Unprecedented Capital Raise Brings ‘Joiy’ for Founders

A great story here about the power of a really compelling and novel business opportunity to raise angel funding.

Global markets are firmly in the sights of Archer McRae Beverages after closing a $1.35 million funding round this month, with their flagship beverage ‘Joiy’ – the largest single capital raise of a Creative HQ start-up.

Helmed by founder Chris Archer, Joiy is the product of 25 years of award winning wine making, coupled with global ambitions and a customer centric approach. Joiy was part of business incubator Creative HQ’s global growth programme last year.

Read more

Publons pair get scientific publishing moving faster

Frustrated by the glacial pace of academic research, Daniel Johnston and Andrew Preston decided to propel scientific publishing into the 21st century.

“Everybody thinks of science as moving at a blistering pace, but it’s actually one of the most technologically challenged industries out there,” Johnston says.

Preston was working as a physicist in Boston when he and Johnston dreamed up Publons, an online platform for researchers and academics to review and discuss scholarly work and, for the first time in centuries, to earn credit for their efforts.

The idea won Publons $300,000 in startup funding via the 2013 Lightning Lab accelerator programme. According to Johnston, who earned a BA in history and political science from Victoria University, it takes 150 days on average to get a scientific paper published, with 120 of those days because of the peer review process.

Publons pair get scientific publishing moving faster – Business – NZ Herald News

“The way we publish and share research hasn’t really changed in the last 350 years.”

This slowness is caused by a lack of incentives for peer reviewers, he says.

“They don’t get recognition for their contribution, they don’t get paid and they don’t even get anything they can put on their CV, so this crucial part of science is seen more as a chore than anything else.”
Though Publons started off as a platform to discuss published research, this finding caused Johnston and Preston to switch Publons’ primary focus last year to incentivising peer reviewers before publication, bringing on board companies such as GitHub, Amazon Web Services and Makey Makey to sweeten the deal for participants with a rewards programme.
The concept is taking off, says Dave Moskovitz, a Wellington angel investor and one of the first investors to be attracted to Publons.
“The first 500 users took six months, we moved from 500 to 5000 in another eight months, while today Publons boasts nearly 35,000 researchers and 83,000 reviews.”
Moskovitz, a self-described failed PhD student, has watched Publons grow from its very early days three years ago, when Johnston and Preston attended one of his Lean Startup clinics in Wellington.

His own experience in academia showed the promise of the core idea and then when he saw the progress Johnston and Preston made during the 2013 Lightning Lab – where Moskovitz was helping as a mentor and evaluator – he decided to join the team. “I really like their approach to problem solving, to building a team and a market. This is going to democratise science to a degree.”

Johnston says the next big step for Publons is to set up a base in London where it can more easily establish partnerships with potential customers in scientific publishing and find industry investors.

The company’s capital raising, which stemmed from Lightning Lab, came from a number of sources, including the Government’s New Zealand Venture Investment Fund and several Wellington-based angels.

Johnston says it has helped build up the company’s team and rapidly increase its user base.

Publons pair get scientific publishing moving faster – Business – NZ Herald News

Produced in conjunction with the Angel Association of NZ.

As published in NZHerald 16 April 2015

 

Innovation: What turns a dream into reality?

Tim McCready makes some great points in this article about the need for those with great ideas seeking funding to be “investment ready” and suggests some organisations which can help.

What does it take to turn a dream into a reality? The answer inevitably involves money, and usually quite a lot of it.

Many New Zealand businesses choose to grow organically, either by bootstrapping, where revenue is reinvested into the business for growth, or through small amounts of funding obtained from the bank, family, or friends.

However, a business built on innovation nearly always requires a significant injection of capital from a third party, and traditionally through venture capital or angel investment.

Aside from money, these sources of investment can bring additional spillover benefits to advance a business.

Angels and venture capitalists will typically invest in opportunities where they can add value using their networks, bring knowledge and a new perspective, or impart first-hand experience. When it comes to innovation, you cannot have enough of any of these.

