Purpose Ventures raises $37m

A new fund to invest in Western Australian startups has raised at least $37 million, including $10 million foundation investment from a major local entrepreneur.

Purpose Ventures, established by Derek and Kylie Gerrard, sought at least 20 investors to put in at least $1 million each after receiving the commitment of the Steinberg Family Office, the private investment vehicle of Time Zone founder Malcolm Steinberg. 

Purpose Ventures will operate as an Early Stage Venture Capital Limited Partnership, a tax effective structure that requires that no more than 30 per cent of a fund is from any single investor.

“I am passionate about seeing the success of the next generation of WA entrepreneurs and believe our quality of life is directly related to the amount of wealth generated by the community,” Mr Steinberg said in statement announcing the official launch of Purpose Ventures.

“Modern technology and innovation has been an important factor in the development of a number of recent Australian unicorn companies that can generate this type of wealth for our state,” he said.

“The lack of early-stage funding in WA was clear and we believed that backing Derek and Kylie and the Purpose Ventures Fund was the best choice in accelerating our local venture capital market.

“Their experience and the team they have gathered should put WA on the national stage as a place founders can get funding and support to scale global companies from.”

The Gerrards were with energy and water monitoring software group Greensense from its launch in 2008 to its 2014 sale to ERM Power, with Mr Gerrard running the business during that time. They were then involved in the WA launch of national networking group Innovation Bay and, more recently, have been players at incubator group Spacecubed.

In between, Mr Gerrard took on the role of venture fund manager at the RAC-funded BetterLabs which had about $23 million to invest in innovations and the companies behind them.

Mr Gerrard also points to his investment banking background at Barclays in the early 2000s as a being dealmaking background he thinks is important to making investments and exiting them profitably.

“This was a 10 year commitment,” he said.

“In October last year we made that decision.

“Malcolm agreed to be the cornerstone investor.

“We have talked to 100 or more investors, all in WA, to see if there was support to get this fund to a minimum $30 million which we felt we needed.”

Mr Gerrard said Purpose Ventures would pay half of any performance fee earned into a new foundation to fund WA charities, a field he knows well as chair of Meridian Global Foundation, an innovative charitable organisation.

The experienced venture capitalist said the environment for early stage venture capital funds was improving.

He said people who made money here in sectors like mining and property had tended to continue in those fields, but that was changing, and wealthier people were diversifying.

Mr Gerrard added that investing in venture capital funds was all about backing a team of people, highlighting the group Purpose Ventures had gathered as venture partners, being HealthEngine founder Marcus Tan, infrastructure adviser Nicole Lockwood and Spacecubed founder Brodie McCulloch.

Mr Gerrard said major success stories out of WA, like Canva, also highlighted that there was the potential for major rewards for this kind of investment.