The Sydney Angels Sidecar Fund (Fund) will leverage a unique and exclusive partnership with leading Sydney-based angel investment group, Sydney Angels, to invest alongside experienced active Angels. This type of arrangement between a fund and an angel group is commonly referred to as a sidecar fund.
The Fund has negotiated an exclusive co-investment arrangement with Sydney Angels through which the Fund will capitalise on the deal origination, deal evaluation and deal management processes of Sydney Angels to access high growth potential early stage investment opportunities. The Fund will co-invest in those opportunities together with experienced Sydney Angels’ members provided the investment opportunity meets the threshold criteria.
The Fund will be at the vanguard of a potentially valuable, yet immature and idiosyncratic, asset class – angel capital.
The Fund is being formed in Australia as an unlisted Early Stage Venture Capital Limited Partnership to raise total committed capital of at least $10 million.
The Fund will:
- provide wholesale investors with unique access to high growth early stage businesses;
- facilitate investment returns that are tax exempt;
- achieve portfolio diversification from traditional equity and fixed income investments; and
- support entrepreneurs, job creation, innovation, new business ventures and economic growth.
The Fund is structured as a limited partnership that will be registered as an ESVCLP with Innovation Australia. The ESVCLP program is a federal government initiative designed to stimulate investment into Australia’s early stage venture capital sector by allowing generous tax concessions to investors in funds that meet the registration and investment criteria set out in the Venture Capital Act 2002 (Cth). For investors, income and capital gains received from an investment in the Fund will be tax exempt.
Investment Objective and Strategy
The investment strategy of the Fund is to gain exposure to high quality early stage investment opportunities that have been selected, screened and invested in, by members of the Sydney Angels.
The Fund is targeting an annualised return of >20% over 7-10 years by deploying the substantial experience of its own investment management team combined with Sydney Angels’ members in making, building and realising seed and early-stage investments.
The Fund expects to invest in approximately 25-30 early stage companies over the next five years. The Fund plans to make investments ranging in size from $100,000 to $500,000.
Generally, the Fund will invest the same amount into an opportunity as do the Sydney Angels’ members. In certain cases, the Fund may invest more or less than the amount that Sydney Angels’ members invest but this is not expected to be commonplace and is subject to certain limitations.
A strategic portfolio priority will be to commence delivering successful exits and returns within 4-5 years. Return of capital to Investors by way of distributions following asset realisations is a priority for the Fund.
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