Australia's Blackbird holds first close on debut fund

In an environment that has become cold to venture capital, VC fund Blackbird Ventures has reached an A$20m first close on its maiden fund with commitments primarily from industry insiders.

Australian venture capital firm Blackbird Ventures has held a first close on A$20 million (€16 million; $21 million) for its debut fund, which is dedicated to investing in Australian internet startups to help them grow globally, according to a firm statement.

The fund’s original target size was A$30 million, but now that it has reached that size already, Blackbird has chosen to open up the fund to other investors, according to Rick Baker, co-founder and director of Blackbird. The firm hopes to hold a final close at the end of the year, he added.

Blackbird unofficially launched and started marketing its fund in May, and focused mainly on entrepreneurs and Australian internet industry insiders that the co-founders knew well, Baker told Private Equity International. Blackbird did not use a placement agent, he said.

The fund’s current LP base is made up of more than 35 Australian tech founders and Silicon Valley venture capitalists, with one anchor investor being Australian company Startmate, according to the statement.

“The idea is that these guys can put not only their money but also their experience into these companies to bring them along,” Baker said. He added that Blackbird’s business model of bringing in investment partners who have been entrepreneurs in the past helped his firm draw more capital into the fund.

The fund’s investment size will typically be between A$1.5 million and A$2 million, and will target Australian internet companies, Baker explained. The fund has already made two investments, and expects to make around 25.

Institutional LPs in Australia are no longer allocating money to venture capital, mostly because Australian venture capital has been slow in providing returns, Baker said. Blackbird is currently speaking to a few institutional investors that are interested in investing, but Baker says the firm has to remain realistic in its expectations.

“We’re hoping they will come around, but the chances are low,” he said.