First State Super will invest tens of millions of dollars into fintech start-ups over the coming years, in partnership with H2 Ventures, a specialist fintech VC fund, according to the Sydney Morning Herald‘s James Eyers. The launch of the First State Super-H2 partnership was attended by Prime Minister Malcolm Turnbull, Treasurer Scott Morrison, Assistant Treasurer Kelly O’Dwyer and Assistant Innovation Minister Wyatt Roy, following the government’s innovation statement on Monday that has laid down a blueprint to create a more supportive environment for entrepreneurs to grow businesses.
“There has never been a more exciting time to be in fintech,” Turnbull averred, noting a fresh interest in fintech and its risks. “There is plenty of money available – $2 trillion of superannuation assets. As you start to see more investors in innovative ventures we will see the fruits of that.”
After allocating $110 million to a technology VC fund launched by Blackbird Ventures in September, First State Super noted its interested in fintech by funding startups identified by H2, a firm, set up by former AWI Ventures alumni Ben and Toby Heap, looking to capitalize on Australia’s thriving startup ecosystem. Launching its own accelerator program last May to nurture promising fintech firms from inception to market launch, H2 is based in Stone & Chalk. First State, which manages $54 billion, wants to deploy $250 million into technology companies in the next few years, said chief investment officer Richard Brandweiner.
“Institutional investment into Australian innovation is a really important thing – we have no doubt others will follow. First State Super decided this is a space they want to be in, and they decided to put [in a] big lick of money, driven by the fintech opportunity,” Ben Heap, H2 Co-Founder.
Heap and Brandweiner noted that there was not a sufficient number of fintech start-ups in Australia to warrant raising a hundred million dollar-plus fund at present, but that this could change, reported Sydney Morning Herald. First State is interested in investing in technology companies not only for their performance potential, but also for the “ramification of these investments over the medium term.”
“Disruption is going to come from somewhere at some time, because the banking sector is so large and profitable,” stated Brandweiner. “We would rather be at the table than be a victim in that. Having a seat at table from where disruption is going to come from is good risk management. It is not about beating the banks – the Australian financial system is too reliant on banks. It is more likely anything we do will end up being in collaboration with the banks.”
Last week saw the Australian Parliament legislation regarding the regulatory structure of investment crowdfunding. The government previously stated final rules were a priority for completion before the end of the year. “Crowd-sourced funding” (CSF) has been described as an emerging form of funding that allows entrepreneurs to raise funds from a large number of investors.