Black Nova launches new fund targeting $35m for early-stage startups

A Sydney-based early-stage venture capital (VC) firm that has backed the likes of Govconnex, Saasguru, Pathzero and Notiv has launched its second fund, with the thesis "boring is better" so long as there is "exceptional upside" in a startup.

Black Nova will be targeting $35 million of committed capital with a first close within six months, capitalising on the opportunity in Australia and New Zealand for a thriving business-to-business (B2B) technology industry.

The additional funds will bring Black Nova’s commitment to early-stage startups to $57 million, and follows more than $22 million invested in 2022 for the firm's Fund 1 - a portfolio of 33 companies with many supported over multiple rounds and one company through exit.

The VC has deployed 95 per cent of capital aligned to its investment thesis across thematics such as enterprise resource planning (ERP), regulatory tech, cyber, construction, DevOps, artificial intelligence (AI), government relations, marketing-tech and businesses that generally solve for efficiency issues.

The firm has also committed over 25 per cent of its capital to United Nations Sustainable Development Goals (UNSDG) ethical impact investments, such as those with Sydney-based startups Pathzero which is focused on carbon emission measurement and reduction, and Evidentli which standardises digital health records to unlock better treatment and drug efficacy.

"Without a doubt, our bold investment thesis “boring is better” continues to work very well for us, demonstrating that there is an exceptional upside in supporting the less-glamorous, but essential, businesses solving acute, and the everyday problems for the mid-market and enterprise customer‘," says Black Nova’s managing partner Matt Browne.

"Through this Fund II launch - which is a continuation of our capital allocation strategy into the local startup ecosystem - we’re reinforcing our commitment to a future where Aussie startups with ambitious B2B SaaS solutions for companies are able to make positive changes worldwide."

The latest Cut Through Venture VC funding report shows there has been a flurry of activity in pre-seed funding recently, in contrast to a broader year-on-year decline in funding for startups overall in Australia. Browne believes there has never been a greater need to support startups in this country.

"When our portfolio companies receive investment from Black Nova VC, they are automatically enrolled in our Venture Partner (VP) Program, where they are mentored by our VPs. We built our VP Program with founders in mind, guaranteeing that they receive ongoing 1:1 support," he says.

Black Nova’s commitment to supporting its founders post-fundraise is the secret sauce behind each fund and is one of the most important factors that distinguish the firm from other VCs in the country. The Black Nova team has assembled a formidable panel of Venture Partners with impressive industry experience and relevant networks and skills to support its portfolio, all having successfully invested in, founded and/or successfully exited companies themselves, including:

• Christian Wanner - an exited entrepreneur that co-founded the first pure-play profitable online grocery in Europe, LeShop.ch as CEO; Senior Advisor to Mckinsey & Co, C-suite and board level experience across the globe.

• Noga Edelstein - co-founder of UrbanYou which pioneered on-demand home services in Australia and successfully exited; Director of Advisory at Tractor Ventures; Lifetime Ambassador at SBE Australia; angel investor; former top-tier lawyer and General Counsel at Yahoo7.

• Matt Allen - Co-founder and co-CEO of Tractor Ventures; co-founder and VP at SideStage Ventures; chairman of Qsic; Investment committee for the Alice Anderson fund; co-founded and exited 5 tech startups; has made over 50+ early-stage investments.

Cooper Darling-Blair, founder and CEO at GovConnex and a 2022 Sydney Young Entrepreneur Awards finalist, said his business had grown 17x since it was supported by Black Nova in 2020.

"We wouldn't have been able to achieve that result without, not just Black Nova's capital support, but also their operational support," Darling-Blair says.

The entrepreneur founded his business after working as a government relations and corporate advisor, where he quickly realised the sector was ripe for disruption given the countless hours spent on manual research. The GovConnex platform instantly searches parliament, social media and press releases, and is used by some of Australia's largest businesses and associations.

"As a B2B SaaS (Software-as-a-Service) company, operating in a niche market, sales operations can be particularly complex. This is one area where they have been able to lean into the nitty gritty of our business and help us achieve outstanding results," he says.

"Together, we support and coach our founders through various stages of growth until they 'win,' and a win for our founders is, of course, a win for Black Nova and our partners," concludes the VC firm's Matt Browne.