Beaten Zone fund wins approval, targets AUD $451m defence tech

Beaten Zone Venture Capital Fund 1, LP has secured unconditional registration as an Early Stage Venture Capital Limited Partnership (ESVCLP) from the Australian Government’s Department of Industry, Science and Resources.

Government approval

The ESVCLP registration marks a milestone for Brisbane-based Beaten Zone Venture Capital Fund 1, which concentrates on early-stage defence technology investments. The registration provides Limited Partners in the fund with access to government-backed tax advantages, including a 10 per cent capital gains tax offset on contributions and capital gains tax-free treatment on eligible investments.

Steve Baxter, Founder of Beaten Zone Venture Partners, commented on the registration:

“This is great news and well done to our team. We have received from the federal government a notice that our fund is now unconditionally registered as an Early-Stage Venture Capital Limited Partnership.”

The fund received conditional approval in August 2023, followed by a review process that culminated with formal approval of final documentation by the Innovation Investment Committee Chair on 27 June 2025. The Department of Industry, Science and Resources has verified that Beaten Zone Venture Capital Fund 1, LP satisfies all requirements of the Venture Capital Act 2002.

Portfolio and investment pipeline

Beaten Zone Venture Capital Fund 1 has deployed AUD $4.45 million across four portfolio companies to date. The firm reports an investment pipeline consisting of 691 opportunities, collectively valued at over AUD $451 million. Up to five additional investments are being targeted for completion before the end of 2025, with several opportunities now in due diligence. The majority of these deals have been sourced through proprietary networks, allowing the fund access to a high volume of defence technology investment opportunities.

Baxter drew a parallel with the early days of other venture capital firms, noting:

“I often think what the founders of Blackbird Ventures must have thought when first launching, when they surveyed the market and saw the likes of Canva, SafetyCulture, Culture Amp and wondered why these great teams were not finding equity capital, which is where we stand now in defence. Great teams, great deals, eager markets with massive tail winds.”

The fund has also increased its origination activities in the United States market, adding 305 new opportunities in the most recent quarter alone. This expansion represents a substantial increase in the number of opportunities under review.

Focus areas and strategy

Beaten Zone Venture Partners focuses on four principal sub-domains within defence technology: Autonomous Systems, Advanced Materials & Manufacturing, Advanced Computing & Software, and Emerging Technologies. The fund targets companies developing products with material military use, explicitly excluding those involved with controversial weapons or capabilities that would contravene Australian-ratified treaties.

The defence technology sector in Australia has seen growth in response to heightened global security needs and increased government investment in sovereign capabilities. Within this context, Beaten Zone Venture Partners aims to identify and support companies contributing to defence and security applications through a systematic and disciplined investment approach.

The ESVCLP registration offers the following to investors:

• 10 per cent capital gains tax offset on fund contributions
• Capital gains tax-free treatment on eligible investments
• Access to a curated portfolio of defence technology companies
• Professional fund management with sector expertise

According to the fund, 88.4 per cent of deal flow has been sourced through proprietary networks, providing an advantage in sourcing high-quality opportunities across the core technology domains the firm targets.

Baxter has a background in technology, telecommunications and venture capital, and has invested in more than 90 Australian companies since 2011. He previously founded SE Net, a South Australian internet service provider, and co-founded PIPE Networks, a Brisbane-based telecommunications company.