Defence technology venture capital firm Beaten Zone Venture Partners’ initial fund has received unconditional registration as a tax-advantaged Early Stage Venture Capital Limited Partnership (ESVCLP).
Founder Steve Baxter said: “This is great news and well done to our team.”
Beaten Zone Venture Capital Fund 1 gained conditional approval in August 2023.
The unconditional registration, from the federal Department of Industry, Science and Resources, indicates the fund must have raised at least $10 million in commitments so far. Funds are required to raise that figure to qualify for unconditional ESVCLP registration. ESVCLP funds are also restricted from raising more than $200 million making them suitable investment vehicles for high-net-worth individuals, wholesale investors, and family offices wishing to gain exposure across a range of early-stage technology investments.
Limited Partner investors in an ESVCLP gain an immediate 10% capital gains tax offset on their contributions. Subject to meeting ESVCLP conditions, investment returns are capital gains tax free.
Of the capital raised by the Beaten Zone fund so far, $4.45 million has been invested across four companies and the firm is currently looking at five potential investments on which it could move before the end of the year.
Baxter said Beaten Zone had a robust pipeline of 691 opportunities valued at over $451 million. The firm had already established itself as a leading investor in the Australian defence technology ecosystem in which it sourced almost all of its potential deals though its own networks. The firm had now strategically extended its research into the US market which had added a further 305 investment opportunities in just three months.
The defence technology sector has experienced unprecedented growth in recent years driven by increasing global security concerns and resulting growth of defence investment by governments.
Beaten Zone has positioned itself at the forefront of the emerging defence technology asset class, with particular strength in four key sub-domains:
- Autonomous systems
- Advanced materials and manufacturing
- Advanced computing and software, and
- Emerging technologies across the broader defence spectrum
Based in Brisbane, Beaten Zone also has investment team members in Adelaide which is becoming an important centre for emerging aero-space, and related defence, technologies.
Baxter’s involvement with technology began while he was serving in the Australian Army. He later founded South Australian dial-up internet service provider SE Net and co-founded Brisbane-based telecommunications company PIPE Networks. Following a successful exit from PIPE Networks, Baxter began investing in technology ventures in 2011 and has invested in more than 90 companies to date. He has also contributed to development of the Australian, and specifically the Brisbane, technology start-up ecosystem by establishing River City Labs, Startup Catalyst, River Pitch and TEN 13 investor network. Baxter also appeared in four seasons of the Channel Ten television show Shark Tank.
Beaten Zone’s investments to date include HEO, which has developed in-space imaging technology for monitoring satellites; Arkeus, merging optics and autonomy to help save lives; and Zendir, digital twin platform for managing the design and manufacturing of space equipment.
Image: A technician works on an HEO imaging device designed to be deployed in space to monitor the condition of satellites.