Derek Gerrard (left) and Terry Agnew.

RAC launches $3m seed fund

Wednesday, 12 September, 2018 - 15:35

Startup businesses in Perth have access to a new source of funding after the Royal Automobile Club of WA launched a $3 million investment fund last night, while also disclosing it is a substantial shareholder in fast growing blockchain business Power Ledger.

The BetterLabs Venture Fund will be run by Derek Gerrard, who has recently been engaged as the RAC’s entrepreneur-in-residence.

Mr Gerrard is well known in the startup community.

He established the Perth chapter of Innovation Bay, which has invested more than $3 million in Perth startups since 2015 and is a director of Go Capital, which has invested over $10 million in startups, including Health Engine and iCetana.

The new fund will initially build a portfolio of around 10 companies and is likely to invest between $100,000 and $500,000 in each business.

Mr Gerrard told last night’s launch BetterLabs would be a genuine seed fund, and that meant it was prepared to invest in very early stage businesses seeking to validate their product and business model.

This could include businesses that do not yet have any revenue.

“We obviously need visibility of a pathway to revenue but they don’t necessarily need revenue when they apply for funding.”

He added businesses need to demonstrate some level of traction.

“There needs to be proof that their idea and their business has been validated with customers.”

The BetterLabs team was also focused on great people and great teams, which could be demonstrated by past experience.

“The final thing that we care about is that we want to add value beyond just the money.”

This included the level of innovation and accountability.

While the fund is backed by the RAC, it has a wide investment mandate.

Its target sectors include clean tech (sustainable living and commuting), member community (to generate deeper community connections) and third age (to support ageing people).

It will also support mobility innovations that support new ways of getting around, and technology that supports new models of insurance.

The formal launch of the fund comes well after RAC invested in Power Ledger, in December 2016.

Chief executive Terry Agnew said this would be the fund’s first investment but had not been publicised until now.

He explained that RAC had established a strategic innovation function three years ago to ensure the organisation continued to innovate.

“To ensure we remain relevant and sustainable, we need to learn and innovate at a greater speed,” Mr Agnew said.

“BetterLabs is one of the innovation initiatives that we are pursuing to secure RAC’s future.”

Power Ledger co-founder and managing director David Martin told Business News the RAC had been the first investor in the business after the five founders, who also include chair Jemma Green.

Mr Martin said it was a substantial investment that allowed Power Ledger to properly prepare for its subsequent initiatives, which have included raising $34 million in Australia’s first ever ‘initial coin offering’.

Power Ledger has since expanded its peer-to-peer power trading business internationally, including to Silicon Valley, and has more than 30 staff.

Another notable RAC initiative launched today was the arrival in Perth of one of the world’s first driverless, on-demand vehicles.

CAPTION: The RAC Intellicar with two RAC driverless buses that have been trialled in South Perth.

Mr Agnew said the arrival of the RAC Intellicar was a significant transportation milestone for both Western Australia and Australia.

“How we move around is rapidly evolving and being able to test emerging vehicle technologies right here in WA will help us adapt to these changes in the safest way possible,” he said.

“Human error is the cause of the vast majority of road deaths and serious injuries, so if we can help WA and Australia safely transition to driverless vehicles sooner, hundreds of Australian lives could be saved.”

 

 Marcus Tan, Alex Bradley, Beth Caniglia and Charlie Gunningham at the seed fund launch. Photo: Gabriel Oliveira