AI will be the defining technology of our time. It is set for accelerated growth and demand and, as such, we have positioned the Fund to take advantage of the exciting investment opportunities unavailable to public markets.”

Mullavey said tech such as AI is forecast to be worth $315 billion to the Australian economy by 2028

“In recent times we have seen a total of AU$86 billion dedicated to AI programs and activities from 14 of the world’s most advanced economies. Locally the Australian technology industry will require up to 161,000 new expert AI professionals by 2030,” he said.

“In many cases, the technology is already available, but the challenge many smaller AI firms face is commercialising ideas into a viable product or service. This as a major opportunity to leverage our strong partnerships, experience, and networks, and provide the expert support required to navigate this tricky stage of development.”

The NextGen Artificial Technology Fund has no floor nor ceiling on deal size. The (not guaranteed) income yield objective is 5% per annum with a total return objective of 10-12% per annum (on an internal rate of return, pre-tax, post fees and costs).

The Fund is designed with a three to five-year investment term and a minimum initial investment of $100,000, then additional funds in multiples of $50,000.