Eco Investor June 2011

Unlisted Funds

Sidecar Fund for Entrepreneurs and Angels

Australia’s First Angel Sidecar Fund has completed its initial capital raising of $10 million and has announced a partnership with venture capital firm MH Carnegie & Co.

Fund manager, Proto Investment Partners and Sydney Angels say the Sydney Angels Sidecar Fund will stay open for another three months and aims to close with a maximum of $15 million in capital.

Proto, as manager of the Fund, will co-invest with Sydney Angels’ members in early-stage ventures, including suitable cleantech ventures.

MH Carnegie & Co is an investor in the Fund and a partner targeting larger co-investments.

Proto director Jeremy Colless said “The Fund will commit around 50 per cent of its capital to second round investments in early stage ventures. The added draw of larger co-investments by MH Carnegie & Co, in addition to the Fund’s investments, will provide a compelling alternative for Australian early stage ventures that currently are forced to head offshore for later capital rounds.”

The Fund’s exclusive partnership with Sydney Angels capitalises on the angel group’s ability to provide, evaluate and manage early-stage investment opportunities. Such an arrangement between a fund and an angel group is commonly referred to as a “sidecar fund”.

The investors in the Fund are a diverse mix of Sydney Angels’ members, individual angels and domestic and international sophisticated investors.

Sydney Angels co-founder and Proto director Vivian Stewart says it is a landmark event for the angel sector in Australia.

“One of the challenges entrepreneurs typically face is simply raising enough money to reach relevant milestones. A second challenge lies in trying to source follow-on funding without being distracted from executing the business plan. We believe the Fund will address both these issues by increasing the available pool of capital at the angel stage.”

The Fund expects to invest in 25-30 early-stage companies over the next five years. Investments will range in size from $100,000 to $500,000 including follow on investments. Entrepreneurs can applying for funding via the Sydney Angels website.

Sydney Angels has invested in eight deals so far. These are:
- Drive My Car Rentals
- Posse - Hungry Giant
- Buzz Numbers
- Heard Systems
- Big Richard
- Bubble Gum
- Thread People

The Hungry Giant is a cleantech business commercializing waste management and recycling equipment.

For investors, the Sidecar Fund provides access to early-stage deal flow sourced, screened and coinvested by Sydney Angels’ members; and portfolio diversification from traditional equity and fixed income investments.

Approval as an Early Stage Venture Capital Limited Partnership (ESVCLP) from Innovation Australia will provide investors with tax free returns.

 

 

 



 





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