Blue Sky Venture Capital, a division of Blue Sky Alternative Investments Limited, is looking to raise $30 million for a new fund in a bid to capitalise on Australia’s underpenetrated and cash-starved venture capital sector.
It’s worth noting that $30million is a pretty considerable amount considering the fact that just $100 million was raised for venture capital in Australia in the whole of 2013.
The new fund is targeting a 30 per cent internal rate of return net of fees, and will have its first close on 22 August 2014. Blue Sky is applying for registration as an Early Stage Venture Capital Limited Partnership, so returns to investors will be tax exempt.
Blue Sky Venture Capital investment director Dr Elaine Stead remarked that competition for high quality venture capital deals in Australia was at an 11 year low, with a mere $100 million of capital invested in 2013, compared to $29 billion in the United States.
“There has been no better time to invest in the Australian VC market,” Dr Stead said.
Looking to stand out from the crowd
While 80 per cent of all venture capital investment goes into the earliest stage companies, including start-ups, Blue Sky intends to focus on the underpenetrated and lower risk late venture capital and early stage expansion sector.
The firm also pointed out that they intend to maintain a technology and industry agnostic approach, unlike most other venture capital firms which typically invest roughly 80 per cent of their capital in the crowded biotechnology and IT spaces.
How does Blue Sky’s track record look so far?
Blue Sky currently manages $600 million worth of assets across private equity (PE) and venture capital, hedge funds, real assets and real estate.
The PE and VC division has delivered a 16.3 per cent internal rate of return net of fees since inception to investors within its funds, far higher than the 4.9 per cent industry benchmark.
Blue Sky invests both locally and internationally, from Sydney to Silicon Valley, and also partners with other international venture firms. The firm recently formalised a partnership with North American healthcare specialist fund, Five Corners Capital.
Early stage investments in which Blue Sky has been involved include Mexican restaurant chain Beach Burrito Company, biotech company Hatchtech and online retailer Pet Circle.