Article: AI evangelists lay groundwork for start-up flood, VC investments” (Australian Financial Review, 10 June 2025)
As the artificial intelligence movement gathers steam and concerns mount about risks and benefits, it is interesting to see who’s leading the social licence push in Australia.
Venture capital firm King River Capital, whose founders have been backing Al businesses for nearly 20 years, held court with institutional investors including superannuation funds and family offices late last week, and mounted the case for responsible Al investment.
Their pitch is that Al is critical infrastructure – Australia, which is well behind the United States like the rest of the world, will not thrive without it. Yes, jobs will go, but others will be created, and shying away from the technology now will only compound productivity and labour issues already in the economy.
They pitched what we’ll call the “Five As of responsible Al investment”; a list that included awareness, alignment, accountability, architecture and advantage (the last bit is about making money). It’s their way of assessing responsible AI investments, and in turn trying to assure investors that putting money into an Al-focused venture capital fund is an ethical investment.
VC firms leading Australia’s Al foray
King River Capital co-founder Zeb Rice and partner (and CFO) Dom Tayco relayed the pitch to us on Tuesday. It’s clear they’ve put a lot of thought into it – as you’d expect from a firm whose bread and butter is Al investments and is trying to whip up funds to put to work.
But should it really be up to a VC firm to do the thinking for Australia’s superannuation sector, family offices, governance advisers and other gatekeepers? Should it be up to an investment firm to come up with the responsible Al framework or where the money is actually coming from?
Tayco says it is “absolutely” King River’s job.
“We’re the thought leaders in the area and we’re fearful because institutional investors really do need to think about it,” he says. “Super funds are investing generational equity and that requires forward-thinking and governance. We need to work together.”
– Dom Tayco, Partner & CFO, King River Capital
The truth is it’s a three-pronged pitch. There are the likes of King River – a venture capital firm that’s close to finalising a $US100 million ($154 million) raising for its third fund and making Al investments every month or so – and industry bodies the Tech Council of Australia and the Australian Investment Council (the old AVCAL).
There’s also government, which already has an ethical framework via its eight principles and 10 mandatory guardrails put forward in the second half of last year.
Rice says it helps that King River has ample examples of responsible Al investments. He reels off three Australian portfolio companies (cybersecurity detection group Cyble, music co-creation software Splash and agentic workforce group Relevance Al) as proof of the firm’s responsible Al investment framework.
“Being very frank, Australia is behind on Al company creation – and you could say that about the whole world except for the United States and Silicon Valley in particular,” Rice says pointing out that North American start-ups raised nearly $US70 billion in the first five months of this year, or seven times more than Asia and Europe-based Al start-ups combined, according to TechCrunch.
“We’re at the point with Al where it starts in Silicon Valley, that wave will spin out and we’re seeing it go to New York, a little bit to Seattle and then that will start hitting Europe and Australia’s shores in the next couple of years.”
Rice says it was similar in Australia in software a decade ago, before Atlassian and Canva created a wave for the likes of Employment Hero, Safety Culture and a bunch of other now unicorns to ride; a wave that only exists when there is capital for start-ups and scale-ups.
And what attracts capital? Good experience – and conviction that decent ideas and founders come with proper governance, responsible investment and an ability to make money. And that’s where the evangelists at King River really come in; Rice says he’s found a few good Australian Al businesses to back, but there should be plenty more in the not-too-distant future.