Dr Michelle Deaker

Leading Australian venture capital firm, OneVentures, has thrown its support behind the Federal Government’s Science and Innovation Package announced yesterday, welcoming tax incentives to stimulate early stage investing, visa reform to encourage talented entrepreneurs and STEM graduates to Australia, funding for incubators, and initiatives to buoy the number of STEM graduates and women participating in the sector.

The proposed reforms to the Early Stage Venture Capital Limited Partnerships (ESVCLPs) to increase the size of funds under management and relax the rules around the requirement to divest assets once they reach $250 million asset value are sensible and will ensure funds have sufficient scale to support capital-intensive companies in sectors such as life sciences and clean technology, and to hold them until they reach optimal value before divesting.

OneVentures says the Biomedical Translation Fund is a welcome boost for the biomedical sector, providing much-needed funding to increase the frequency of conversion of the outputs of our $9 billion per annum Research and Development (R&D) into commercial outcomes.

With more capital available for this task, there will be greater opportunity to replicate the success realised recently, with OneVentures portfolio company Hatchtech (a company developing an innovative head lice product) signing a commercialisation agreement with Dr. Reddy’s Laboratories that could return $279M to Hatchtech investors (including $100 million to OneVentures investors).

OneVentures expects that the tax incentive for investors who participate in ESVCLP funds will stimulate interest from superannuation funds and other investors to work with accredited venture capital managers.

While ESVCLPs are tax free on income and capital account, allowing investors in new ESVCLPs to receive a 10% non-refundable tax offset on capital invested during the year is a welcome initiative to help investors offset risk. ESVCLPs are good investment vehicles for venture across early and later venture funding stages.

OneVentures CEO and Managing Director, Dr Michelle Deaker said that while the startup community applauds the many initiatives that aim to unlock funding for early stage or ‘start-up’ companies, the challenge will be to work out how we boost funding to the later stages of the VC funding cycle and this initiative may help the institutional investors level of interest.

“The fact is that over the course of the last decade funding to the seed and start-up phases has increased, while funding for later stages (Series B&C) has not materially changed,” Dr Deaker said.

“This is one of the reasons OneVentures $100 million Innovation and Growth Fund II focuses on funding later stage opportunities – because to build a successful start-up ecosystem we need to start great companies, provide them with early stage support, then give them access to capital to ensure they grow into significant, global companies. We want to take the ideas boom and translate that into substantive businesses.”

Filling the entrepreneur ‘management gap’

OneVentures says the proposed Entrepreneur Visa will help attract talent to fill the ‘management gap’ that exists in Australia, where there are insufficient entrepreneurs that have serially established, grown and exited successful technology companies.

Dr Deaker cited a number of such entrepreneurs who have proven the value of bringing global experience to the local venture capital scene:

• Dr Paul Kelly, Managing Partner and head of OneVentures’ life sciences practice, has been instrumental in building a number of significant life sciences companies both within OneVentures and during the 15 years he was offshore in Cambridge, UK, and Boston in the USA. Dr Kelly began his career in Australian as a physician and clinical researcher before embarking upon a career internationally in biotechnology and commercialising biotechnology innovation. Since then he’s gone on to create over $1.3billion in value to shareholders from various companies he has either founded or led through various commercialisation phases.
• Alex Lipe, founder of Molecular Securities in New York is a successful Australian who lead the M&A team at Morgan Standley in New York, has overseen many billions in transactions and invests his time with OneVentures Australian portfolio companies helping to see them on the road to success and beyond. The partnership with Molecular Securities and OneVenturees was pivotal in the asset sale of Hatchtech.
• New OneVentures team members Dr Amir Zalcenstein, with over 12 years’ experience commercialising biotechnology from Israel, and Melissa Widner, who successfully built two enterprise and marketplace software companies in Silicon Valley and has been partner of 2 venture funds.

“A specific initiative of the Turnbull government is “Best and Brightest,” the government wants to see more of our highly skilled entrepreneurs, talented executives and investment professionals return home to help drive our new economy.

“OneVentures was fortunate to have Paul return to Australia to invest his expertise in building and growing biotech companies. People like Paul not only brought his expertise but relationships such as that with Alex,” Dr Deaker said.

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Sydney-based venture capital firm OneVentures has announced the appointment of experienced technology investor and successful Silicon Valley entrepreneur Melissa Widner as Venture Partner.

Ms Widner comes to OneVentures from US Seapoint Ventures in Seattle where she was a General Partner in two venture funds. She has been an active angel investor in both Australia and the US where she served on the board of the Alliance of Angels, one of America’s first and most active angel investment forums. For over 15 years she has served as a Board Director for technology companies in the US and more recently in Australia.