New Zealand’s ‘no. 8 wire’ mantra is not just rhetoric. Over the last few years I’ve seen an increase in international funds and multinational organisations taking an interest in New Zealand.

They recognise us as a pool of largely untapped potential and are coming to see what we have to offer.

There is plenty of exciting innovation happening here, but it is probably fair to say that many businesses are not ‘investment ready’, and don’t present themselves in the best light to make an attractive funding proposition. There is some truth that money is hard to get. Not just from New Zealand, but anywhere.

Venture capitalists and angel investors hear about opportunities to spend their money continuously – it’s their job.

They want to see solid business opportunities and investment pitches that are professional, polished, and concise.

It is arguably for this latter point that many businesses unwittingly make the challenge more difficult than is necessary and struggle to get their foot in the door.

New Zealand Trade & Enterprise’s Better by Capital programme addresses this by explaining the capital raising process, allowing a business to identify and access the investment required to expand and internationalise.

Better by Capital partner with private sector specialists who have capital raising experience to help businesses get ‘investment ready’ and prepare a capital plan. NZTE’s capital team can then assist with their global investor networks to identify and access domestic and international sources of funding.

Callaghan Innovation, the government-backed innovation hub, provides more than $140 million in funding a year to businesses to use for their R&D projects to encourage innovation.

R&D Growth Grants provide 20 per cent public co-funding for R&D expenditure, capped at $5 million per annum. R&D Project Grants are targeted at businesses who are new to R&D where Callaghan provides funding for 30-50 per cent of R&D costs.

R&D Student Grants provide funding to cover the salary of a university student or graduate to work on an R&D project within a business for up to six months.

For early stage, high-growth businesses, Callaghan Innovation has an Incubator Support programme.

The incubators are privately owned businesses that can assist with all areas of innovation, including access to networks, market and technology validation, intellectual property assessment, access to capital, and advice on strategy and governance.

The introduction of this programme last year is the result of a push from the Government to get more innovation off the ground in high-tech sectors, which they rightly recognise as crucial to growing New Zealand’s economy beyond commodities.

Aside from the time required for the application process, government grants have few drawbacks and are a useful way for a business to make their cash go further.

R&D grants from Callaghan are non-dilutive, meaning that they don’t affect the ownership structure of the company. If your business is eligible, this funding should be at the top of your list.

Technology entrepreneur Sam Morgan has been known to criticise the government’s overzealousness when awarding grants, however he concedes that “it would be irresponsible not to try to get some”.

Not only does this help the balance sheet, but showing support from the New Zealand government and having access to extra cash for projects will undoubtedly help when talking to third parties about further investment.

It would be remiss to talk about capital raising and not mention crowdfunding. Equity crowdfunding is a relatively new method of raising capital, and is becoming an increasingly popular buzzword since a change in New Zealand’s securities legislation last year allowed it.

The Financial Markets Conduct Act allows a business to efficiently crowdfund up to $2 million without having to put together a costly and time consuming prospectus, prompting the launch of equity funding from PledgeMe, Equitise, and Snowball Effect. Donors pledge their support online, where their investment level can be of almost any size.

Crowdfunding relies on an opportunity reaching a large audience, which means it tends to work best if the project is something the mass public can get behind exciting technology or niche healthcare innovations have done particularly well on these platforms internationally.

As crowdfunding becomes more mainstream, having an opportunity that stands out and entices investors will inevitably become more challenging.

Finding funding for innovation is notoriously difficult and takes a significant amount of time.

But like so many things in business, funding is about networks, and you can’t do it alone. There are tools and services in place to help make it easier – you just need to know where to look.

•Tim McCready is Director of Business Development & Trade Correspondent for NZ INC. He has worked in the public and private sector in New Zealand and offshore growing businesses internationally.

First published NZHerald 26 March 2015

Creating our own Silicon Valley

There are so many components in successfully scaling great tech ventures. NZVIF’s Franceska Banga identifies a number of them in this article where she compares Silicon Valley with NZ. Essentially we all have a role to play!

