Blackbird closes $1 billion fund, says it will continue early-stage investment strategy

Investment powerhouse Blackbird Ventures just closed a mammoth $1 billion venture fund — the biggest Australia has ever seen. And according to co-founder Rick Baker, it will use the cash to keep investing in early-stage startups.

The majority of funding for Blackbird’s fifth fund has come from superannuation giants such as HostPlus, AustralianSuper, NGS Super, Telstra Super and Aware Super. They are joined by several private investors, as well as some Australian and New Zealand sovereign wealth funds.

This news follows Square Peg’s new $860 million fund just last week. According to Rick Baker, Blackbird’s own announcement wasn’t a ‘hold our beer’ moment.

“No, it was just a coincidence. We’ve been planning this timeframe for quite a while,” Baker laughed during a call with SmartCompany.

“We were waiting for the final pieces of the funds to come into place and didn’t know that square peg is going to announce.”

Blackbird will continue to invest in early-stage tech startups

Blackbird has been investing in early-stage tech startups for more than a decade, with the likes of Canva, Culture Amp and SafetyCulture in its suite of portfolios.

With such a huge raise, there have been questions on whether there are planned changes. According to the VC, it plans on staying the course when it comes to its early-stage funding strategy.

“We try very hard to be the first capital into a brand new company and to back the founder right at the beginning,” Baker said to SmartCompany.

According to the company, 70% of its investments are pre-revenue, sometimes before a company has made a sale or even completed a product, and it plans on keeping it that way.

“What we’re really looking for is founders with huge ambitions to be the best in the world, with ideas and insights about how to solve a problem,” Baker said.

“We are now in a great position that we can continue supporting them with capital all the way through their lifecycle and in the private markets.”

Blackbird also plans on staying quite firmly within the tech space, with its bread and butter residing in software startups. Some of its recent investments in this space include Blinq and Dovetail.

“65% of what we do is software based — we still really love Software-as-a-Service, particularly models that use bottom-up sales models that are global, right from the beginning,” Baker said.

Baker also says there has been an increase in interesting software tools and projects in the cybersecurity space in Australia.

But the team also likes to have a bit of extra fun, investing in what it calls “frontier technology” ideas. This includes the likes of rockets, climate technology, satellites and alternative protein businesses.

“We’re looking for pockets of brilliance and insights and expertise in Australia and New Zealand and we see them and we jump all over them and try and help them as much as we can,” Baker stated.

A turnaround for Australian startup investment

The economic turmoil of 2022 has seen a significant downturn in startup investments, especially compared to the boom of Q2 2021. But with the huge new funds announced by Blackbird and Square Peg, perhaps a change is on the horizon.

According to Baker, the current tightened market is a good time for investing.

“It’s a time where we can really seek out founders who are doing their life’s work where we can spend time with them before having to make an investment decision,” Baker said to SmartCompany.

“We can make sure that we’re both well aligned on the mission and the vision of the business.”

Baker also says that this is a time of maturity in the Australian startup ecosystem.

“In past financial downturns, the Australian venture capital ecosystem has really been smashed around and struggled to then recover,” Baker said.

“I’m really confident that it has now the maturity and the momentum to be able to push through this period of macro uncertainty.”

Baker says the pool of capital for Aussie startups comes at a time of economic transition for Australia

” I think it will be driving business stories for the next decade as Australia moves from a resource-based economy to an innovation-based economy. That is really special for really important for the nation.”