Airtree secures USD $425 million fund as global tech focus grows

Airtree Ventures has secured a new fund totalling USD $425 million (AUD $650 million) as international investors focus on opportunities within the Australian technology sector.

More than half of the capital for Airtree's fifth fund has come from first-time limited partners, including institutional investors such as insurers, endowments and pension funds from the United States, Asia, and Europe. These investors are entering the local venture capital landscape for the first time, motivated by capital efficiency, a stronger exit market, and a record of consistent returns in Australia and New Zealand's start-up ecosystem.

Data from Dealroom indicates Australia has achieved the highest rate globally for unicorn creation per venture capital dollar invested, with over 40 companies reaching billion-dollar valuations despite less than USD $34 billion in overall venture capital raised since 2000. The country now ranks third globally for returns from venture-backed IPOs and M&A transactions, behind only the United States and China.

Global interest

Airtree's portfolio includes nine companies that have achieved unicorn status, more than any other venture fund in the region. These companies include Canva, Airwallex, Go1, Linktree, Pet Circle, and Employment Hero, most of which received backing from Airtree at early stages. The fund's performance has aligned with some of the top-performing venture capital firms internationally.

International institutional interest was described by Andrew Kaplan, Senior Director and Head of Venture Capital at MetLife Investment Management, which has committed capital to the new fund. Kaplan said, "MetLife Investment Management (MIM) is excited to partner with Airtree, which represents the kind of high-quality venture capital manager we seek out for our clients. The Australia and New Zealand ("ANZ") venture markets are entering a pivotal chapter, and ANZ's focus, discipline, capital efficiency and growing track record of global outcomes stood out to us in an emerging landscape."

Market evolution

The transformation of the local technology ecosystem has been marked over the past decade. In 2013–2015, just six companies in Australia and New Zealand reached valuations above AUD $100 million. Today, that figure is more than 150. The sector is now the third-largest contributor to Australia's economic output and provides employment for hundreds of thousands.

Major exits from the region have reinforced the sector's maturity and global significance. Atlassian's listing on NASDAQ in 2015 was an early milestone. More recently, Block acquired Afterpay in 2022 for USD $29 billion, while AirTrunk was acquired in 2024 for AUD $24 billion. There have also been substantial secondary market transactions, such as Canva's USD $1.6 billion deal in April 2024, SafetyCulture's AUD $90 million deal in September 2024, and Airwallex's USD $300 million Series F round in May. Airtree is a shareholder in all three companies.

John Henderson, General Partner at Airtree, commented on the recent uptick in international attention:

"The world's most sophisticated LPs have woken up to the ANZ opportunity. It is extremely gratifying to have them see what we see - world-class, venture-scale companies are being built here, and they want to be part of what comes next."

Fund structure

The fifth fund includes USD $165 million set aside for early-stage investments and USD $260 million for later-stage growth startups. Airtree attributes its returns and long-term investor alignment to its approach to fund sizes and pace of deployment, which it has maintained despite oversubscribed interest.

According to Henderson, "We've always aimed to maintain deployment discipline, and keep our fund sizes commensurate with the market we operate in, despite significant oversubscribed demand from LPs."

Growth stages

The balance between early-stage and growth-stage deals has also shifted as the ecosystem has matured. Kell Reilly, General Partner at Airtree, noted, "When Airtree launched its first growth fund in 2017, fewer than 8% of local deals were at the growth stage. Today, that number is over 20%, with a highly compelling cohort of early-stage companies progressing to growth-stage as the market has matured."

The growth market relative to early-stage investment is nearing parity with established venture ecosystems like the United States, expanding at a compound annual growth rate of 19% over the past five years. Airtree remains among a small number of local investment firms with dedicated resources for the growth segment.

Attracting institutions

Reilly, who joined Airtree in 2024 after a 13-year tenure in Silicon Valley investing in notable technology companies, commented on the appeal for international funds:

"For global institutions, Australia represents a rare combination: proven exits, capital efficient founders, and a pipeline that's just hitting its stride. The opportunity has always been here. Now the world is paying attention," Reilly added.

Airtree's latest fund brings total assets under management to AUD $2 billion, managed by a team of seven partners and 32 staff across Australia and New Zealand.