The University of Technology, Sydney (UTS) launched an investment fund on Friday that aims to improve access to capital for startups associated with the university, and to fill gaps created by the economic impact of the COVID-19 pandemic.
The new fund has been kickstarted with the help of MA Financial, one of the largest fund managers created through the Significant Investor Visa program. Startups can pitch for the chance to access a SAFE (Simple Agreement for Future Equity) note worth up to $100,000.
The first company awarded money through the new fund is Vizial.io, which develops an AI-powered internet-of-things solution for tracking train track utilisation and other transport data. MA Financial is expected to make one investment each quarter, with the next round opening in March 2024.
Applicant companies must be a participant in the UTS Startups program and have at least on current or previous UTS student involved. However, the university does not intend to make investments through the fund.
Startups are also be expected to have at least $50,000 in revenue, or to have signed memorandums of understanding with customers.
MA Financial manages funds made by individuals entering Australia on a significant investor visa, which requires they make an investment of $5 million or more in the Australian economy over the five-year validity period.
This includes a requirement that 20 per cent be committed to venture capital or private equity. UTS director of entrepreneurship Murray Hurps said the fund has taken a “year of conversations” to establish.
“There has been a decline in accelerators and incubators across Australia, meaning there’s been a decline in risk tolerant capital, especially early-stage capital. [The fund] is looking for a solution to this, how can we make sure those first cheques are still being written,” Mr Hurps told InnovationAus.com.
“In talking to a lot of people, the only organisation I could find that was willing to step in and make sure these opportunities are grown again, was MA Financial.”
Mr Hurps told InnovationAus.com that “the goal is to make sure that we in building something that’s very desirable for startups has easy access and the best terms available for this kind of investment”.
“We want that to be a watering over all the best startups and founders are going to enter then invite other investors,” Mr Hurps said.
The terms of the SAFE note are based on those published by Airtree Ventures, although some changes have been made to improve support for institutional capital, provide founder ownership of fundraising, enable tailoring to particular founders and businesses, enable one or multiple small investments, and be compatible with rapid investment decisions.
This was supported by professional services firm The Gild Group, which “played a critical role in designing the investment documents used for the UTSSGF program”. It currently has about 400 startups among its clients.
In addition to competing for funding, startups will also get to experience three weeks of support programs to give applicants access to mentors and engagement with other experts, before a shortlist is put forward for a pitch event.
The investment in Vizial.io was narrowed down from the 700 companies in the UTS Startups program, and was selected over five other startups during the pitch event on Wednesday. However, as new investors and startups join the program, the frequency and size of investments will be reviewed.
Vizial.io chief executive Sean Marshall said “We’re immensely grateful for the program’s transformative impact on our pitch”.
“These funds empower immediate marketing and growth initiatives while signalling a structured path to engage more investors. This positions Vizial strategically to capture Smart Cities’ vast opportunities,” Mr Marshall said.