Silicon Valley. Rightly or wrongly it’s the totem pole by which countries judge their transition to a more technology-based economy. But while many want to create the next Silicon Valley, replicating its confluence of factors is not easily done.

There are some features which helped create and continue to make Silicon Valley unique. It helps, for a start, having nearby two top universities – Stanford and Berkeley – with Stanford’s famed electrical engineering department especially important. So, too, does having huge pools of investment capital nearby.

But what might surprise many about this bastion of private enterprise is that it grew out of a long-term partnership with private enterprise supported by decades of US Government contracts and subsidies.

Its 60-plus years of growth has seen three technological waves.

Post World War II, federal Government money to develop new defence and aeronautical technology established the valley’s foundation and the first wave.

Darpa (Defence Advanced Research Projects Agency), created in 1958, is credited with playing a significant role in the development of the earliest version of the internet.

From that base came the second superconductor and PC wave of the 1970s and ’80s, followed by the internet, social and mobile media technological wave since the mid- 1990s.

The venture capital funds, which today underpin so much valley innovation, also enjoyed decades of Government support.

The Small Business Investment Act of 1958 established federal funding for US venture capital firms. In its first decade, the programme invested US$3 billion into young firms – over three times the amount invested by private venture capital funds.

The programme still exists and in 2013 it provided US$2.2 billion of funding investment. Many of the valley’s most dynamic tech companies – Apple, Compaq and Intel – have been backed by Government funds.

While our tech sector shouldn’t try to mimic Palo Alto – our market is very different – there are many reasons to believe we can build a credible and sustainable tech sector that is economically significant over the long-term. Over the past 15 years there has been significant progress in building New Zealand’s technology landscape.

The annual TIN100 survey shows that over the past eight years, revenues from New Zealand’s top 100 technology companies have jumped from $4.7 billion in 2006 to $7.6 billion in 2014.

While NZ has some catching up to do if we want to create a technology sector of significant economic scale, we are well on the way.

The TIN100 result backs up what we are seeing daily in the business news pages, with a stream of new technology companies becoming household names – alongside Fisher & Paykel Healthcare, Datacom and Trade Me are the likes of Xero, Orion Health, Wynyard Group, Rakon and Pacific Edge.

The innovation pipeline of the next generation of technology companies also looks very healthy.

New Zealand’s tech sector is being built through the application of innovation and technology across multiple sectors led by the software industry. There are many other sectors where unique technology solutions are being developed.

Healthcare integration, helicopters, paint, parking, apples, animal health, surgical dressings and cystic fibrosis are examples where local innovation is leading the world.

There is no single factor driving this innovation. The role of successful private sector leaders and entrepreneurs is crucial. But so, too, is the support from the Government, from establishing Callaghan Innovation, developing business incubators, encouraging more R&D, commercialising more university research and strengthening our capital markets.

We know it takes a long time to develop a sustainable venture capital sector – the Valley’s VC sector took 40 years to develop. And while our VC market is likely to remain boutique, servicing local start-ups as they grow, their role is critical in filling the $2 million-$10 million funding gap – beyond crowdfunding and angel investors, before traditional capital markets.

We may never rival the US but we need to ensure our VC sector reaches a critical mass to meet the needs of New Zealand’s growing tech sector.

Since its establishment as a Government-owned and funded company, NZVIF has partnered with 10 venture capital funds. Alongside its fund partners, NZVIF has invested into some of New Zealand’s most promising growth companies – including Orion Health, Xero and PowerbyProxi.

For every dollar invested by the Government through NZVIF, there must be at least 1:1 matching investment from private investors. The public/private sector investment leverage runs significantly above that. To date, a total of $1.1 billion has been raised for NZVIF VC-funded companies of which NZVIF’s contribution is $100 million.

Overall the VC fund has returned 5.6 per cent per annum. Post-GFC, VC fund investments are showing returns of 26 per cent per annum.

