Not a Rocket Lab – what new fund wants to see in start-ups

The latest survey of our (tightening) venture capital scene found a heavy focus on investing in “deep tech” – or research and development-heavy start-ups that hope to become the next Rocket Lab or
Fisher & Paykel Healthcare. It appeals to our No 8 wire, practical ethos.

But with Brand Fund 1, entrepreneur (and some-time fashionista and media hound) Simon Pound is taking a new approach, looking for early-stage firms who show promise in the more elusive, less tangible field of creating a brand.

He’s billing the Auckland-based effort as Australasia’s first brand-led venture capital investment fund.

Pound says the marketing and brand development consultancy he co-owns, Previously Unavailable, was often doing “equity for services” deals with early-stage firms. That is, getting paid in shares.

“The idea for the fund came about when Icehouse Ventures approached us after working with us over a number of years on many companies in their portfolio and on some of their branding,” he says. The idea for a brand-focused venture capital fund was born.

Brand Fund 1 was launched as a joint venture between Previously Unavailable – which provides the talent-scouting smarts and mentoring for recipients – and Icehouse Ventures, which brings its venture capital nous and takes care of all the back-office practicalities.

Between them, Previously Unavailable and Icehouse put $300,000 of their own capital into the new fund when it launched at the end of February, with an initial target of raising $1-2 million from outside investors for seed and even “pre-seed” investments. But following interest from across the Tasman, it has $4m committed (the close is next month).

While it’s still very much a boutique fund, Pound says the top-up will allow Brand Fund 1 to start writing bigger cheques than its original plan and allow for around a third of the fund to be used for follow-on investments.

“It’s amazing to have this support in this difficult funding environment – which is testament to the companies we are working with,” Pound says.

“It has been so cool to see the support out there for a fund like this – a real sign the tech and high-growth and VC environment here is maturing.”

Brand Fund 1 backed three companies with its first wave of investment: Tracksuit (which measures a firm’s “brand health” for much less money than the big survey firms), Aglow, which is pioneering a subscription-based approach for beauty salon visits, and AF Drinks (the AF stands for Alcohol Free).

It’s just put money into four more: supplement maker Calocurb, Ideally (customer insights), MenuAid (menu plans) and Compostic (compostable cling wrap).

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.