Australian superannuation fund, Hostplus has invested AU$85 million in Artesian, a venture capital firm that will bring the venture capital’s total investment funds to $150 million. The investment will be used to support early-stage startups in Australia.
With a focus on managing corporate bonds, relative value trading, and credit arbitrage, Artesian has been managing fixed income funds since 2004. Since 2008, the firm has been operating as an active seed and early stage VC in Australia and China.
Providing context to the Australian startup ecosystem, Artesian managing partner Jeremy Colless says that there are now more than 10,000 startups being formed in Australia over a 5-year period. Jeremy adds the hurdle that VCs, corporate investors, and acquirers, and other later stage institutional investors face is that 90% of the 10,000 startups being formed are uninvestable and are to be avoided. He went on to say,
It is difficult for traditional VCs and other late stage investors to scale their normal deep-dive due diligence processes across so many ventures at this early stage.
Colless revealed that the company pre-screens more than 2000 startups annually and select the top 5 to 10% to participate in Artesian’s accelerator programs and follows on startups that raise further rounds from external or VC investors.
The focus of the company now is scalable high growth potential startups that can build and exit their business on a relatively low lifetime capital.
Meanwhile, Hostplus is the industry superannuation fund that focuses on providing superannuation services in the hospitality, tourism, recreation, and the sport industries. Hostplus now aims to invest 4% of the $20 billion it manages into venture capital. It has already fueled $350 million into the sector, which includes this deal with Artesian.
Commenting on Hostplus, he states,
Hostplus has almost single-handedly reinvigorated institutional support for Australian start-ups and entrepreneurs. Without the vision and commitment of chief executive David Elia and chief information officer Sam Sicilia, the investment management team and the board of Hostplus, high-growth Australian ventures might struggle to build traction, create new products, jobs, have material exits and go on to motivate, support and inspire a new and even larger number of innovative, risk-taking founders.
By 2018, partnering with accelerators, incubators, investors, and universities, Artesian aims to co-invest in 500-1000 startup investments.