New Zealand has made significant progress over the past two decades and the results can be seen in the array of emerging technology companies with good growth prospects. If every year we have two to three VC funds investing across 10 companies in the $2 million-$10 million funding gap, the impact could be significant.

Building a vibrant early stage investment ecosystem is not an insignificant goal. Look at the countries which have succeeded – the US, Israel, Finland and Singapore. In all, government support behind private sector endeavour has been instrumental.

Franceska Banga is chief executive of the NZ Venture Investment Fund

First published NZHerald 26 March 2015

A start-up founder’s biggest blunder?

This timely article from the BBC summarises some of the key points from the AANZ’s Governance Course very neatly.  It includes “no friends on the board”!!

With a nod and a wink, a well-known venture capitalist said something that made my blood run cold.

I was at this closed-door meeting for founders of high octane new technology ventures to give a talk about the importance of establishing company boards. It was there that this renowned investor said smugly, “You should not have anyone on your board who isn’t an investor or a friend.”

He went on to say that only people who funded the start-up “will care enough” to help founders achieve their goals, whether it be acquisition, fast growth or becoming a public company. He added that only a friend “can side with you in a board fight if you really need it”.

Read more on www.bbc.com

To patent or not to patent

In this article there are some useful perspectives on the role of IP in an angel deal, including insights from AANZ sponsor AJ Park’s Jo Shaw.

Legally protecting your intellectual property by taking out patents on your new product, service or design is a bit like managing teenage children, says Greg Mirams, a Dunedin-based agritech-entrepreneur and founder of animal parasite diagnostics company Techion Group. “You hope that one day they will turn into something valuable for you in later life; they quite merrily take a lot of money, promise lots, but often they don’t deliver.”

Read more on www.NZBusiness.co.nz

How the mathematics of venture capital has changed and what it means for start-up exits

Fascinating article about the role some of the big accounting firms – specifically mentioning our sponsor KPMG – are playing introducing strategically placed startups to corporate acquirers with commentary about the impact this might be having on the size of exits.

Floating on the stockmarket could fall out of vogue for start-ups backed by venture capital in favour of trade sales to incumbents, because of lower demand for massive exits.

Jeremy Colless, the managing partner of Artesian Capital Management, told a roundtable on innovation hosted by KPMG on Monday that the trade sale option was becoming more viable because “the mathematics for venture capital firms” had changed.

Read more on www.brw.com.au

Hawkes Bay economy gets major blast from new food facility

The power of angel investment. Enterprise Angel backed Rockit Apples creating jobs in the Hawkes Bay. And a cry for angels in that region too!

The global success of Rockit™ apples has led to a $17 million investment into land development and a state-of-the-art food packaging facility in Havelock North.

Minister for Economic Development, Hon. Steven Joyce officially opened the multi-million dollar food facility today (Wednesday).

Havelock North Fruit Company managing director Phil Alison said world-wide consumer demand, which is up 700 percent from 2013, has proved a fruit such as an apple can be marketed as “a premium snack food and compete against sugar-coated confectionary.”

Read more on www.scoop.co.nz

Bullish claims excite angel investors

This story profiles the role experienced angel investor, Susan Iorns has had in the journey and growth of one of the first Lightning Lab graduates, Expander.

Making a compelling pitch to investors isn’t easy, but Ollie Langridge’s bold claims attracted considerable interest from investors before he even had a product, let alone started marketing it.

The former TV commercial director first addressed potential investors a couple of years ago at Wellington’s startup accelerator Lightning Lab’s demo day. He told them he and business partner Paula Nightingale had an idea that could potentially prevent infant deaths, like those caused by the Chinese melamine scandal.

This bold claim related to the technology they would eventually develop, based on QR codes (abbreviated from Quick Response Code, a two dimensional matrix-like barcode) which could mark products with unique codes like a fingerprint.

Consumers can easily scan this code with their smartphones to check a product is authentic and safe – an option that is in increasing demand given the increase in food safety incidents and resulting tragedies such as the infant deaths in China caused by contaminated milk powder.

