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AVCAL 2000 Yearbook

Australian private equity investors broke new records in 2000, with venture capital firms shooting through the $A1bn mark in fundraising for the first time. AVCAL provides the key investment statistics for 2000, plus its entire yearbook – essential reading for anyone investing in the region.

Executive Summary

The 2000 AVCAL Yearbook presents an overview of investment activity in the Australian venture industry. Venture Economics has worked in conjunction with AVCAL to survey the firms that comprise AVCAL's membership. The majority of the study is based on responses from the 26 firms that responded to the joint study. 

Funds and Firms

While superannuation funds continue to be the predominant source of funds for the Australian venture capital industry, the industry is seeing a more diversified group of limited partners. Although contributions from superannuation funds has reached an all-time high at $A1877.5 million, their contribution as a percentage of all sources of capital has actually declined steadily over the past three years - from 40% in 1998 to 38% in 1999 to 31% in 2000.

As the industry matures, Australian funds have also been able to attract increasing interest from non-Australian investors. Asian sources now contribute 18% of all funding to Australian funds while the percentage from Australian sources has declined to 76% in 2000 from 96% in 1999.

While the majority of Australian funds focus on expansion or balanced stage investments, an increasing number of funds focusing on seed and early stage investments were formed in 2000. In 2000, 12 new early stage funds and six new seed funds were formed.

Disbursements

 In 2000, $A831 million was invested in companies by firms, more than doubling last year's amount. Firms primarily made investments in internet and computer software companies in 2000. Out of the 76 investments recorded in our survey, the majority of investments, 40, were made at the development/expansion stage while seed and early stage financings combined to account for 22 investments.

 Exits and Performance

A venture capital firm has three options when exiting an investment: initial public offering, sale, or liquidation. In 2000, 11 companies went public, 12 were acquired and four investments were liquidated. Australian funds formed between 1986 and 1999 achieved an 18.3 percent IRR as of 31 December 1999. The top performing funds had returns between 19.7 and 71.5 percent.

The average size for seed and early stage funds has increased dramatically from prior years. The average early stage fund was $A107.4 million in 2000 and the average seed stage fund was $A59.5 million.

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Copyright © 2001 AVCAL/Venture Economics