PAC Capital have recently launched Australia’s first Venture Capital (VC) fund focussed on Web3 technologies.
The fund PAC Private 1 (PP1) will invest in metaverse, blockchain, gaming, health, AI, ML, and virtual reality (VR).
Digital Nation Australia spoke to Clayton Larcombe, chief investment officer at PAC Capital about the reasoning for launching the US$50 million wholesale investment fund.
“People in Australia are starting to really understand what the metaverse, what esports, gaming is all about, they're starting to really understand every different facet of how big the vertical is,” said Larcombe.
“There's obviously some venture capital funds that have invested in esports companies around Australia, and crypto. But we’re the first one to have a really strict mandate.”
Prior to launching PP1, PAC launched the first listed esports hedge fund.
“The esports fund is a long-short hedge fund style that invests only in esports companies around the world and gaming companies, because I wanted to give people exposure and access to this growing asset class that I think wasn't really focused on enough, especially in the Australian market.”
While the esports fund is listed on the NASDAQ and the Hong Kong stock exchange, the PP1 is a private liquid fund designed to find the next esports company that is set to rapidly grow, he said.
According to Larcombe, the PP1 was born as a result of his personal investment success, which started at the Seed round in the online wagering company for esports matches, Picklebet.
“Over the last few years, I've been on this path with Picklebet and a lot of people and investors have said, ‘Clay, we would love you to start a new fund that purely is targeting these companies. Trying to find another Picklebet or another company that essentially will grow at the same pace'.”
The PP1 is designed to support early-stage investments and is seeking to co-invest with managers.
According to PAC Capital, PP1 has already deployed 15 percent of capital delivering more than 10 percent return on invested capital (ROIC). The next six months are expected to deliver mark-ups with more than 60 percent ROIC.
When it comes to the key differentiators that Larcombe is looking for in his investments, he said it largely comes down to the connection he makes with the founder.
“Without the founder being incentivised or understanding their process or their goal and dreams and targets, and how can you get them there, if you don't have that connection, or you don't see the vision, then unfortunately, that's the hurdle that I won't invest in,” he said.
One of the companies that PP1 has already invested in is Talon, Asia’s top esports team, which the company claims is placed to become one of the most successful teams in the world.
According to Larcombe, investing in the metaverse reflects the cultural transformation that is occurring in how younger generations are communicating.
“The way this next generation communicates through gaming and esports, through different platforms, the way that they interact through metaverse, and virtual reality and different new worlds and they all interact, it is a big cultural shift.
"This is not just something that is going to come and go. This is a big leap forward for the way generations of people can improve and interact with each other around the world,” he said.