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Brisbane-based Beaten Zone Venture Partners has announced its first capital call following the successful first close of Fund I, a conditionally registered early stage venture capital limited partnership fund.
As Australia’s specialist defence technology venture capital firm, this milestone marks a significant step in strengthening Australia’s sovereign Defence capabilities through private capital investment.
So far, over AU$10 million has been committed to Fund I, allowing it to meet the final conditions for full early stage venture capital limited partnership status. With a final close expected within 18 months, Beaten Zone Venture Partners (BZV) is targeting a total fund size of AU$60 million to accelerate investment in cutting-edge defence technologies.
Steve Baxter, founder and managing partner of BZV, welcomed the strong response from investors, reinforcing the firm’s belief in the need for dedicated defence technology venture capital.
“The response from investors has validated our thesis that defence technology requires specialised venture capital expertise. With this capital call, we’re moving from thesis to action – ready to deploy more capital into companies developing strategic technologies that enhance Australia’s sovereign capabilities. On behalf of the Beaten Zone Ventures team, I want to sincerely thank our investors for their trust,” Baxter said.
Fund I focuses on supporting companies that have historically struggled to attract investment due to their defence sector exposure. This hesitation from traditional capital sources has created opportunities for high-value equity investments, particularly as global defence budgets shift in response to geopolitical realities.
“The Western world’s holiday from history is over,” Baxter said. “Defence budgets are increasing, with discussions in the US about raising spending towards 5 per cent of GDP from the current 2 per cent. Meanwhile, the rapid integration of consumer technologies – such as cost-effective aerial drones with advanced sensors – into modern arsenals is changing defence capability requirements.”
Since its inception, Beaten Zone Venture Partners has reviewed over 350 companies, assessing potential investments worth nearly $320 million. The firm has already made several strategic investments in transformative Australian companies, including:
- HEO – Developing technologies to ensure a secure and sustainable space environment.
- Arkeus – Advancing decision making through optics and autonomy with next-generation sensor technology.
- Nominal Systems – Revolutionising simulation platforms to improve the design, testing and operation of complex systems from satellites to vehicles.
BZV’s investment strategy targets sovereign Australian businesses with scalable solutions that align with US market demand. With the US Defence budget nearing US$900 billion – compared to Australia’s US$32 billion – the firm sees major opportunities in securing contracts with the US Department of Defense, which has over 100 organisations capable of acquiring capabilities with minimal tendering processes.
“The breadth of our deal flow reflects the evolving nature of modern defence requirements, where traditional domains intersect with emerging technologies,” Baxter said.
Beaten Zone Venture Partners is building a strong pipeline of opportunities across crucial defence domains, including:
- Advanced computing and software for defence applications.
- Next-generation materials and manufacturing processes.
- Autonomous systems for multi-domain operations.
- Quantum technologies and defence applications.
- Advanced sensing, connectivity and security solutions.
- Space technology and orbital capabilities.
- Biotechnology and human performance enhancement
- Microelectronics and semiconductor sovereignty.
“Through our investments, we’re not just funding individual companies – we’re helping build interconnected capabilities that strengthen Australia’s Defence industrial base,” he said.
The timing of BZV’s equity investments aligns with significant global growth in defence spending. The allied defence sector now exceeds US$1.2 trillion, creating substantial export opportunities for Australian companies.
AUKUS commitments of over $350 billion across the next three decades will further drive demand for advanced defence technologies.
While Australia’s defence market provides a strong foundation, the real opportunity lies in accessing broader allied markets through strategic partnerships and capability-sharing agreements.
BZV’s investment strategy is guided by core defence capability pillars:
- Lethality – Investing in advanced weaponry and supporting systems that enhance operational effectiveness.
- Survivability – Supporting protective technologies and countermeasures that strengthen forces in contested environments.
Baxter added, “What we’re seeing in the market validates our investment thesis. The traditional funding structure has built impressive capabilities, but with private capital, these companies can accelerate innovation and deliver their technologies globally.”
With its first capital call and a growing portfolio of high-potential investments, Beaten Zone Venture Partners is set to play a pivotal role in strengthening Australia’s sovereign defence capabilities and positioning Australian companies for global success in the defence technology sector.
