By: Jeremy Colless
We estimate approximately $700M is required per year. Seed, Angel and Series A appears to be mostly available however later stage funding is still not yet sufficient in Australia. As an ecosystem, we will probably always require investment from global Venture Capital (VC) firms.
Being the world’s third largest pension fund industry with total assets of almost $1.9T in 2015 (according to the Australian Trade & Investments Commission), we believe the Australian Superannuation industry has an important role to play in filling this funding gap.
There is plenty of room for superannuation funds in late stage VC. We estimate a funding shortfall in Australia over the next 5 years of approximately $2.2 B (or $8.8B over 20 years) – mostly in Series B rounds and later.
It is important to note that not all super funds are the same – some have younger demographics and are more suited to long horizon investments. Therefore, the opportunity for super funds is actually not to invest in existing VC structures but to invest in proprietary/bespoke structures. Those that just become a Limited Partner in a VC Fund are hostage to 5-10 year investment horizons. In their own vehicle they can take much more patient investments and have a distinct competitive advantage over VCs who must liquidate funds after 10 years.