Angela Ashton
Specialist alternatives investment research firm Evergreen Ratings has assigned a “Commended” rating to the Aura Venture Fund II, highlighting Aura’s strong team of venture capital specialists.
Evergreen Ratings Founder and CEO Angela Ashton says Aura Funds Management has established a strong track record with its first venture fund, Aura Venture Fund I, which has produced a gross internal rate of return of 33.7 per cent a year since it was launched in 2017.
The latest fund, launched in April last year, has been designed to build a diversified portfolio of technology-based companies operating across a range of sectors and which have the potential to generate high levels of capital growth for investors. Investee companies will be predominantly Australian based.
Aura is targeting an internal rate of return of 30% a year, net of fees, with a portfolio of 15 to 20 companies. The fund has a target size of at least $50 million and a term of six years from its final closing date that will be early 2022.
The fund will invest in pre-seed, seeding and Series A capital rounds. While seed investing carries the highest risk, the fund receives a disproportionate stake in the investee company, providing for the highest return outcome.
Ashton says: “Our view is that the experience and track record of the manager will allow the fund to minimise the downside on these investments.”
Led by Eric Chan, the co-founder and managing director of Aura Ventures, Evergreen says the manager has a strong team with genuine early-stage investment experience. “This should reduce the risk of poor investment decisions and allow the Fund to provide investee companies support as required,” the rating report says.
“The manager looks to invest where it believes it can best add value to the investee company. A disciplined and proprietary screening process is applied to all opportunities. The manager seeks to identify, invest in and partner with quality founders and management teams.”
Aura takes an industry agnostic approach and focuses in identifying technology-led businesses that are providing solutions to problems that are underserved. Technology will be at the core of every business the fund invests in.
Current investment themes include fintech, e-commerce and sustainability. The team screens investment opportunities, looking for talented founders with vision, a great product or service that solves a problem and a large potential market.
Investee companies include:
- Catapult Group, a sports analytics company that provides data to monitor and optimise athletic performance.
- Shippit, a fulfilment software provider that gives e-commerce merchants access to the best courier rates.
- Lygon, a blockchain powered fintech specialising in the areas of digital bank guarantees and payment guarantees.
- Harvest B, a plant-based food business.
The fund has received unconditional registration as an Early-Stage Venture Capital Limited Partnership from the Department of Industry, Science, Energy and Resources. Registration provides scope for favourable tax treatment for investors, including a 10% offset on invested capital and 100% tax-free income and capital gains.
Chan says: “We strongly believe that the tailwinds the Australian Venture Capital market is currently receiving look set to continue in the years ahead providing experienced investors with a great opportunity to generate outsized returns for their Limited Partners. It is genuinely exciting to be at the coal face of the industry; meeting with and partnering with high quality founders that will create category defining businesses.”