Langridge’s claims were enough to whet the appetite of a number of early stage angel investors present at the demo day, including Wellington-based Susan Iorns, who together with other members of Wellington’s angel group, Angel HQ, and the NZ Venture Investment Fund, invested $500,000 to develop Langridge’s Green Codes cloud-based technology under the company name Expander.

Iorns was so impressed she even became chair of the fledgling company. “I look for a couple of things when I’m considering investing in a company – whether the company is likely to create high-skilled jobs in New Zealand and whether it is likely to succeed abroad,” Iorns said.

“Expander’s technology was both scalable and I didn’t see any geographic boundaries. Ollie’s pitch was also a great and worthy call to action.”

A subsequent, oversubscribed capital-raising round last year secured even more funding to help accelerate Expander’s market overseas, says chief executive Erwin Versleijen, who joined the company early last year.

Versleijen formerly worked in mergers and acquisitions with PwC and commercialised products for Minolta, Samsung and BMC Software. He says he saw Expander’s potential from his first introduction.

“It’s a startup in the right space, so it’s likely to be a leader in its field,” Versleijen said.

The anti-counterfeit and brand protection market is expected to grow from US$3.4 billion today and the traceability technology market is expected to be US$14 billion by 2020.

Consumers are demanding more and more information about the origin of products before they buy, he says. “With ever increasing competition for market share, traditional media and sales techniques simply aren’t enough anymore.”

You don’t often see New Zealand shoppers using their smartphones to scan products but it is common in Southeast Asia, with most smartphones owners in China using QR code readers daily, Versleijen says.

When consumers scan Expander’s QR codes on a food or beverage product they are directed to a mobile landing page where they see where the product came from and who made it, nutritional facts and allergy information, and how to get in touch.

Consumers can also register to receive more information like recipes and accept invitations to social media.

For companies, this technology allows them to increase loyalty and brand equity, and get valuable data on where and how consumers are buying their products, Versleijen says.

Expander’s QR technology differs from the competition because its QR codes are randomly generated and not reliant on a legacy system, he says.

“Consumers can scan the codes from any reader on their smartphone. There is no dedicated application to download or training required.”

This year Expander is targeting the global dairy industry.

Exporters of infant milk formula and fresh milk to China need to have unique identifiers, such as a QR code for traceability on each package and a recall process to meet regulatory requirements.

Expander has cracked the QR code, now it’s ready to crack the international market, Versleijen says.

First published in NZHerald 12 March 2015

Andy Hamilton: Kiwi companies need to think bigger

In this article Ice House CEO and former AANZ Chair, Andy Hamilton challenges us all to think bigger and be more focused in our aspirations for economic growth and specifically the ventures angels are supporting.

Everything is fine in New Zealand is it not? The country has experienced a great few years. We have ridden the commodity boom and other countries’ misfortunes.

Things have changed for the better, while many things have not. What could be wrong?

My view is the current Government has a definitive optimistic plan for our economy and it should be complimented for its focus, clarity and execution.

At the same time, I wonder whether it has an indefinite optimistic approach to the hidden challenge that exists, and that is dangerous for our long-term prospects.

To me, the Government lacks a plan to enable our economy to be truly competitive longer-term.

Just riding out the macro factors will not be enough to win.

We have always, it seems, produced great people and some teams which are world beaters, but we have not and are not creating great companies on a global scale fast enough.

A key metric: How many companies in New Zealand employ more than 100 people? The answer is 2318, with an average employee number of 430, representing 48 per cent of all employed persons in our country. Do you think this is a small or big number?

Actually, the relative result is very similar to comparable countries, but the hidden metric, the big and scary difference, is the quantum size of our big companies vis-a-vis these other countries.

Our big are way, way smaller.

This has implications for our long-term prospects and I believe this needs to change for us to improve the nature of our economy and ultimately GDP per capita for our people.
We lack a supply of entrepreneurs who can turn ideas into global companies like the Israelis or Americans or a supply of talented executives in fast-growing industries such as technology that can do the coding, do the tech work.
Without this wealth we will not be able to look after our people and the increased stratification that is occurring between the rich and poor all over the world will also be in NZ. That leads to discontent and worse.

