The Blackbird team.

The Third Way: This is Why We Back Our Founders

Date Published:
December 16, 2019

Why the founders we backed in 2013 are becoming some of the best of their generation.

Blackbird raised its first fund at a time when Australian venture capital was a contrarian idea. So contrarian, in fact, that “Blackbird Ventures 2012 LP”, the fund’s name, took until 2013 to close.

We had over 500 meetings in 22 months to raise $29M from 97 individual investors. Almost of the investors are individuals and the majority are tech founders. They gave us a chance to prove successful venture capital investing could be done from Australia.

The Blackbird first fund is now entering its 8th year and is shaping up to be one of the best performing global funds of its vintage. The $28M of capital invested is now worth almost $300M.

The founders we backed in Blackbird’s first fund are becoming some of the best of their generation. The companies they’ve built are turning over tens or hundreds of millions of dollars, employ thousands of people and are still growing at 50-100% annually. And we believe companies like Canva, SafetyCulture, Culture Amp, Propeller and Zoox have much more growth in them and our ambition is to partner with these companies for many more decades to come.

Traditionally, startups look towards an acquisition or an IPO before their 10th birthday. Recently, we’ve seen companies staying private for longer. In response, the private capital markets are becoming more sophisticated and venture capital funds no longer need to force a company to go public or to sell to a larger company prematurely to return capital to their investors.

In response to this, we decided to look for a way to lock in the success of our first fund, while still maintaining ownership in these iconic companies and continuing to support them in their growth.

We completed a transaction known as a GP-led secondary. Through this transaction, our first fund investors were able to sell a minority portion of their holdings to Stepstone and HESTA for approximately $100M.

Blackbird will manage the new fund on behalf of Stepstone and HESTA, allowing us to continue to support the founders of these companies on their journey.

This is one of the first GP led secondary transactions in Australia. The transaction is becoming more popular in the US and Asia after it was pioneered by large global venture capital firms like NEA and Warburg Pincus.

The transaction process saw Blackbird run a competitive tender process to set the price for the assets. The process was advised by Lazard and resulted in strong interest from a group of global investors. The successful bidders, StepStone and HESTA, then become investors in a new fund which is also managed by Blackbird.

Most importantly, the transaction leaves our relationships with our underlying portfolio companies unchanged as Blackbird continues to manage the new fund which holds the shares.

Why did we do this?

Firstly we wanted to lock in a strong return for the fund, taking the returned capital of the fund to 3.4x the invested capital and leaving the remaining majority to continue to grow in value along with the portfolio companies.

Secondly, by doing this secondary, we are able to continue backing the great founders of our portfolio companies for a longer period.

We are true believers in founders and we’re excited to have found a way to continue supporting them, while honouring the belief of our original investors with a strong capital return.

This is an inflection point for the Australian and New Zealand startup ecosystems. Our founders have already proven that you can build a successful startup in Australia. Now, with this transaction, Blackbird has shown that you can build a successful venture capital fund from Australia and New Zealand.

We hope that this distribution in some way, directly or indirectly, powers the next generation of ambitious founders!


This is a milestone for Blackbird and it is worth mentioning all the people who have made this happen. Firstly to the founders we backed in this first fund. You are the ones building the world class companies, creating the jobs and changing the world.  Thank you Mel, Cliff, Cam, Luke, Didier, Rod, Doug, John, Tim, Jesse, Geoff, Chris, Mike, Matt, Rory, Francis, Ben, Duncan, Jeremy, Casey, Chris, Marc, Simon, Tom, Asher, Ryan, Ned, PJ, James, Niall, Josh, Johan, Jonathan, Daniel, Pete, and Nick (double thanks to you).

Next to the original gangsters, the investors in this fund. You gave us a chance to prove we could build a VC firm in Australia and deliver returns that are equivalent (and better than most) US VC funds. There are 96 of you, so too many to mention. We hope this goes some way to repaying your trust.  There’s lots more still to come from this fund too!

To our new LPs in the “Chapter Two Fund”, StepStone and HESTA, we’re very pleased to have you join the Blackbird family and will work hard to make this a great investment for you too.

Finally to the whole team at Blackbird. This was a hugely labour intensive process and everyone pitched in. Special thanks to Alex who masterminded the huge process of getting the transaction completed.