With the launch of its second co-investment fund, this month, Sydney Angels is seeking to raise between $10 and 20 million to invest in high-growth potential early-stage ventures.
Sidecar Fund 2 follows the first Sidecar Fund, which Sydney Angels launched in 2012. Sidecar Fund 1 attracted $10 million in capital from outside investors, to invest alongside (dollar for dollar) Sydney Angels members, and has benefitted 27 start-ups, which have gone on to raise a further $85 million in equity capital and grants to scale their businesses.
“Our first sidecar fund has successfully completed its five-year investment period and its portfolio of 27 includes a number of successful high profile ventures such as Ingogo, Fame and Partners, Instaclustr, and Clarity Pharmaceuticals, to name just a few,” said Richard Dale, Sydney Angels and Sidecar Fund Investment committee member.
“Early investments by Sydney Angels members have helped put start-ups on the path to success, including Atomo Diagnostics which was first invested back in 2011 and is now a player on the world stage, receiving substantial investments and grants from the Bill & Melinda Gates Foundation. Back then only angel investors could get into exciting early stage deals like Atomo, but since 2012 when Sidecar Fund 1 became operational its investors have had a stake in every deal Sydney Angels members do. We believe Sidecar Fund 2 will similarly provide investors with opportunities to support promising Australian start-ups as they scale innovative ideas into businesses of great value.”
Dale told Dynamic Business that establishing a diverse portfolio of start-ups is the primary objective of Sidecar Fund 2, which is now open to investors wanting to invest in promising early-stage ventures alongside experienced angels.
“The fund backs the companies that syndicates (teams) of Sydney Angels members invest in, after extensive filtering and due diligence,” he said.
“There’s no set criteria for a start-up to apply to Sydney Angels for funding, but there are plenty of key things which angel investors tend to look for in start-ups before making an investment decision. These include the product or service the start-up will be providing, the market size and potential, the team who is behind the start-up, their plan for success, the passion and skills of the founders and, to some degree, the valuation they present to us. We also want to make follow-on investments in those startups that go well and achieve their milestones after our initial investment.”
Dale said that investors who come on board with Sidecar Fund 2 will gain access to early stage investment tax benefits. He explained, “A fund of at least $10 million enables us to qualify for Early Stage Venture Capital Limited Partnerships (ESVCLP) tax free status. This means investors in the fund are exempt from tax on income and capital gains made through the fund. They also get a 10% tax offset when they invest in the fund.’’