We know we produce good talent, whether that is as sportspeople or executives in large organisations. We know we can make stuff, like milk and more recently technology.

But can we build big companies that ultimately benefit and help us create a better future for New Zealand? Big question.

Our Government knows this is the problem. Even though it may be harsh to say its position is as an indefinite optimist, I contend that it lacks a plan and the confidence to attack this issue, and maybe even it has not prioritised this as far up the job list as it should.

One company the size of Fonterra is not going to cut it, it is like what we call “key person risk”.

My solution: Only one thing matters and that is talent, but talent specifically in building big and bigger companies.

Let’s take the pulse for that.

We have a great bunch of expats and Kiwiphiles, and arguably an over-supply in the demand for their skills, experience and networks.

We are seeing emerging technology and new age leaders, aspirational millennials who don’t want to work for the “person”. An emerging group of early stage investors, angels and venture capitalists who are learning fast how to support and enable our companies to succeed. And an emerging global group of believers, Peter Thiel of Founders Fund and Vinod Khosla of Khosla Ventures to name just two.

On the other hand, we don’t have senior executives in our big companies who are built to succeed in the world, nor board members of our big companies with diverse perspectives and experience from key markets such as Asia and America.

We lack a supply of entrepreneurs who can turn ideas into global companies like the Israelis or Americans or a supply of talented executives in fast-growing industries such as technology that can do the coding, do the tech work. And finally, we lack a set of investment bankers who can help build global capital pools to support our companies’ global aspirations.

There is much work to do, and the only thing to do when faced with a big challenge is to start biting it off one chunk at a time.

We must do something, we must engage. If you live overseas then nominate yourself to go on the boards of Kiwi companies to give them an outside-in perspective. Do like Bridget Coates, Derek Handley, Phil Veal and Claudia Batten and find a way on to the boards.
The director pool in New Zealand is a blue-rinse club, both men and women, and it was very challenging for these people to break through, but they did, and so should you because it does and will make a difference.
The director pool in New Zealand is a blue-rinse club, both men and women, and it was very challenging for these people to break through, but they did, and so should you because it does and will make a difference.

If you are from the tech industry, and you know how to hire and train more people to get into the tech industry, we need you in New Zealand, because our fast-growing tech companies are sucking up all the available talent and not investing enough to fill the gap of what is likely 10,000 jobs right now.

Maybe instead of going from 500 to 700 focus firms for the Government’s NZTE, they should have gone to 300 firms and really enabled their scaling, or were they worried about the value they create for these firms?

Now, despite the challenges and hurdles, there are some signs that are good. There is a shift happening in NZ, it is just that you need to look for it.

Look at the number of listings over the past few years alongside the performance of the NZX itself, which has ranged from 15-28 per cent year on year for the past three.

There have been exits too, Greenbutton’s sale to Microsoft generated a significant return for the founders and investors, Sutton Group and Gardians were sold to Danone showing it is not just tech where value can be created.

There is also an emerging pack that includes Lanaztech, Rocket Lab, PowerbyProxi, Nexus6, Vend and Shuttle Rock and others regularly coming out like STQRY, Puteko, Parrot Analytics, Drikolor, 1-Above, Harmoney, Varigate, Texus Fibre and iMeasureu.

All of this activity is healthy, it fuels and stokes the pipe, but we need to remember that we must see scale being achieved from this. How many companies sit alongside Fonterra and are actually delivering year-on-year sustainable returns? Wouldn’t it be great to have the top 10, top 50 globally relevant and scaled businesses owned out of New Zealand?

Things are good in New Zealand, but we should not be fooled. In my view we must address our lack of ability to build scaled and relevant global corporations from New Zealand and we must get on to it now.

I encourage others to positively address this challenge by finding ways to make a difference to create globally scaled and relevant firms from New Zealand.

Andy Hamilton is chief executive of business incubator The Icehouse.

