• Well-known Australian VC fund M8 Ventures has put itself on pause amid the coronavirus.
• Acknowledging the imminent economic challenges Australia faces, general partner Alan Jones said, “we can’t ask potential investors to invest in a seed-stage venture fund right now when we wouldn’t consider doing so ourselves.”
• Jones also admitted the fund had struggled to attract the wealthy investors it needed, but said he hoped to emerge from the current crisis in good shape.
• Visit Business Insider Australia’s homepage for more stories.

As the government puts the economy into “hibernation”, one of the country’s well known venture capital (VC) funds is following suit.

On Wednesday, M8 Ventures general partner Alan Jones — not to be confused with the controversial broadcaster — revealed the fund would be put on pause for the foreseeable future.

“We’re putting M8 Ventures into sleep mode, pausing our plans for the fund,” he wrote in a blog post. “We’ll plug it in, keep it charged up, and come back after the pandemic has passed if we’re still in a position to do so.”

“The biggest issue right now is the pandemic cutting the guts out of not just the tech startup industry but the global economy,” Jones said, acknowledging rising infections and fatalities, spiralling national debt and what “may be the biggest jump in unemployment ever recorded”.

“We can’t ask potential investors to invest in a seed-stage venture fund right now when we wouldn’t consider doing so ourselves.”

It means the Australian startup scene has overnight lost one of its key sources of capital, with many founders now having to rule out receiving any seed funding from M8.

The fund had been cobbling together its first $10 million fund but admitted it had been struggling even before the pandemic to attract the kind of wealthy investors, he and fund partner Emily Rich, need.

“At the end of the day, we both grew up in the wrong neighbourhood, went to the wrong school, got the wrong degree and followed the wrong career path for high net worth individual and family offices to know us,” Jones said.

Despite the shortcomings of the fund so far, however, M8 maintains it has plenty to look forward to after the pandemic subsides, revealing a partnership had been made in principle with “a well-known identity in venture capital” circles.

“If we make it through the next few months in good shape, we look forward to formalising that relationship and introducing them to you as well,” Jones said.

As Australia’s bootstrapped startup scenes struggle through the coming months, they’ll need VC funds to make it through with them.

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