)
Melbourne-based Advance VC, a “fund of funds” that aims to address growing demand for liquidity to facilitate venture capital exits, has announced its first close at almost half of a $15 million targeted capital raise launched in May this year.
Described as Australia’s first dedicated fund of funds with a focus on secondaries, Advanced VC is targeting limited partners (LPs) and general partners (GPs) in existing VC funds as portfolio companies remain private for longer and traditional 10-year fund cycles are extended.
“The maturation of the Australian VC ecosystem has created the opportunity and need for a specialised buyer of fund secondaries,” says Advanced VC founder Max Kausman, a former investor at Tidal Ventures.
“Advance VC’s model has been embraced by sellers looking to cash out, fund managers appreciating that liquidity is critical to a healthy market, and by investors who recognise now is an opportune time to deploy while others are stepping away.”
The lifetime of a venture capital fund is typically 10 to 12 years, with an option to extend for two additional years.
While LPs expect to receive cash returns towards the end of a fund’s life, Advance VC points out that investments are largely illiquid until underlying portfolio companies achieve an exit.
Advance VC buys shareholdings in existing VC funds from LPs and GPs seeking liquidity, with fund secondaries typically negotiated at a discount to the fund’s reported net asset value.
By providing a ready buyer for secondary interests, Advance VC offers a path to liquidity for investors without requiring portfolio companies to exit.
Advance VC also makes selective primary investments into new funds and provides investors with diversified exposure to a range of high-growth technology companies via both established and emerging venture capital managers.
The fund says it invests across multiple managers, vintages and sectors with holdings dating back to 2012.
Advance VC has announced the completion of its first close after launching a $15 million capital raise at the end of May with commitments received for nearly half its target.
Among the investors participating are Stake founder Matt Leibowitz, Decjuba founder Tania Austin, former SmartGroup CEO Deven Billimoria, tech entrepreneurs Nathan Cher and Rowan Simpson, Blackfox Property’s Marc Schwartz and LUXEM, the Joshua Slattery Family Office.
Advance VC also has secured support from LaunchVic via its VC Support Program.
“The arrival of Advance VC in Australia is a positive step towards a mature and world-class local ecosystem,” says Dean Bergin, partner at LUXEM.
“Advance VC offers an attractive investment product: broad coverage of high-performing tech companies in Australia, with a shorter timeline to liquidity.
“It provides sophisticated investors with uncapped upside through exposure to outlier outcomes, while being less concentrated than investments into single funds.
“LUXEM’s investment in Advance VC provides coverage of a range of strategies, providing a great complement to our investment in individual fund managers.”
Since inception, Advance VC has made investments into 11 VC funds, including vehicles from Blackbird and other established and emerging managers.
Through these holdings, the fund says investors gain indirect exposure to high-growth companies such as Canva, Airwallex, UpGuard, Zeller, Tracksuit, PsiQuantum, Kismet, Bridgit, Neara and Prophero.
“As a fund manager, I am a strong supporter of anything that provides flexibility and liquidity to LPs, founders and early employees who own shares in breakout companies,” says Michael Batko, CEO at Startmate.
“Startmate has invested in some of Australia's best tech companies over more than a decade.
“A thriving secondaries market rewards people who’ve built or invested in great companies early. It also attracts more talent and investment into the ecosystem, which benefits everyone.”
)
