Australian venture capital firm, OneVentures, is set to invest about $100 million in technology based companies in a major boost to the industry.
The company has announced the first close on its Innovation and Growth Fund II.
Having already raised over $60 million, it is now well on the way to its final $100 million target with strong backing from high net worth and family office investors.
OneVentures, managing director and chief executive, Dr Michelle Deaker, said the fund strategy and the commercial experience of the OneVentures team have struck a chord with Australian investors.
"The rapid rate at which the fund has attracted investment from High Net-Worth Individuals (HNWIs) and family offices reflects the strong appetite for opportunities in high growth technology-based companies in Australia," she said.
"These ventures will increasingly fill the void left by manufacturing and mining as traditional drivers of economic growth and job creation.”
The fields of investment focus for Fund II include healthcare, education, mobile, media, cloud computing and data, sensors and robotics, and food security.
Deaker said OneVentures was intent on supporting innovation beyond the start-up stage where there is a significant structural gap in the market caused by a lack of capital meaning value investing is still possible.
"Capital raised by Fund II will be focused on investing in series B and C stage funding where businesses are generally approaching profitability but need capital to build scale and fuel growth," she said.
"Often the entrepreneurs who run such companies are forced to move offshore in their search for this funding. At OneVentures we want them to have a quality onshore professional investment alternative”
The Australian Private Equity and Venture Capital Association Limited has noted that venture capital and private equity funds have over the past decade invested $30 billion into Australian businesses.
Deaker said this was a tiny fraction of the money sitting in the hands of the country’s high net worth investors and superannuation funds.
“There is huge potential for Australia’s economy to enter a new and innovation-based era of growth as more of the money is mobilised through vehicles like Fund II," she said.
The recently published Global Innovation Index (GII) 2014 acknowledged Australia’s innovation credentials.
Published by Cornell University, GII is a comprehensive review of the innovation capabilities and measurable results delivered in 143 countries around the world.
The index ranked Australia 17th overall and identified regulatory quality, secondary and tertiary education, R&D activity, ITC, and general infrastructure and trade policies as clear areas of strength.
However, Australia’s Innovation Efficiency Ratio, a measure of the innovation outputs relative to the innovation inputs is disappointingly low.
By this measure, Australia is the 81st ranked country.
Deaker said the money was not flowing into innovation through investment in venture capital funds as it should.
"Without this, the future of our economy and jobs will be at risk," she said.
“Our experience with both our first fund OneVentures Innovation Fund and with the first close on Fund II suggests to us that high net worth individuals and family offices in this country see the opportunity and believe they can really provide an impetus for the development of venture capital businesses through their capital and networks using the experience of the OneVentures team to deliver on the opportunity and build a portfolio of quality assets.”
Deaker encouraged the government and the key stakeholders to recognise the role of Venture Capital in the innovation economy and help correct the Australian market’s structural challenges by implementing new programs that will help nurture what is a very small VC community in Australia by global standards.