As VC Soars, Main Sequence Attracts Temasek, Hostplus for Second Fund

Main Sequence, a deep technology venture capital (VC) firm based in Australia, has raised $250 million AUD (US$193.6 million) for its oversubscribed second investment fund. It has attracted a series of returning asset owners and investors.

Investors Hostplus, Horizons Ventures, Lockheed Martin, and Temasek, as well as other family offices and private investors in Morgan Stanley Wealth Management and Mutual Trust supported the raise, Main Sequence said Tuesday.

Investor interest in venture capital has been growing steadily over the years, but recently, it has gone positively gangbusters. Attractive returns from a growing number of unicorns, companies valued at upward of $1 billion, have boosted interest.

In the first quarter of 2021, global VC investments jumped to $125 billion, a 50% leap from the prior quarter, and a 94% increase from last year, according to Crunchbase.

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At Main Sequence, the second investment fund is aiming to build companies that will make health care more equitable, change the way food is produced, and increase industrial productivity, according to Main Sequence Partner Mike Zimmerman.

It will also have an increased focus on climate-related technology that will be led by Main Sequence Partner Martin Duursma. The firm is researching the clean hydrogen industry, decarbonizing energy grids, and building new carbon capture technologies.

Other goals have also been outlined by the firm, such as maintaining the global food system to feed 10 billion people and venturing into space travel.

“This new fund will help us continue this pivotal work to solve the world’s biggest challenges through investment in science-powered companies,” Zimmerman said in a statement.

“I am particularly pleased that there is an increased focus on technologies that reduce carbon emissions through which Hostplus will further expand our investments in climate solutions,” Hostplus CEO David Elia said in a statement.

Main Sequence has the backing of the Australian government and the country’s national science agency, CSIRO. Established in 2017, research for the venture capital’s portfolio companies is supported by Australia’s 43 universities and research organizations. It’s part of the venture science model Main Sequence has pioneered that starts by identifying big challenges, then forming startup businesses.

Other venture capital models have also tapped into research institutions at universities. Earlier this year, Oxford University debuted a fund capitalizing on conservation technologies from the school.

Since it managed the first CSIRO Innovation Fund, the venture capital firm has since invested in 26 companies, including telehealth firm Coviu, robotics company Emesent, alternative protein company v2food, and biosecurity firm RapidAIM.

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Tags: company, Funding, Hostplus, Investment, Main Sequence, Singapore, Temasek, Venture Capital, wealth

A bipartisan group of US representatives is backing the re-introduction of the Public Service Retirement Fairness Act, which would modify rules relating to 403(b) plans so that they would be allowed to include collective investment trusts (CITs) as investment options.

The bill was introduced by Jimmy Panetta, D-California, and co-sponsored by Darin LaHood, R-Illinois; Ron Estes, R-Kansas; Brendan Boyle, D-Pennsylvania; Andy Barr, R-Kentucky; and Madeleine Dean, D-Pennsylvania.

CITs are tax-exempt, pooled investment vehicles maintained by a bank or trust company and offer similar benefits to mutual funds but typically at lower costs. For example, they tend to have lower operating costs, including regulatory, administrative, distribution, and marketing fees, than mutual funds.

The group of legislators argue that CITs should be an option for participants in 403(b) plans because they are less expensive and could help participants avoid losing thousands of dollars in retirement savings to fees.

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“Teachers and nonprofit employees tirelessly serve our community, but face a high cost of living that is further compounded by a lack of access to flexible retirement plans, hindering saving,” Panetta said in a statement, adding that the bill “will save these Americans up to thousands of dollars by ensuring they have the same access to lower cost, lower-fee retirement options as private sector employees.”

According to investment firm Franklin Templeton, CITs were originally created as investment vehicles for defined benefit (DB) plans but have evolved over the years and are now popular with 401(k) plan sponsors. Their low fees relative to mutual funds are the main reason for their growth in popularity, the firm said. CITs’ regulatory costs are lower because they are not subject to the same registration, operational, disclosure, and reporting requirements of federal and state securities laws and regulations or oversight by the US Securities and Exchange Commission (SEC). They also have potential tax advantages for international funds due to a qualified investor base.

In addition to allowing CITs to be included in 403(b) plans, the Public Service Retirement Fairness Act would make changes to the Investment Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934, as well as adjust related rules and regulations covering CITs and separate accounts.

The reintroduction of the bill was praised by the National Association of Government Defined Contribution Administrators (NAGDCA), which has been calling for the move for years.

“Lack of access to the same breadth of investment structures long available to other types of public sector DC [defined contribution] plans is costing 403(b) plan participants—which include the nation’s 10 million teachers—potentially thousands of dollars in retirement savings due to higher investment expenses and reduced returns,” NAGDCA Executive Director Matt Petersen said in a statement.