Blackbird raises AUD $1.05 billion for record venture fund

Blackbird has raised AUD $1.05 billion for its sixth venture capital fund, the largest venture capital fundraise recorded in Australia and New Zealand.

The new fund includes backing from overseas institutions such as Adams Street Partners, Morgan Stanley Investment Management and Schroders, alongside existing Australian investors including Future Fund, Hostplus, Aware Super and HESTA.

The capital will support Blackbird's long-running strategy of investing in founders at the earliest stages and increasing its stake as portfolio companies grow. The firm has built that model around pre-seed and seed investing, with 96% of initial investments from its previous early-stage fund made at those stages.

The raise adds to signs of deeper international interest in Australian and New Zealand technology companies, as local venture investors try to show global institutions the region can produce companies of scale.

"We're honoured to welcome a number of new investors from around the world. This raise reflects both the growing global interest in Australian and New Zealand founders and the enormous opportunity ahead, as the boundaries of what small, ambitious teams can build continue to be redrawn," said Samantha Wong, Partner at Blackbird.

Founded 14 years ago, Blackbird has backed more than 190 companies across Australia and New Zealand, as well as founders from the region working abroad. Its portfolio includes Canva, Halter, Heidi, Eucalyptus, Baseten and Gilmour Space.

Blackbird was Canva's first institutional investor and wrote its first cheque to Halter when the company had three customers. It remains the largest shareholder in both businesses and has built a 35% position in healthcare artificial intelligence company Heidi.

Track record

Blackbird has four decacorns, six unicorns and more than 46 companies valued at hundreds of millions of dollars. Across its funds, it has invested more than AUD $3 billion, and its portfolio is valued at more than AUD $12.5 billion.

The firm has returned more than AUD $2.25 billion to investors at a net internal rate of return of 32%. Nine of its funds rank in the top quartile globally for their vintage year, with six in the top 5%.

The latest raise marks a sharp increase from Blackbird's inaugural AUD $29 million fund in 2013. Even with the larger pool of capital, the firm said it would maintain its focus on backing founders before revenue, before product and, in some cases, before an idea is fully formed.

"This fund allows us to continue our multi-stage strategy. Every generational company we've backed started as a wild idea. We've come a long way from our inaugural $29M fund in 2013, but even as the fund size increases, we're investing in founders earlier than ever - pre-revenue, pre-product, and sometimes even pre-idea. We backed Canva when it was just an idea, so it is in our DNA to believe in founders before anyone else does, then double down our conviction as they scale globally and redefine their industry," said Rick Baker, Partner at Blackbird.

Institutional backing

Several of Blackbird's domestic backers described the new fund as part of a long relationship with the firm and with the wider venture market in Australia and New Zealand.

"We first backed Blackbird in 2015, when Australian venture capital was still an emerging asset class, and have partnered with them through every vintage since. Over that time, the relationship has delivered strong outcomes for our members while helping support an ecosystem that is now producing globally significant technology companies from Australia and New Zealand," said Rishi Dua, Portfolio Manager, Private Equity, at Aware Super.

"Blackbird has established itself as one of the leading venture investors in the region, with a proven ability to identify and back exceptional founders early. The strength of the team, the quality of the portfolio, and their continued access to the next generation of technology companies across Australia and New Zealand made participating in this latest fund a compelling opportunity for us," Dua added.

HESTA also pointed to the overlap between financial returns and exposure to technology businesses operating in sectors relevant to its members.

"HESTA has partnered closely with Blackbird for over six years, building investments in some of the most ambitious tech companies in Australia and New Zealand. Companies like Heidi Health demonstrate the opportunity, where we aim to deliver strong long-term returns to members while having a positive impact on the sectors many of them work in," said Jeff Brunton, Deputy Chief Investment Officer and Head of Portfolio Management at HESTA.

Tech economy

The fundraising comes as investors continue to debate the depth and durability of the region's technology sector. Blackbird cited figures showing Australia's technology ecosystem is growing about 50% faster than the broader economy, contributing roughly AUD $248.5 billion, or 8.9% of gross domestic product, and employing almost one million people.

Within its own portfolio, Blackbird said its companies employ more than 17,000 people across Australia and New Zealand and generate more than AUD $11 billion in annual revenue.

Wong said Blackbird's market position gives it access to a large volume of early-stage founders each year. "Being at the centre of the ANZ ecosystem allows us to meet thousands of founders every year. Our new funds give us more capacity and more capital to do what we love, which is to back outlier Aussie and Kiwi founders, right from the very beginning," she said.