OneVentures CEO and Managing Director, Dr Michelle Deaker said: “We are delighted with Melissa’s appointment. She brings a unique US venture capital perspective to OneVentures and has a deep understanding of the venture capital industry in Australia, as well as in the US. The appointment deepens OneVentures’ software and digital expertise and US venture networks.”

“Melissa will work closely with the Partners to identify, evaluate and manage investment opportunities in the tech sector for our $100 million Fund II. She will also build our US relationships and leverage her US venture networks to support our portfolio companies as they migrate offshore,” Dr Deaker said.

OneVentures’ portfolio companies Vaxxas, Smart Sparrow and Incoming are now headquartered in the US and will further benefit from the appointment of Ms Widner.

Ms Widner’s experience at Seapoint Ventures is closely aligned to the philosophy of OneVentures which has a focus on providing substantial operational, financial and management experience to build successful businesses.

Prior to her time at Seapoint Ventures, Ms Widner was the co-founder and CEO of 7Software (acquired by Concur Technologies, NASDAQ: CNQR acquired by SAP) and previously the CEO of Northwest Industrial Supply. Under her leadership, both companies generated significant returns for investors.

Ms Widner served on the Advisory Board for the University of Washington Bothell’s Business School and she taught courses in entrepreneurship and venture capital at University of Washington’s Graduate School of Business. She graduated with a Master degree from Stanford with courses in policy analysis and business and a Bachelor degree from the Jackson School of International Studies at the University of Washington.

In Australia, Ms Widner is an established leader among executive women as co-founder and Executive Committee member of Head over Heels, a non-profit organisation that seeks to increase the representation of women leading high-growth businesses. She also served on the Federal Government’s Venture Capital Committee.

“The team at One Ventures brings a disciplined approach to investing as well as first-hand knowledge of the entrepreneurial journey,” said Ms Widner.

“It is a privilege and honour to join Australia’s leading venture capital firm,” she said.

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Dr Michelle Deaker

Australian venture capital firm OneVentures believes the National Commission of Audit’s recommendations to dissolve key innovation funding programs like the Innovation Investment Fund (IIF) would be a step backwards for Australia, calling on the Government to reinforce its support for these initiatives in the upcoming Federal Budget, citing innovation as the key in creating new business opportunities, higher growth and improving productivity.

The aim of the IIF program is to seed new venture capital firms to support the establishment and growth of a viable venture capital and innovation industry building infrastructure and capacity in the sector. Importantly, OneVentures notes that the program is not a grant but held by treasury on capital account with venture fund managers to return capital to the Government as investments are realised.

OneVentures’ first fund is a key beneficiary of the Australian Government’s IIF, demonstrating firsthand the crucial role Government can play in investing in the future of Australia. The firm is now in market for a new $100M fund with its Fund I being highly regarded as a portfolio of quality assets by investors.

The OneVentures Innovation Fund raised $40 million, including $20 million of IIF funding, allowing the firm to make investments into emerging Australian companies operating within the technology and life sciences space. The fund was able to launch just after the GFC, leveraging the benefit of the IIF program for private investors. Through the IIF Program, OneVentures has also been able to attract and repatriate some highly experienced entrepreneurs and business leaders returning from overseas into Australian VC management

According to OneVentures’ Managing Director and CEO, OneVentures may not have become the established firm it is today without the IIF Program.

“Innovation funding programs like the IIF are integral for the venture capital industry in seeding new funds and creating the new industries of the future, and its removal would reduce Australia’s global competitiveness in the long run,” Dr Deaker said.

“Government funding programs foster the broader investment community and the IIF model where the government matches private investor capital, sharing risk and taking a low capped return, encouraging capital from institutions and high net worth individuals to the venture capital asset class”

Alongside the $40 million Innovation Investment Fund, OneVentures has run a co-investment model where private investors in the Fund can choose investments they prefer and provide additional capital where a funding round is larger than what the fund can support. The IIF fund laid the platform with OneVentures raising an additional $40 million in capital to support technology start-ups with strong market potential through co-investments and syndicated funding largely from offshore. The quantum of funding has therefore effectively doubled into the economy and OneVentures expects the number to be far greater before the end of fund life.

Emerging companies which OneVentures has been able to successfully support include medical electronic information system Charmhealth, nanoneedle vaccine technology developer Vaxxas and adaptive e-learning platform Smart Sparrow.

“The multiplier effect of the government support is clearly visible when you look at OneVentures Innovation Fund through the additional capital raised into our companies via co-investment and syndication,” Dr Deaker said. “In the medium to long term, the quantum of new jobs in potentially new emerging industries generated through this program for the economy represents a strong case for Government support. The program also ensures that the country benefits from public financed R&D with six of our nine portfolio companies originating from R&D in Australian universities and research institutions.

