Despite current macroeconomic conditions making for a difficult fundraising market, Blackbird successfully raised the largest fund ever managed by an Australian VC firm, according to partner and chief operating officer Alex Apoifis.
Blackbird raised A$1 billion ($671 million as of 11 November) for its fifth flagship fund from 270 investors, including domestic pension funds such as Aware Super, HESTA and Hostplus, Australia’s sovereign wealth fund, The Future Fund, New Zealand’s sovereign wealth fund and Elevate NZ Venture Fund, a fund of funds managed by NZ Growth Capital Partners.
With its record-breaking fund, Blackbird will continue to be one of the top investors in Australia. According to a report published by CB Insights, Blackbird was Australia’s most active investor in Q3 2022, investing in eight companies. The top five investors, all domestic firms, invested in a collective 25 deals.
“We’re very much open to make investments. We’re still super keen to get in as early as possible to the great new companies being formed and to continue supporting our existing companies that are showing signs of success,” Apoifis told Venture Capital Journal. “We’ll continue to deploy capital at a pretty steady rate regardless of the macro conditions.”
Founded in 2012, Blackbird describes itself as stage-agnostic, but prefers to invest “pre-revenue, pre-product, as early as possible.” The firm has invested in more than 100 Australia- and New Zealand-connected companies, including Canva, Culture Amp, SafetyCulture and Zoox, according to its website. For its newest fund, Blackbird plans to allocate roughly A$350 million to early-stage investments and A$650 million to follow-on investments.
The early-stage funds will charge the standard 2 percent management fee and 20 percent carried interest, while the continuation funds will charge a 1 percent management fee and 20 percent carry, with both carried interest percentages applying once the funds reach an 8 percent IRR hurdle, Apoifis said.
“One of the concepts we were founded upon was founders helping founders,” said Apoifis. “When we started, one of our target areas was people in the tech ecosystem who may have started their own businesses and exited or were in the process of generating wealth. We’ve been really fortunate that a lot of them have supported us through this.
“This time around we also made a concerted effort to reach out to the founders of our portfolio companies and just say, ‘Do you want to come back in and kind of complete the circle of life?’ And we got a lot of support from them. It’s one of the things we’re most excited about, the number of portfolio company founders that invested in this fund.”
CB Insights reported that $3 billion was invested across 382 deals in Australia through Q3 2022. Discounting the all-time high of $6.1 billion invested in Australian companies in 2021, the first three quarters of 2022 show a marked increase from 2020’s $2 billion, 2019’s $1.8 billion and 2018’s $1.1 billion.
Of the top 10 deals done in Q3 2022, Blackbird took part in three, including the largest, a $94 million Series B round in Wi-Fi chip developer Morse Micro. The firm also participated in the third-ranked $30 million Series B investment in category management software Hivery and led the sixth-ranked $24 million Series B investment in safety and wellbeing software provider Sonder.
Blackbird took the unusual step of publishing its performance in December 2021. Data on the firm’s website shows that Blackbird’s first fund (vintage 2013) produced a net TVPI of 33.5x and net IRR of 61.3 percent; Fund II (vintage 2015) produced a net TVPI of 11.1x and net IRR of 53.9 percent; Fund III (vintage 2018) produced a net TVPI of 4.1x and net IRR of 50.7 percent; and Fund IV (vintage 2020) produced a net TVPI of 1.4x and net IRR of 26.4 percent.