Artesian Venture Partners has secured AU$85 million from Australian superannuation fund Hostplus, with around half to be used for investment in early-stage startups in Australia and the remainder being invested in later-stage funding rounds.
Hostplus has invested more than AU$350 million into Australian venture capital firms including MH Carnegie & Co, Brandon Capital, Blackbird Ventures, and Square Peg Capital.
Hostplus CEO David Elia and CIO Dr Sam Sicilia have both communicated in the past that the fund's young membership demographic enables it to have a higher risk tolerance and invest for the long-term where the payoff is 15 or more years away.
"One of the benefits of having a relatively young member demographic like Hostplus is that it gives us much greater ability to invest in unlisted markets, such as property, infrastructure, and private equity over the long-term. In turn, our unlisted assets provide the fund with broader investment diversification and the downside protection from the volatile nature of listed markets that accompany increased global uncertainty," Elia said previously.
Jeremy Colless, managing partner at Artesian Venture Partners and founder of equity crowdfunding platform VentureCrowd, praised Hostplus, saying it "almost single-handedly reinvigorated institutional support" for startups and entrepreneurs.
Colless told ZDNet that a key risk for Hostplus is that the VC funds it has invested in "do not subsequently provide reasonable risked adjusted returns". The super fund is mitigating this risk by investing across a range of Australian VCs each with different strategies and investments.
Artesian VC, which was spun out of ANZ Banking Group's capital markets business in 2004, claims to employ "a unique, scalable approach to early stage VC". It partners with accelerators, incubators, university programs, and angel groups to identify promising early-stage startups for concentrated later-stage investments.
"There are now more than 10,000 startups being formed in Australia over a five-year period. The challenge for VCs, corporate investors and acquirers, and other later stage institutional investors is that 90 percent of the 10,000 startups being formed are uninvestable and to be avoided," Colless said.
"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".
Artesian's partners, which include Sydney Angels, BlueChilli, University of Wollongong's iAccelerate, Slingshot, University of Queensland's ilab, SproutX, and Energylab, pre-screen more than 2,000 startups every year, selecting the top 5 to 10 percent to participate in their accelerator programs, according to the VC firm.
Artesian has the right to invest in every pre-screened startup and has pro rata rights for subsequent rounds, the VC firm said. It continues to invest in the startups with the greatest material traction heading for trade sale or IPO exits.
Artesian's Australian VC portfolio includes nearly 100 investments including Fame & Partners, GetSwift, HeyYou, Instaclustr, Clarity Pharmaceuticals, CriticalArc, Ingogo, Jayride, and Gamurs.
The firm has also invested in China-based startups such as Dr Panda, Italki, Tradesparq, Rechaos, and Aidaijia.
In addition to investing in Australian ventures, Artesian and Hostplus said they will also be eyeing startups in China.
Updated AEDT 03:28PM: Added comments from Jeremy Colless.