“Importantly, this program is not a grant and the investment by the Government is on capital account, to be returned in the future as investments are realised by IIF fund managers,” she said. “Our first Fund has already returned early capital to the Government with that investment providing an internal rate of return of 28% to investors. The Fund also has a carrying value of investments at approximately 2x just 4 years into its investment cycle.”

OneVentures launched its Innovation and Growth Fund II in March this year, seeking to raise $100 million for institutional investors and high net worth individuals, to invest in start-ups through to emerging high growth companies.

“The IIF is part of a structure currently in place to aid a venture capital firm’s fundraising process, and contrary to the National Commission of Audit report, I believe the Government will be looking to develop this program further if it can. The Liberal government originally developed the program recognising that it helps to provide the necessary oxygen to build the new economy, encouraging private sector investment, driving growth companies and fuelling job creation to support Australia’s future,” Dr Deaker concluded.

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Australian venture capital firm, OneVentures, yesterday officially launched the OneVentures Innovation and Growth Fund II, seeking to raise $100 million from institutional investors and high net worth individuals over the next 12 months.

The fund will invest in a portfolio of emerging Australian companies with global ambitions across healthcare, education, mobile, media, cloud computing and data, security and privacy, machine learning, sensors and robotics, and food security.

The first OneVentures Innovation Fund, formed as an Early Stage Venture Capital Limited Partnership in 2010, raised $40 million and was supported by $20 million in funding from the Australian Government’s Innovation Investment Fund.

The fund was the first in Australia to tap into a growing trend in the Australian market for high net worth individuals and family offices to diversify their investments towards venture capital filling the gap vacated by institutional investors post-GFC. Since then, OneVentures has closed three co-investment funds securing $30m in additional funding for the portfolio.

“The quality of the portfolio OneVentures has assembled over the past four years is one of the best venture capital portfolios I have seen in Australia,” said Mark Nelson, Executive Chairman of Caledonia and an investor in OneVentures Innovation Fund.

The fund is trading at a premium after only four years and of its eight portfolio companies two are now operating out of Silicon Valley and one out of Boston, reflecting their successful growth into global markets. Smart Sparrow recently closed a $10m financing and Hatchtech over $12.5m for US expansion and US FDA phase three studies respectively.

“OneVentures is demonstrating a capability to do deals of global significance,” said Dr Michelle Deaker, Managing Partner at OneVentures. “Our investors value the technical experience of the partners as well as their proven entrepreneurial and business building experiences in the domestic and international arena. The partners also bring experience and networks of relationships to select highly attractive investment opportunities addressing large global markets, and to manage those investments through to the exit stage.”

Dr Deaker believes there has never been a better time for investors to turn their attention to venture capital. While traditional drivers of the economy such as mining and manufacturing are slowing or moving offshore, innovative technology-based companies hold the key to driving Australian economic growth and many are now succeeding on the global stage.

“While the innovation economy has been building, Australia continues to invest substantial capital in R&D and there has been substantial activity and investment in early stage angel syndicates and incubators. However, there is a dearth of capital available to propel those developing businesses forward with later stage development and expansion capital,” Dr Deaker said.

“This dynamic should create downward pressure on valuations and generate scope for superior returns. We see no reason why Australia’s entrepreneurs, with the assistance of experienced venture capital firms like OneVentures, cannot compete successfully in global markets. For investors, the fund provides an opportunity to truly diversify a portfolio and gives access to emerging businesses with true breakout potential.”

OneVentures today also announced that Dean Hawkins was joining the firm as a partner.

Mr Hawkins has led international businesses at the forefront of TV, media, broadband, apparel and sports industries for the past 18 years, working in UK, Germany, Holland and Switzerland, including 4 years as global CFO and board member of Adidas, based in Germany, during which time Adidas grew its market capitalisation from €1.5b to €8b. Since his return to Australia, he has served as chairman of International News Network Ltd (Hong Kong), and non-executive director Ten Network Holdings, Apparel Group, Leighton Contractors and I-Med Australia.  As chairman of compression garment company, Skins, he oversaw the expansion of the group sales into 30 countries world-wide including a joint venture in China.

Mr Hawkins commenced his career in investment banking with UBS and was chosen by Global Finance Magazine as one of its “Global Corporate Finance Superstars”. He has also led a number of media organisations, collecting Emmy and BAFTA awards along the way.

Commenting on the appointment, Dr Deaker said: “Mr Hawkins complements the skills of the partners and his experience in both high growth and established businesses will be invaluable for our portfolio companies.  Mr Hawkins brings a new dimension to our team with a strong finance, M&A background and international commercial and cross-border experience. The international experience of our team is showing a marked impact on our portfolio performance as they expand into global markets and prepare for exit.”

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