Investible closes $22m round to fund its portfolio approach towards picking startup winners
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For early stage Australian startups looking to get their business idea off the ground, it probably pays to book a meeting with Investible.
The Sydney-based angel investment firm is sitting on a fresh batch of dry powder, after closing its first early-stage VC fund this week with $22m in committed capital.
Investible took in an extra $2m from its funding network after initially targeting a $20m round.
That network is largely comprised of high net-worth investors and family offices, many of whom are also members of Club Investible — the fund’s invitiation-only network of sophisticated angel investors.
Speaking with Stockhead, the fund’s Investment Director Daniel Veytsblit said the extended network forms an important part of Investible’s product offering in the marketplace.
“We kind of leverage the club because they’re people who want to be more active at the seed stage,” he said.
“Around half of that group are entrepreneurs in their own right who have started, scaled and exited businesses and now are investing back in early-stage businesses.”
“It’s an important network to help us source deals and screen deals, and also support deals by sitting on advisory boards for companies operating in sectors where they have specific expertise.”
Investible screens more than 1000 companies per year and the fund aims to make around 15 investments annually. So far this year, it has provided seed capital for 12 companies.
Those investments join a portfolio of around 70 startups, with standouts including tech unicorn Canva and Ipsy, the makeup subscription service.
Discussing the size of the raise, Veytsblit said the fund targeted $20m because it’s an amount that ties in with Investible’s portfolio approach to early-stage investment.
By its risk-and-reward nature, seed investing is a bit of a numbers game where a small number of big hits offset the majority of companies that don’t find a way to scale.
“We want to have a diversified portfolio of 40 companies or thereabouts. So if we write an average cheque size of 300k, multiplied by 40 that’s an allocation of around 12m,” he said.
“The strategy then is to follow on with a group of 7-10 companies, and that follow-on cheque will typically be in the range between $750k to $1m — which takes you towards $20m.”
“So that’s why the $20m target is a good size, and being a bit oversubscribed gives us some flexibility — it means we can put a little bit more into each of our follow-ons, or add some diversity in the portfolio and go closer to 45 seed investments.”
Investible operates with an ESVCLP (Early Stage Venture Capital Limited Partnership) license in Australia, which makes it eligible for tax breaks on investment returns but restricts overseas investments to 20 per cent of the fund.
But while the majority of capital is deployed locally, the fund has also made early-stage investments in the US, Canada, Israel and New Zealand.
Veytsblit said not too much changes when looking abroad, although the fund typically takes a more collaborative approach.
“Generally in the overseas market we’re looking to partner with great local investors, whether that’s instos or VCs at the seed stage, or smart industry angels we know can support founders,” he said.
“So it is more of a co-investment approach, but the investment philosophy is still the same — we’re looking for great founders who want to build scalable businesses that have an unfair competitive advantage.”