Tech investor Blackbird Ventures has raised Australia’s largest fund to invest in nascent technology companies, with $1 billion to deploy in a market that has slumped since the giddy heights of last year.

The fund is betting that the long-term growth of the technology industry will render the ongoing downturn a blip, despite analysis firm PitchBook recording a 40 per cent drop in the value of US venture investments last quarter.

Blackbird co-founder Niki Scevak insists his fund won’t forget small start-ups.Credit:Louie Douvis

The quote: “[Technology has] succeeded in a big way over the past 10 years and we believe it will continue to succeed such that Australia and New Zealand will be in just the same position as America and China, where it’s the main industry, it’s the main show,” said Niki Scevak, Blackbird co-founder.

The numbers: The Tech Council of Australia, an industry lobby group part funded by Blackbird, commissioned a report that suggested the technology sector directly accounted for 3.8 per cent of GDP in 2021. It’s growing fast though and has a bigger indirect impact.

$US25,000: Blackbird’s smallest investment in the past 12 months. It won’t identify the company.

Behind the story:

• Blackbird wants growing companies to know that despite the downturn, it has cash available to fuel their growth as one of its main rivals, Square Peg, announced an $850 million fund just last week.
• It is signalling to small start-ups that it isn’t going to ignore them despite its sheer size. “We feel like we’re constantly fighting gravity to remind people there’s no cheque before Blackbird,” said Nick Crocker, a partner at Blackbird.
• But its size will also let Blackbird muscle in on deals, taking out entire funding rounds that rival firms may have hoped to also take a piece of.

The downside:

• Blackbird’s rivals, who did not want to speak on the record, fear the fund’s size, at about 35 times the size of its first fund a decade ago, will be bad for founders. They reckon it will generate heaps of cash for its investors and staff but mean its most senior staff will be stretched too thin to offer personalised advice to founders, who need counsel when they are growing their firms.
• And they caution that it may have to cut cheques at exaggerated valuations to deploy all its cash as quickly as investors expect.

The rejoinder:

• Scevak said the fund wasn’t that large. “That amount of capital is big for Australia but not big for the world,” he said. One US fund, Andreessen Horowitz, announced it had raised $US9 billion ($14 billion) earlier this year.
• Blackbird has hired staff, including people who can guide other professionals at levels below the founders of the companies it invests in.

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