Blue Sky declares first close for its venture capital fund
Blue Sky Venture Capital investment director Dr Elaine Stead
Blue Sky Venture Capital has declared first close for its venture capital fund (VC2014) with more than $15 million in committed capital.
Blue Sky Venture Capital investment director Dr Elaine Stead said there was strong momentum towards the fund’s $30 million target.
“There is a huge interest from investors who are aware of Blue Sky’s strong track record of venture capital investments, and who are keen to take advantage of Federal Government incentives designed to boost investment in the sector,” Dr Stead said.
The fund has attracted significant interest from foreign high net worth investors as it is eligible as part of the new Significant Investor Visa (SIV) rules that require a minimum investment of $500,000 in eligible Australian venture capital or growth private equity funds.
The fund is also a registered Early Stage Venture Capital Limited Partnership (ESVCLP), meaning returns to investors will be tax exempt.
“These initiatives are most welcome as the sector has been cash starved for so long. On the plus side, it does mean the calibre of deals coming to us is unprecedented. We have a very strong pipeline,” Dr Stead said.
The fund’s first investment will be Australia’s largest independent online retail delivery network, ParcelPoint, and it is currently in due diligence on a second investment.
While 80 per cent of all venture capital (VC) investment goes into the earliest stage companies, including start ups, Blue Sky focuses on the underpenetrated and lower risk late VC and early stage expansion sector.
“We look for validated, game changing products, platforms or technologies with a global reach, rapid scalability or growth, established, experienced management teams and businesses where we believe we can genuinely add value,” Dr Stead said.
“Focusing on later stage opportunities also allows us to provide investors with a shorter investment horizon than is typically seen in venture capital.”
In contrast to the wider VC market, which typically invests 80 per cent of capital in the crowded biotechnology and IT spaces, Blue Sky is committed to maintaining a technology and industry agnostic approach.
“We see sectors that are substantially underpenetrated because historically, most venture capital has focussed on biotechnology and digital technology. We are open to all sectors provided the opportunity is right,” Dr Stead said.
“Our goal is to provide investors with an opportunity for exposure to venture capital and the substantial returns this asset class can provide, but with a lower risk profile.”
The fund is Blue Sky’s second venture capital fund. The first vehicle invested in companies such as online retailer Pet Circle, social app HeyLets, specialty pharmaceutical company Hatchtech, biotech company Conventus Orthopaedics and anti-ageing skin procedure Serene Medical.
Blue Sky Venture Capital is a division of Blue Sky Alternative Investments (ASX:BLA).
