For a venture investment firm with a relatively short history, Jelix Ventures has made some waves since it first launched in 2014.

Established by husband and wife team Ian and Andrea Gardiner, the inspiration to start the company was drawn in part from Ian’s first business Innovation Bay — a local platform offering education and networking opportunities for entrepreneurs.

Through various pitch events held on the platform, the pair gained exposure to plenty of great investment ideas. Speaking with Stockhead, Andrea said it raised an obvious question — “Why was there no money for it?”

“We hypothesised there was a lack of expertise and therefore confidence in that early high-risk stage of investment,” she said.

That led to the formation of Jelix, which then led an investment round in data management company StorReduce.

After partnering with Amazon Web Services and building early momentum, StorReduce was recently purchased by US tech hardware giant Pure Storage.

In that sense, it became one of the rare jewels in Australia’s startup crown — a company which scaled from the pre-revenue stage to a successful exit, which saw early investors make 10 times their money.

Getting the structure right

Jelix is now finalising terms with a large US investor to establish a multi-million dollar fund.

Not all of the capital will be deployed in early-stage startups, commensurate with an appropriate risk profile.

“Where we’ve had really strong deal flow is in that early end, the seed stage,” Gardiner said. “But we don’t expect our fund to finance entire rounds.”

Jelix can invest in seed and Series A rounds with its existing syndicate of investors, with extra capital to be deployed down the track.

“That way we can prove our value and earn the opportunity to invest in later rounds. We are structuring it so 30 per cent of funds are for early stage, with 70 per cent for the later investments — which will probably be follow-up investments on those Series A rounds,” she said.

Coming of age

“Sequoia Capital, Accel Partner, Index Ventures — there’s a few and they’re starting to actively invest in Australia.”

“Australia is a less hotly contested market, and I think they see where they can add value in terms of helping companies scale internationally.”

Gardiner said valuations are cheaper in Australia at the Series A stage.

“The cost to get in is lower, and it’s cheaper to scale here than in Silicon Valley. Companies there are competing with big salaries that Facebook and Google can offer, so it’s a lot more expensive.”

“We’ve also got entrepreneurs like the Atlassian founders who are active investors in startups. There’s loads of accelerators and incubators. So I think we’re coming of age.”

Wake-up call

However, Gardiner said she’s becoming increasingly worried about the lack of support from policy makers, which could stunt further growth.

“I know plenty of startups that are moving overseas because of the government incentives.

“One of our investors took us to China last year and the amount the Chinese government is offering foreign startups to bring the tech to China and commercialise it there was jaw-dropping.

“London, Singapore, New Zealand – governments are all investing very significantly in innovation and the startup sector.

“The government needs to drive home the message that while tech does take away dreary jobs, it’s also the sector creating interesting high quality jobs.”

As a measure of the sector’s importance, Gardiner highlighted a recent report which showed 90 per cent of new jobs in Australia are created by companies less than two years old.

“Innovative startups are a critical economic imperative for Australia, so it’s really important that we create those jobs here.”