Auctus to take a million dollar stake in NY venture capital firm

Published at Oct 4, 2018, in Technology

Auctus Alternative Investments Limited (ASX:AVC) has announced the execution of binding agreements in relation to transactions with Scout Ventures Fund III, L.P, (ScoutFund III), Scout Ventures Fund III, GP, LLC (Scout Fund III GP) and Bradley C. Harrison (Harrison).

AVC will invest up to US$1,000,000 to acquire a minimum 10% economic interest in Scout Ventures Fund III, G.P., a venture capital investment firm is based in New York.

The Australian alternative investment funds manager may also receive initial and ongoing fees for funds invested in Scout Ventures Funds and for future Special Purpose Vehicles. Further, Scout Ventures will assist AVC in identifying investment opportunities in emerging and frontier technology industries.

Scout cultivates relationships with otherwise hard-to-access, experienced tech business founders with a particular interest in AR/VR, AI, drones, robotics, IoT, enterprise SaaS, cybersecurity, and big data.

Founded in 2012, Scout has achieved a lifetime blended IRR of 18.4% and taken in excess of a dozen companies from discovery phase to exit, profitability or other liquidity event.

Scout has over 65 investments across three fund vehicles and has made cash distributions for each of its previous funds.

AVC has executed a Letter Agreement, Investor Referral Agreement and Economic Assignee Agreement which provides for various transactions involving AVC and the Scout Parties.

The Scout Fund III GP is proposed to be a US$50 million fund deployed across approximately 24 companies in the target sectors identified above.

AVC has proposed making the Scout investment via its wholly owned subsidiary High Line Alternative Investments Pty Ltd (HLIA).

In addition, the company advised it will now take steps to appoint Bradley Harrison to be a member of the Board over the coming weeks.

Legal proceedings update

AVC has today provided an update to the company’s previous ASX announcement lodged on 22 June 2018 in relation to the writ of summons issued out of the Supreme Court of Western Australia by PKF Lawler Pty Ltd (now renamed Hall Chadwick Pty Ltd) and another associated entity.

The company advised it has now served a defence in the proceedings which includes a counterclaim against both plaintiffs, and joining Mr John Bell as a defendant to the counterclaim.

Mr Bell is a former Director of the company who was nominated by a plaintiff to act as CFO under a service arrangement which is the subject of various claims in the proceedings. AVC will continue to vigorously defend the proceedings and progress its counterclaims and will update the market as developments occur.

It is important to note that AVC is itself a speculative investment, so professional financial advice should be sought if considering this stock for your portfolio.

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