If you are wondering where all the investment funds went in the last six months, chances are it has been invested in TVP, a local venture capitalist which secured a record $144.4 million for this period.
After raising $44 million in 18 months during the VC's first foray into institutional funding (known as TVP#2), TVP cleaned up in the last six months and the $144.4 million it landed has set a new record for an institutional fund specialising in information technology and communications. It is an effort which is all the more impressive considering the state of the IT investment market in the last six months.
TVP executive director Phillip Wing said that for this round of investment, the VC had an institutional track record from its previous round, with many first-time investors staying on board. These included Development Australia Fund (the largest investor in TVP), Commonwealth Superannuation Scheme, Public Sector Superannuation Scheme, Victorian Funds Management and ING Private Capital.
Wing said more investors are looking into this kind of asset class, and are looking for those VC's who have a specific focus, in this case the IT&C sector. "The industry is still in its infancy for VC funding in this sector, and this is clearly a watershed for it."
New investors this round include BHP Super, Telstra Super and Goodman Fielder Super. The money will be invested in a similar manner to how the VC has funded its 14 current investees, which include Peakhour, Syrinx Speech Systems and inter-touch. Wing said investors in TVP see the real results when one of these companies is sold. Recently, TVP made what Wing describes as "a very good return" on the sale of investee Security Domain, a PKI software developer, to security vendor Baltimore Technologies. "We'd love to see a few more of those," he said.
TVP will now look to invest in more IT&C start-ups with its latest round of funding, particularly focused on broadband and wireless network rollout, and enterprise-level business software.
"Our investments are spread between core technology companies and pure business model companies," he said. "We take a view on it as to whether there is potential for the product in the global market and whether it has the management team to sustain its growth," he said.
Wing believes, as many of his VC peers indicate, that since the technology stock crash, the quantity and quality of ideas for technology start-ups has improved.
"Generally, there has been a big flight to quality," he said. "There are just as many deals, and they are of better quality. We've found the intermediaries between us and the investees have also wised up," he said.
The success of TVP, according to Wing, is its focus on quality. The VC firm did not make any investments for seven or eight months in a period where dot-coms and B2B exchanges were the only start-ups entering the market. "There were and still are none of those kinds of companies in our portfolio," he said.
TVP has now opened a branch in the Silicon Valley, where partner Allan Aaron has moved full-time to aid investees looking to expand into the US market. "Eight of our companies have offshore revenues and five have offices in the US," said Wing. "So we have committed one of our founding partners there to help our investees gain revenues out of the US market."