Since launching late last year venture fund AirTree has run the ruler over 230 early stage businesses.
The $60 million fund led by former Expedia boss Craig Blair and tech investor Dan Petre made its first investment in Pawshake last December.
The mobile pet sitting community secured $1.5 million in seed funding led by AirTree.
The fund’s second investment was made this week. AirTree has invested $4 million into Australian design platform DesignCrowd.
It’s also understood there’s another deal expected to be announced in the next month.
So after closing $60 million in funding last July the fund is on the way to hitting its target of funding 15 startups over the next couple of years.
But Petre said he’s noticed a few differences in the tech funding space this time around.
“The opportunity pipeline is bigger than we expected,” he told Business Insider.
“The deal flow is bigger then expected.
“There’s a high degree of valuation exuberance.”
AirTree is also investing a little earlier than when they first thought they would – going in at a late seed round instead of series a or b rounds with the exception of DesignCrowd.
Petre said a good chunk of Australian tech companies are attempting to raise funds with inflated valuations and there’s a lot of high net worth coming in during the first round “taking a gamble” just to get in.
“You’re seeing the average round in the US $15-19 million rounds,” he said. “Many Australian businesses are starting their valuations at $15 million.”
Predicting harder economic times ahead, Petre said the investment climate won’t always be like this and patience is required.
“We’ve seen in the US [tech] coming off a little bit in the last quarter,” he said.
“The world’s not always full of people throwing money at business. There could be some hard times coming. You’ve got to be patient.
“There’s no question that we’re heading for a harder time.”
With investment moving away from the mining sector, Petre said there’s an opportunity to invest in innovation which can transition the traditional economy towards a digital one and create a “rising tide” over the longer term.
And while tech and the digital sector is still small and “nowhere near having created a sustainable base that could replace mining or agriculture” investing in innovation could create a buffer in the future.
“[But] you can’t build an innovation economy without investing heaps of money in it,” Petre said, adding structural change needs to occur, especially around R&D spending levels in big corporations.
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