Perth VC Purpose Ventures raised $37 million in 6 weeks to address chronic underfunding for WA-based startups

Perth venture capital firm Purpose Ventures has demonstrated there’s plenty of cash in the west to back local startups, raising $37 million towards a $40 million target in just six weeks.

The VC opened its fund to investors on February 8 – the midst of the Silicon Valley Bank collapse and attracted $37 million in commitments from Western Australian investors before the end of March.

Purpose Ventures invest in early-stage businesses and have committed 70-80% of its investments to WA-founded or operated companies. The fund will also allocate 50% of their performance fees to supporting charitable initiatives. 

The Steinberg Family Office has backed the $40m fund as a cornerstone investor, attracting investment from some of WA’s largest companies and high-net-worth families.

The fund is not industry-specific and has a 15% carve-out for health-related investments.  

Managing director Derek Gerrard has stepped in to solve a local problem with it comes to access to capital for founders on the western seaboard. Despite accounting for around 10% of the Australian population and contributing more than 15% to the country’s GDP, WA has struggled to attract venture capital for quite a while. 

He said WA is at least five-times underrepresented in local venture capital access. It means that the state is losing founders in the process (WA’s most notable exports are Canva cofounders Melanie Perkins and Cliff Obrecht who met at University of WA as Arts and Commerce students and set out to solve the problem of yearbook design)

“While much of the supporting startup ecosystem has improved in WA,  the lack of WA-based venture capital often results in WA’s best entrepreneurs being compelled to relocate their businesses to the Eastern states, or overseas, in search of funding, taking with them local IP, job creation and wealth creation,” he said.  

Gerrard believes these businesses would have run and remained in WA had early-stage capital investment been available from WA sources.

In 2022, $4.57 billion was allocated to venture capital through the Early Stage Venture Capital Limited Partnerships (ESVCLP) structure, but less than 1% was invested in businesses registered in WA. 

Purpose Ventures received conditional ESVCLP registration in February and is the first WA-based fund to do so. The Venture Partners team includes some of the largest contributors to the state’s startup ecosystem, including HealthEngine founderDr. Marcus Tan, Lockwood  Advisory Nicole Lockwood, and Spacecubed founder. Brodie McCulloch.

The VC also recently received operational funding from the WA State Government’s New Industries Fund from the Department of Jobs, Tourism, Science and Innovation for the first three years to establish the fund under their WA Ventures Support (WAVES) program.