This year Shearwater Capital marked our sixth year.
Plenty has changed in the world since September 2018, when Mike, Charles and myself first sat together in a small, windowless room at the Hub in Darlinghurst and tried to work out what Shearwater Capital would become. We knew broadly what we were hoping to do and had been talking about it for a number of years leading in. We came together to shape a new, different kind of venture fund.
As I reflect six years on, I think we’ve done a pretty good job of executing on our original vision.
To understand Shearwater today, you need to start at the source of capital: it’s our own funds. This brings many things, including agency and patience.
We formed the view early on that venture doesn’t scale; or at least not the style of investing that we’re aiming for. So we deliberately kept the fund’s headcount small. If you’re dealing with us, you’re dealing with the principals.
We felt that was important because the founding partners have all built our own start-ups. We’ve raised capital ourselves as founders. So we wanted to keep it simple when it came to investing.
This means we’re a small team (it’s still just Matt and I running the business on a daily basis). This small size comes with a high pace of activity. Between Matt and I, we review 2-3 decks every day and meet a founder each day on average. We sit on numerous boards. And I organise the odd match of venture squash!
We now have 22 investments. We’ve been lucky enough to back some great founders: six of our Seed/Series A investments have gone on to be valued north of $100m. We’ve roughly returned the fund once over in cash and the fund has top decile performance.
From a gender diversity perspective, of 22 investments, 3 have all female founders and a 4th has a mixed gender founding team. (As I write this we’re closing our 23rd investment which has a female co-founder.) So ~14% of our investments are in all female founders which is short of where I’d like it but compares well to ~5% historic industry averages. What’s satisfying is that the total carrying value of the female founders is slightly ahead of the portfolio in terms of performance.
At the end of last year, we closed our second fund. This time the fund is underwritten by just Mike. So as the headline says, we now have $100m in which to invest in the best founders in Australia and NZ.
So what are we looking for?
- primary & secondary investments, across AU and NZ companies
- Companies that are founder led
- We like partnering early where we can, or join late based off sustained revenue growth
- More on our specific criteria
But if you had to distill our mission down to one statement, it’s about going on journeys with great founders.
Six years in, I think what we offer is pretty compelling: engaged investors that have good experience in scaling large companies and are looking to go on the journey with founders. Our fund is evergreen and not time bound. And we invest in companies, not rounds or stages. So we can invest at any stage, including early investor and founder liquidity.
So if this resonates with you, or you know someone you think it might do, please reach out to us; or connect us with companies who you think will be a good fit for Shearwater Capital.
