Advance VC, a new fund-of-funds, is addressing the liquidity problem of Australian venture Limited Partners with the launch of its A$15 million fund to buy shareholdings from LPs in Australian venture funds.

The firm, founded by former Tidal Ventures investor Max Kausman, has already secured commitments for nearly half of its target and announced its first close.

Advance VC is positioning itself as Australia's first dedicated player in the VC fund-of-funds space with a focus on secondaries, but not secondaries as we typically see it.

The firm's strategy involves purchasing existing stakes from investors (Limited Partners) and fund managers (General Partners) in established VC funds, offering a much-needed liquidity option in a traditionally illiquid market.

In simple terms, this means the fund will buy LP stakes in entire VC funds instead of secondary shares in individual startups, gaining exposure to the whole portfolio.

While its primary focus is on these secondary transactions, the fund will also make some selective primary investments into new funds.

The launch comes at a crucial time for the Australian tech scene. Many of the country's most successful startups, such as Canva and Airwallex, are remaining private for longer, which has extended the life cycle of the VC funds that backed them.

This has created a liquidity crunch for early investors who are often locked into funds for a decade or more, sometimes extending to 15 years. Advance VC is stepping in to fill this gap, typically acquiring these secondary stakes at a discount to the fund's net asset value (NAV).

"The maturation of the Australian VC ecosystem has created the opportunity and need for a specialised buyer of fund secondaries," said founder Max Kausman. "Advance VC’s model has been embraced by sellers looking to cash out, fund managers appreciating that liquidity is critical to a healthy market, and by investors who recognise now is an opportune time to deploy while others are stepping away."

The fund has already been active, investing in 11 different VC funds, including vehicles managed by prominent firms like Blackbird.

This has given Advance VC's investors indirect exposure to a high-profile portfolio of tech companies, including Canva, Airwallex, UpGuard, Zeller, and PsiQuantum.

The fund is diversified by both manager and time, with investments in fund vintages dating back to 2012.

Advance VC has attracted a noteworthy list of backers. Investors in the new fund include Stake founder Matt Leibowitz, Decjuba founder Tania Austin, former SmartGroup CEO Deven Billimoria, and tech entrepreneurs Nathan Cher and Rowan Simpson. The firm has also received support from LaunchVic, the Victorian government's startup agency.

Key figures in the local ecosystem are welcoming the move. Dean Bergin, a Partner at investor LUXEM, said, "The arrival of Advance VC in Australia is a positive step towards a mature and world-class local ecosystem. It provides sophisticated investors with uncapped upside through exposure to outlier outcomes, while being less concentrated than investments into single funds."

Michael Batko, CEO of accelerator Startmate, also praised the initiative. "As a fund manager, I am a strong supporter of anything that provides flexibility and liquidity to LPs, founders, and early employees who own shares in breakout companies," he said. "A thriving secondaries market rewards people who’ve built or invested in great companies early. It also attracts more talent and investment into the ecosystem, which benefits everyone."

Kausman, who started his career at Bain & Company and Vesparum Capital, is supported by a team of experienced Venture Partners, including serial entrepreneur Andrew J Nash and former Jelix and Mind Ventures Partner Alon Greenspan.