New Icehouse Ventures fund wants to be the Sharesies of venture capital

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 VC fund terms – that is drawn down over four years.

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

Investors can use these insights to pick and choose the individual startups they like the most, identify opportunities where they can help the startups grow faster, and then invest further in their subsequent rounds, Icehouse Ventures CEO Robbie Paul says.

The second major characteristic of the $10 million IV100 IIfund is that it will aim to eliminate risk by spreading its investment over 100 early-stage companies.

VC funds always invest in a relatively large number of companies, figuring that while most fail – as is the nature of startups – a couple of big hits will outweigh the loses. IV100 II dials up this approach by investing in a ton.

Paul says the new fund was inspired, in part, by two pioneers on the North American VC scene: the Boston-based Hambleton Lord, who visited NZ last year, and Ian Sobieski, the San Francisco/Silicon Valley-based MD of Band of Angels.

Paul notes that Sobieski was behind a fund that invested in 112 companies with a 40 per cent 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 says.

IV100 II was launched in September. It has so far raised $5m invested in 10 start-ups, including Organic Initiative, Remotely, Refund Club, and HeartLab.

Paul expects to have raised the full $10m by Christmas.

It follows the earlier IV100 I, which raised funds in 2017 and backed its 100th company, Revolution Fibres, in March this year. It specifically co-invests in well-funded 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 – have been out-and-out hits. Others, like Halter, which is developing smart collars for cows, are still pre-commercial works in progress.

Paul says IV100 II will 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 – think Air NZ travellers hit by Covid restrictions) are trying to carve out whole new territory.

Organic Initiative or Oi is run by veteran entrepreneur Helen Robinson, and developing organically-certified tampons, pads and liners.

HeartLab, founded by 20-year-old Auckland student Will Hewitt, is creating AI that will assist surgeons with cardiac procedures.

Which could have the best shot at becoming billion-dollar success stories?

Paul says the IV100 II approach means there’s not so much focus on picking individual winners. It’s more about following an approach that will give a good shot that there’ll be some unicorns in its herd.

“In an asset class defined by one-in-one-hundred outliers, missing one outlier can be the difference between success and failure. Local investors in 2008 did not know they would be defined by wireless power or accounting software,” he says, referring to Auckland startup PowerbyProxi, sold to Apple for more than $100m and Xero, which is now listed on the ASX and worth around $17 billion.

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