While there are 113 early stage venture capital limited partnerships (ESVCLPs) in Australia, until recently, there wasn’t a single one in WA. No wonder local startup founders would decry the lack of venture capital in our State.
One of three state government-supported funds to be announced in recent weeks, Kylie and Derek Gerrard‘s Purpose Ventures is the first cab off the rank, having also closed a $37M fund in 6 weeks.
On 1st February 2023, Purpose Ventures became the first WA-based fund to receive conditional ESVCLP registration 4.
Derek Gerrard, Managing Director of Purpose Ventures, suggests WA is at least five times under-represented on access to local venture capital and the difference can be seen on the maturity of the startup ecosystems of the East coast versus WA.
While there is $4.3B in funds in the 113 ESCVPs in Australia, only 1% of this has been invested in WA startups. It’s a shocking statistic, argues Derek.
“While much of the supporting startup ecosystem has improved in WA [in recent years],” said Derek, “the lack of WA-based venture capital often results in WA’s best entrepreneurs being compelled to relocate their businesses to the Eastern venture-capital-limited-partnerships states, or overseas, in search of funding, taking with them local IP, job creation and wealth creation.
In many cases I believe these businesses would have remained in WA and run their businesses locally, had early stage capital investment been available to them from WA sources, which would then contribute to our own economic growth and prosperity. This is the problem that Purpose Ventures intends to solve.
Derek Gerrard
“We believe that there is enough deal flow in WA to warrant a primarily WA-focused fund that leverages the industries, time zone and geography that is uniquely West Australian. A WA-based fund, that is led by a WA-based team, that understands and utilises the local market and networks, can provide investors access to a portfolio of early-stage companies that are otherwise not visible to other venture capital funds, and gives our next generation of entrepreneurs an opportunity to build great, innovative companies.”
Purpose Ventures opened its fund to investors on 8 February and while Silicon Valley Bank was collapsing, they reached a first close on 22 March with $37m, all from WA investors. The fund will look to invest in early-stage companies and has committed that 70-80% of their investments will be for WA-founded or operated businesses.
The Fund Managers have also committed that half of their performance fees will be put into a foundation to support philanthropic initiatives.
Well known team
Derek and Kylie Gerrard are well known in the startup community having been major contributors over the last decade. Kylie ran the Perth chapter of the angel investor network Innovation Bay, prior to leading Spacecubed’s Plus Eight Accelerator, and is also part of the West Tech Fest organising committee.
Derek is known for establishing WA’s only other structured venture fund, the RAC-backed BetterLabs Ventures $23m fund, which he has now left to start Purpose Ventures . Prior to this he had exited his own startup company Greensense.
The husband and wife team have assembled an impressive list of venture partners, who have also been some of the largest contributors to the startup ecosystem in WA including Dr Marcus Tan, founder of HealthEngine, Nicole Lockwood, has various roles under Lockwood Advisory, and Brodie McCulloch, founder of Spacecubed.
The fund has been backed by the Steinberg Family Office as a cornerstone investor and has subsequently attracted investment from some of WA’s largest companies and high-net-worth families.
“I am passionate about seeing the success of the next generation of WA entrepreneurs and believe our quality of life is directly related to the amount of wealth generated by the community,” said Malcolm Steinberg, famous for founding Time Zone back in the day.
“Modern technology and innovation has been an important factor in the development of a number of recent Australian unicorn companies that can generate this type of wealth for our state.
The lack of early stage funding in WA was clear and we believed that backing Derek and Kylie and the Purpose Ventures Fund was the best
Malcolm Steinberg
choice in accelerating our local venture capital market. Their experience and the team they have gathered should put WA on the national stage as a place founders can get funding and support to scale global companies from.
The Purpose Ventures Fund is predominantly industry agnostic, with a 15% carve out for health-related investments. The fund says it will primarily focus on WA-based founder-led companies that are “using innovative technology and approaches to expand into large markets locally and overseas, and which need strategic and operational support as well as capital contribution”.
Purpose Ventures was also recently supported by the WA State Government’s New Industries Fund, from the Department of Jobs, Tourism, Science and Innovation who have provided some operational funding for the first three years to assist in the establishment of the fund under their WA Ventures Support (WAVES) program.
Purpose Ventures is now open for business – for more information, and to apply for funding, visit their website.
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Purpose Ventures, Fund WA and Quokka Capital will be presenting at this week’s Perth Morning Startup (which is also live streamed and recordings are shown here: https://perthvideo.com.au/morning-startup-perth/).
An info session from Purpose Ventures will also be held on Tues 11 April 4-5pm.
Spacecubed is a sponsor of Startup News.
