The Fund, a founder investment network that focuses on technology start-ups at pre-seed and seed stage, has expanded to Australia.
The Fund was founded in New York in 2018 and has since launched additional chapters in Los Angeles, London, the Rocky Mountains and the US Midwest.
Co-founder Jenny Fielding, a managing director at Techstars New York, said The Fund decides on new areas for expansion based on demand from local start-up ecosystems. Earlier this year it was contacted by a group of founders and investors who wanted to start a chapter in Australia.
In addition to participating in first investment rounds, The Fund also seeks to build communities of founders and other leaders from successful start-ups who commit capital as limited partners and provide mentorship to the investee companies. The Fund currently has a network of about 400 founders and has made around 120 investments across its funds.
In each of its regional chapters, The Fund is led by an investment committee of four people. The Australian investment committee members are: Techstars managing director Todd Deacon; AirTree Ventures principal Elicia McDonald; AfterWork Ventures co-founder Adrian Petersen; and former Canva head of product, Georgia Vidler.
A total of 50 people will be included in The Fund Australia’s limited partner base. Those accepted so far include start-up founders Rod Hamilton of Culture Amp; Alex Zaccaria, Linktree; Kate Morris, Adore Beauty plus other leaders from Canva and Safety Culture.
The Fund Australia’s LPs will source potential investees through their networks and refer them to the investment committee.
The Fund is targeting to raise commitments of $US3.5 million and to invest $US50,000 to $US100,000 each in about 40 start-ups over the next two years. Limited partners and other members of The Fund’s international community will provide advice to help investee companies grow.
Deacon noted that there is evidence from around the world that as venture capital firms become established and raise larger funds they shift their focus from early-stage to later-stage businesses. In Australia, this was borne out by a 2019 Crossroads report by Start-up Australia that found that, despite growing venture capital investment, seed investment and angel investment, typically in early-stage start-ups, had fallen over the preceding few years both in terms of numbers of deals and aggregate value.
“There’s been this gap in early-stage funding. There’s those two points of building a really strong community — helping founders and then the funding gap, which we can help to solve to a certain degree. We’re bringing in cheques in the early stage with a lot of power in providing founders access to that network,” Deacon said.
The focus on investing in very early-stage businesses enables The Fund to see deal flow before other venture firms and its small cheque sizes gives it an advantage with startups.
“We don’t take a huge proportion of their raise, yet we come with really high-quality capital,” Deacon said.
Being able to tap into The Fund’s international network is also helpful for Australian start-ups as many plan for international expansion from the start.
Australian unicorns like Atlassian and Canva are also helping strengthen Australia’s startup ecosystem, said Vidler. “It feels like an inflection point for me in the startup ecosystem, where now there’s all these original founders and a community of senior operators who are keen to give back and create and bolster the ecosystem here.”
The Fund Australia is sector agnostic and will seek to create a diverse portfolio. The Fund has focused on gender parity from its foundation. Each region’s investment committee comprises two men and two women, about half of its LPs are women and over 40% of its total capital has gone to female founders. Vidler said this was an important point of appeal for her.
“The pull for me, and I think for a big part of the network in Australia, and a lot of women in tech in Australia, is that they’re going to be super interested in investing in the next generation of female founders as well,” she said.
Image: The Fund Australia’s team: Elicia McDonald, Adrian Petersen, Georgia Vidler, Ed Taylor and Todd Deacon.