Paloma Capital, the venture capital arm of Paloma Ventures, has announced the launch of its second fund, raising AUD$25 million to invest in high-growth technology companies across Australia and New Zealand.
VC Fund II is raising AUD$25 million to target high-growth technology companies that fall into two categories:
- Breakout companies from Paloma’s existing portfolio, including Marmalade (AU), Chemcloud (AU), Runn (NZ) and Authsignal (NZ)
- New companies to launch out of Paloma’s venture studio in the next three years, with a focus on underserved industries and genAI-enabled businesses
Fund II aims to invest in 14-18 companies over a three-year period from the first close, with AUD$25 million being split between Pre-Seed, Seed, and Series A startups in both Australia and New Zealand.
Paloma is Australia and New Zealand’s largest and most successful venture studio, with a portfolio that has now surpassed AUD$250 million in value. The team at Paloma are first and foremost operators; working in the trenches alongside founders, building and scaling new companies from raw ideas through to launch and into high growth mode.
Paloma’s venture studio is focused around two key themes:
- Partnering with founders in industries that are otherwise overlooked by the startup ecosystem. The venture studio supports non-technical founders by pairing their deep domain experience in traditional industries with Paloma’s product development and venture-building capabilities.
- Using genAI to launch new products to market that, to date, have been otherwise unimaginable or impossible to build.
Paloma previously raised AUD$10 million in Fund I in 2021 which has been deployed into a portfolio of 11 companies. Virtually all companies in the portfolio have grown at industry-leading rates whilst also maintaining industry-leading levels of capital efficiency, despite tough market conditions.
Fund I Snapshot:
- On average, Paloma’s portfolio companies from Fund I have grown revenue >4x since the fund’s first investment.
- Total Fund I portfolio revenue has grown from AUD$5m to AUD$43m in 36 months; a compound quarterly growth rate of 20%.
- Paloma’s portfolio companies have, on average, grown ARR by 108% ARR in the last twelve months.
- The average Fund I portfolio company sits in the upper quartile for ARR/FTE(revenue per employee).
- Fund I portfolio companies are becoming increasingly capital efficient as they scale revenue growth – on average seeing a 111% increase in ARR/FTE in the prior 12 months.
- Companies launched out of Paloma’s venture studio take just 20 months to reach $1M ARR -cutting industry benchmarks roughly in half.
Ash Fogelberg, General Partner, Paloma Capital said, “Whilst the fundraising scene in Australia and New Zealand has seen some hyper-inflated rounds and untenable valuations, we’ve been quietly building a portfolio of high growth companies that are extremely capital efficient. “We believe in building ventures that create enduring value over the long term. We do this by providing an infrastructure layer for company creation, paired with a venture capital business. This combination is unique in the market and offers founders both a higher probability of success and a faster start out of the gates. “In the current environment, pre-product and pre-revenue companies are struggling to close seed capital. Paloma Capital’s Fund II will help address this funding gap whilst also reducing the execution risk of early-stage companies through our venture studio model.
“If we want to see a thriving startup ecosystem continue in Australia and New Zealand, we need to look for an alternate path to company creation. Many VC firms will take calls from pre-product, pre-revenue companies, but almost none of them will write a cheque. We will not only write a cheque, but also work hand-in-hand with founders to help build and scale their company at the very earliest stages.”
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