Generate puts $20m into new Icehouse Ventures fund

Generate KiwiSaver has committed $20m to Icehouse Ventures’ Growth Fund II, a $100m venture capital fund to 20 established New Zealand technology companies to expand in global markets.

Friday, June 16th 2023, 9:19AM

by Andrea Malcolm

Generate chief investment officer Sam Goldwater says, Generate was attracted by the unique deal flow and insights of Growth Fund II as a result of Icehouse Ventures’ investments in >300 early-stage startups.

“Having these kinds of relationships, built over time and successive investments, gives Icehouse Ventures privileged access to new deals coming through, which should enhance returns for our KiwiSaver and managed fund customers.”
Icehouse Ventures is New Zealand’s most active Venture Capital group according to the 2023 Technology Investment Network Report. It has invested in approximately half of all early stage technology startups funded in New Zealand over the last six years.

Robbie Paul, CEO of Icehouse Ventures, says Generate’s backing signals the KiwiSaver provider’s evolution into an institutional-grade fund manager.

“Sam and the Generate team have watched us closely since the launch of our first Growth Fund in 2020. A $20m cornerstone investment in Growth Fund II is a wonderful endorsement coming from an investor that serves almost 130,000 Kiwis,” says Paul.

Four months after launching, Growth Fund II is on track to a first close of $50m, a milestone that took 12 months for Growth Fund I. The fund is open to wholesale investors and the minimum investment is $50,000 which is paid over a three year period.

Paul says the high investor demand for Growth Fund II, in defiance of global venture capital trends, underscores Icehouse Ventures’ unique position in the market and high-trust, long-term relationships with many investors.

Icehouse Ventures’ transition into later stage investment has corresponded with its work toward becoming the most data-driven Venture Capital firm in the Asia Pacific. Its five person product team, led by CTO Peter Thomson, analyses and compares data across the firm’s 308 investments over the past decade to make more accurate and informed decisions.

“The most informative data is built over time. There is a big difference between looking over the books for a month versus tracking a company's progress over many years,” says Paul.

“The super power we are building is based on blending quantitative data sets on metrics like revenue growth with qualitative observations such as the ability of a CEO to communicate an ambitious vision or to attract and retain great talent.”

However, Robbie emphasised deal access is a critical feature in a market that increasingly includes global venture funds.

“When you’re looking at the meteoric revenue growth of the likes of Tracksuit or Hnry, deal access becomes more important than traditional due diligence. That is where our unique relationships, information, and pre-emptive rights have served us well,” says Paul.

Growth Fund I

Growth Fund 1 raised $110m in 2021 from investors including Simplicity, an Iwi, Hobson Wealth, and >500 high net worth investors and family offices from around the world. There have been 32 investments to date including Halter, Hnry, Dawn Aerospace, Crimson Education, and Mint Innovation. (Recent press related to Fund I companies: Nilo, Vertus Energy, Halter, Dawn, Biolumic, Sharesies, Tracksuit.)

Aggregate annual revenue by the portfolio exceeds $250m - an increase of $100m from when the Growth Fund first invested. Nine are generating more than $10m, three are pushing $20m, and one exceeds $100m in annual revenue.

Icehouse Ventures funds has attracted investment from more than 1,500 high net worth investors and a growing number of institutional-grade funders including Simplicity, Harbour Asset Management, Hobson Wealth, and Ngati Apa ki te Ra To.

Tags: Generate