Shark Tank investor Steve Baxter launches $60m defence and weapons systems fund

Tech richlister Steve Baxter, who spent almost a decade in the Australian Army, has launched a $60m fund to invest in startup defence and weapons systems.

Former Shark Tank investor Steve Baxter says we can build Australia’s defence forces in an increasingly unsettled world using the same strategy that made him a tech richlister.

The former soldier, who made his fortune from the sale of internet company PIPE Networks, has launched a $60m fund to invest in startup defence and weapons systems. Baxter has named the fund Beaten Zone – the patch of dirt down range from a machine gun where most of the rounds will land. Baxter, who spent almost a decade in the Australian Army, tells City Beat that in an era where a $1000 cardboard drone can take out an airfield of Russian fighter planes, warfare was being fought differently from previous generations.

“My aim is not to guess what the next big idea is going to be but to build a robust tech sector where these ideas can come from,” says Baxter, who is advising defence forces on innovation. “It is about encouraging young guys with off the wall ideas and not necessarily listening to the old generals.”

Ukrainian servicemen from the K-2 battalion fly a drone at a frontline position.

He says the fund already has a pipeline of possible candidates for investment, including a firm developing a new ‘stealth paint’ to protect vehicles from enemy detection as well as startups looking to develop new missile and satellite systems.

Baxter is critical of traditional defence procurement policies where good ideas can be “commercially mishandled” and not allowed to reach their full potential.

He says the Covid-19 pandemic has underscored the need for Australia to build its own defence manufacturing sector as well as build its weapons export capacity.

He says ideally Australian firms can export their products to key allies given the relatively small size of the Australian defence sector.

“The Australian defence sector is about $32bn compared to $1.2 trillion for the US and its allies,” he says. Baxter says the Beaten Zone team, including Baxter, Ryan Parsons (chief operating officer), Alexandra Grigg (investment manager), Jake Bostock (sovereign capability) and Max Quinlan-Ward (lead analyst), is close to announcing its first investment.

Pub talk

We hear that Redcape Hotel Group’s Aspley Hotel has sold for about $10.5m to an unnamed buyer. The hotel group picked up the Aspley Hotel and Shafston Hotel, Kangaroo Point in 2020 for a combined $27.5m from US hospitality giant Delaware North. The off-market deal is the first of three Queensland divestments for Redcape. It also put its two Mackay holdings - The Shamrock Hotel and The Grove Hotel - through JLL Hotels and HTL Property.

Our spies tell us a buyer has emerged for The Grove Hotel who is willing to pay about $17.5m for the pub. The Shamrock is still on the market.

Redcape was delisted in 2021 and is now a private fund managed by MA Financial - formerly Moelis Australia.

Aspley Hotel.

Originally published as Shark Tank investor Steve Baxter launches $60m defence and weapons systems fund