New fund aims to be the Sharesies of venture capital

AUCKLAND: A second index fund from Icehouse Ventures, dubbed IV100 II, aims to democratise access to the venture capital game — just as Sharesies and Jasper have respectively opened up the sharemarket and commercial property to smaller investors.

IV100 II backers can chip in as little as $50,000 — a modest sum in venture capital fund terms — that is drawn down over four years.

The fund is coupled with a new investor portal, designed to make it easier to track how firms in its portfolio are tracking.

Icehouse Ventures chief executive Robbie Paul said investors could use those insights to choose which startups to invest in.

The second major characteristic of the $10 million IV100 II fund was that it would aim to eliminate risk by spreading its investment over 100 early stage companies.

Venture capital funds always invested in a relatively large number of companies, figuring that while most failed — as was the nature of startups — a couple of big hits would outweigh the losses. IV100 II dialled up this approach by investing in a ton.

Mr Paul said the new fund was inspired, in part, by two pioneers on the North American venture capital scene: Hambleton Lord, of Boston, who visited NZ last year, and Ian Sobieski, director of Silicon Valleybased Band of Angels.

Mr Paul noted Mr Sobieski was behind a fund that invested in 112 companies with a 40% internal rate of return over 12 years.

‘‘But if you took the top six companies out they were average. And if you took the top nine out, they were underwater,’’ he said.

IV100 II was launched in September and had so far raised $5 million invested in 10 startups, including Organic Initiative, Remotely, Refund Club, and HeartLab.

Mr Paul expected to have raised the full $10 million by Christmas.

It followed the earlier IV100 I, which raised funds in 2017 and backed its 100th company, Revolution Fibres, in March this year.

It specifically coinvested in wellfunded startups backed by one of its other active funds, such as Tuhua Ventures or the newly launched Level Two Ventures deep tech fund.

Some of its investments — such as the aforementioned Sharesies — had been outandout hits. Others, such as Halter, which is developing smart collars for cows, were still precommercial works in progress.

Mr Paul said IV100 II would invest across an ‘‘unprecedented’’ variety of founders, business models, industries, growth stages, and missions, taking in companies led by a diverse range of people.

Of its early investments, Remotely (gamifying meetings) and Refund Club (trying to ease the path for people getting refunds by credit card, such as travellers hit by Covid19 restrictions) are trying to carve out new territory.

Organic Initiative, or Oi, is run by veteran entrepreneur Helen Robinson, and developing certified organic menstrual products.

HeartLab, founded by 20yearold Auckland student Will Hewitt, is creating artificial intelligence to assist surgeons with cardiac procedures.

Which could have the best shot at becoming billiondollar success stories?

Mr Paul said the IV100 II approach meant there was not so much focus on picking individual winners — it was more about following an approach that would give a good shot that there would be some unicorns in its herd. — The New Zealand Herald