The quest for early-stage funding facing startups can be challenging. Many large funds have such diverse investment portfolios that startups struggle to know if they are the right fit for their business. But a new fund, launched by Pacific Partners, who are in the UAE for Abu Dhabi Finance Week, is taking a more focused approach. With a laser-like focus on AI startups in four key sectors across three specific geographies, the company aims to invest in early-stage companies.
Clayton Larcombe, the Managing Partner at Pacific Partners, says Australia is a key region as it is one of the world leaders in AI and a hub of innovation in the region.
(Clayton Larcombe, managing partner, Pacific Partners)
“Australia is emerging as a global hub for innovation. The success of Canva highlights the massive potential in the region. We are committed to supporting founders here who are shaping the future of AI,” says Larcombe.
The fund plans to split its investments into two broad categories. 60% will be made available for initial funding with the remainder held for follow up investments as companies grow. Pacific Partners plans to invest in 20-30 companies at any one time.
Stephen King, Pacific partner’s Head of Investment is a former Managing Director at Morgan Stanley. He says, “Rather than taking a scattergun approach and trying to be all things to all startups, we want home in on a smaller portfolio of companies. Our team has extensive experience in these sectors. Our goal is to be real partners to the startups we invest in.”
(Stephen King, head of investment, Pacific Partners)
Pacific Partners will be focusing on four key sectors. The fund’s key executives will leverage their specific expertise in health and wellness, media and gaming, defence, and enterprise solutions, and where those four spheres intersect with AI.
By concentrating on pre-seed, seed, and Series A funding Pacific Partners operates in a less competitive space. Larger VCs often cannot participate at these stages due to substantial minimum check sizes.
“This dynamic creates a favourable environment for generating outsized returns compared to the investments’ risk profiles,” explains King. “Savvy institutional investors are recognizing this opportunity and are developing new strategies to channel investments into smaller funds that can engage earlier in the company lifecycle.”
Edward Saatchi, a Venture Partner and two-time Emmy award winner whose previous company was acquired by Meta, brings visionary insight into the AI-first future the fund aims to cultivate. Saatchi garnered global attention following his TED talk Will Intelligent Life Emerge from a Simulation.
(Edward Saatchi, leader of the fund, Pacific Partners)
As well as focusing on specific sectors and early-stage startups, Pacific Partners will channel its funds in three key regions and has established a presence in Sydney and San Francisco with potential eyes on also setting up shop in the UAE. This reflects its commitment by having offices and staff in the areas where it will focus its investments. The new fund will deliver a quarter of its funds to Australian startups with half being channelled to Silicon Valley and the remainder in the Middle East.
While the fund is relatively young, it has already enjoyed success with its early investment in Perplexity. That company has now surpassed a $9B valuation. The investment in Perplexity was made when the company was at an early stage and not in later, larger funding rounds. This resulted in strong gains for investors and highlight the team’s skill in identifying opportunities before other, larger finds come in later.
Finding investors can be challenging for early-stage startups. Larger funds may have minimum commitments that are outside these businesses capacity or lack the focus startups need as they become established and move into fast growth. Pacific Partners plans to invest in companies and support them through their initial growth.