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Published 28 May 2013 11:51, Updated 29 May 2013 08:07
Garry Visontay, Benjamin Chong and Ari Klinger’s fund offers opportunity and substantial risk. Photo: Sasha Woolley
A trio of Sydney entrepreneurs have launched a new venture fund that is seeking out 20 early-stage start-ups for investments of around $100,000.
Founded by Benjamin Chong, Garry Visontay and Ari Klinger, the Sydney Seed Fund is offering investors compelling valuations in rapidly growing companies and the chance of lucrative exits, but at a substantial risk.
It will target only companies that are less than 18 months old with “seed funding” – early injections of capital that are typically sought from family members or angel investors. Accelerators and incubators like BlueChilli, Pollenizer and Ignition Labs also seek out early-stage start-ups with advice and assistance raising funds.
“This target investment sector is currently underserved and offers a huge opportunity with no direct professional competitors," says Garry Visontay, an angel investor and entrepreneur who is chairman of DesignCrowd and RecruitLoop.
“Historically this is often the phase of a start-up’s development that offers highly attractive wholesale valuations, rapid growth and potential for relatively quick exits as larger capital providers such as VC and private equity funds or strategic investors seek to gain a position.”
The fund will target internet and technology companies that are less than 18 months old and are showing signs of potential growth. They can be prototype companies but need to have what the fund judges as a sound management team, global scalability and a clear exit mechanism.
With a life of eight years, fund managers plan on investing between $50,000 and $150,000 in 20 companies to a total of $2 million.
The founders also hope to build long-term relationships between fund investors and the target companies, assisting them with fund-raising and resources later on.
Benjamin Chong is a co-director of the Sydney Founder Institute who has built a number of internet companies including Online Agility and Jetabroad. Ari Klinger was the co-founder and CEO of iMega which he sold in 2006, and also Online Marketing Group. He is a partner at Right Click Capital.
“We’re trying to build an ecosystem around the fund, it’s more than just a pure fund,” Visontay says. “We’ve got our investor community who we’re going to open the doors to, so they can be as active as they would like in these businesses. There will be passive investors and some active ones which will show more of an interest.”
Social events will strengthen the network, he says, and there are high-profile entrepreneurs overseas acting as advisers. They include San Francisco-based Adeo Ressi and Fadi Bishara, Los Angeles-based David Siemer, and Singapore-based Jeffrey Paine.
“We have four high-profile international advisers who will act as a conduit out of the country for the companies as they look for international capital,” Visontay says. “Also they are a source of deal-flow coming back into the investors in our funds from overseas.”
He says he is reaching out to tech-savvy investors, and those who don’t understand the sector but want to be involved. But like any early stage fund, it is risky.
“We’ve probably got three profiles: tech investors who want to get access to more deal flow and have more diversity in their investments, general high net work investors who don’t have much tech knowledge and would like to have exposure to the tech space, and we have also had interest from family offices that want to spread their net further and get exposure to the tech space which they’re typically not too involved in.”
“Any type of investment in the tech start-up space is very high risk, but it’s countered by potentially very high reward as well.”