Venture capital managers Rob Newman and Matt Callahan have completed a major restructuring and expansion of their Perth business, which has about $60 million under management.
The restructuring included a transition from Foundation Capital, which was Perth’s first dedicated venture capital investor when it was set up a decade ago, to a new company structure, trading as Stone Ridge Ventures.
The new company has gained strong backing from Perth-based superannuation fund Westscheme, which has become a big investor in university research and venture capital across Australia.
Stone Ridge will manage four venture capital funds, including three funded by Westscheme, which are focused on commercialising research from the state’s universities.
Investment director Mr Newman believes Stone Ridge is filling a gap in the Western Australian market.
“We occupy a really unique place in the marketplace,” he said. “We close the gap between research and the classic venture capital.”
Mr Newman said Stone Ridge planned to get involved very early, usually when researchers had reached proof-of-concept stage.
“We bring in both the capital and the management team. We get involved very early and help to turn it into a company.”
The restructuring completed a process that started nearly two years ago, when Foundation’s founding managing director Ian Murchison retired and the group stopped providing growth capital to established businesses.
Former investment director Mark Dutton has continued to pursue the latter business through his new employer, Malaysia-based Navis Investment Partners, which last month agreed to invest $40 million in Perth company National Lifestyle Villages.
The funds being managed by Stone Ridge include the $10 million Murdoch Westscheme Enterprise Partnership fund, which was set up in 2004 to support the commercialisation of research coming out of Murdoch University.
Stone Ridge will be the fund manager for MWEP, while Murdoch staff will continue to source and manage intellectual property within the university.
The $10 million technology fund has been established to commercialise intellectual property coming from places other than Murdoch.
This could include other universities, research institutes and the proverbial backyard inventor.
Mr Newman said the two funds were likely to invest in about six new ventures each year.
Stone Ridge may co-invest with other funds, such as Curtin University’s ‘seed capital’ fund, and would also seek federal government research and development grants.
By pooling this money, Mr Newman expected new ventures should be able to get about $1 million very quickly.
Promising ventures would be able to seek ‘second round’ funding from a third loosely structured ‘fund’, also backed by Westscheme.
The follow-on funding would be sought on a case-by-case basis and would mean that Westscheme would be able to maintain its equity interest in the new ventures, rather than being diluted by other investors.
Stone Ridge’s fourth fund is the long-running $35 million Foundation Innovation Investment Fund, which has invested in 12 companies.
Mr Newman said the foundation fund was not seeking new investments but was able to supply extra money to existing investee companies.