First published in NZ Herald 12 March 2015

Kiwi start-up Notable gains angel investment

Kiwi start-up Notable has attracted funding from US investors YCombinator, a start-up accelerator, and Peter Thiel’s Founders Fund in its latest round of capital raising.

The Auckland-based company has just closed its third fundraising round for an undisclosed amount with a range of angel investors including the two US investors, Flying Kiwi Angels, the NZ Venture Investment Fund, Sparkbox Ventures Group and EFU, the NZ investment company of Japanese billionaire Soichiro Fukutake.

Notable has built a cloud-based PDF viewer with tools that help users annotate and collaborate on files. The company says the SaaS (software as a service) platform works on all browsers and integrates with Google Drive.

Read also:
• Student life made easier with note-sharing app
A new testimonial on Notable’s website from Founders Fund partner Scott Nolan said Notable PDF had “solved one of the cloud’s most stubborn pain points: collaboration through PDFs”, while Altman said “we are still in the early days of online collaboration and Notable PDF is one of the most exciting leaps forward I have seen.”

Notable was founded by three 20-something Auckland University students, Hengji Wang, Alliv Samson and Jordan Thoms, who remain the major shareholders.

They were finalists in the university’s annual Spark Challenge in 2012 and set up the company the following year.

Growth has accelerated in the past year since the company pivoted the app from just being aimed at students taking notes to all users.

It has had over 500,000 users and 1 million downloads since March 2014 and is now the leading PDF viewer app on the Google web store.

The start-up is chasing both the education and professional sectors and will use the additional funds to build more business partnerships, particularly in North America, and on product development and hiring more staff.

Some 80 per cent of users are US-based and chairman Bob Drummond said that follows a decision last year in the US for K12 schools to use Google Chromebooks, for which there are a limited range of apps, as the standard technology.

“There’s enormous potential for growth in the US with a lot of schools and enterprises that have not been involved yet.

Both market segments are growing at a parallel quantum rate,” he said.

The start-up’s focus is on growth rather than profitability at this stage, Drummond said.

Users can download the app for free or pay for premium versions that add on more tools, and there is special pricing for school users.

Drummond said no sales have been made to schools in New Zealand yet.

The founders have been attending a number of education conferences in the US including one in Orlando, Florida, in January where Notable’s freebie handouts included Whittaker’s chocolate.

First published on nzherald.co.nz 10 March 2015

Kiwi start-up Notable attracts angel investment from the US for the first time

In securing funding from US investors, Notable is setting a terrific example of what is not only possible but to be enthusiastically welcomed.  Congratulations to AANZ members NZVIF, Sparkbox and Flying Kiwis who have been part of this deal.

Kiwi start-up Notable has attracted funding from US investors YCombinator, a start-up accelerator, and Peter Thiel’s Founders Fund in its latest round of capital raising.

The Auckland-based company has just closed its third fundraising round for an undisclosed amount with a range of angel investors including the two US investors, Flying Kiwi Angels, the NZ Venture Investment Fund, Sparkbox Ventures Group and EFU, the NZ investment company of Japanese billionaire Soichiro Fukutake.

Read more from www.nbr.co.nz

Why we need more female investors as well as startup founders

A reminder in this article out of Australia which resonates in NZ too, that we need more female investors and founders.  And another reason why we can be so proud of the progress our own Arc Angels is making.

International Women’s Day is this Sunday – a perfect opportunity to recognise the contributions women make to the Australian startup ecosystem.

However, like other industries, gender representation is far from perfect. In 2012, only 4.3% of Australian startup founders were women. There is also evidence to suggest men are more likely to receive venture capital than women – even when the content of their pitches are the same.

Read more on www.startupsmart.com.au

Firm aims to help cystic fibrosis sufferers

Breatheasy is a wonderful example of what motivates and inspires angels to invest in early stage ventures. Founder and CEO, Andrea Millar spoke compellingly about the difference her venture could make to cystic fibrosis suffers at last year’s Angel Summit.  A New Zealand drug company is seeking $500,000 to trial an experimental cystic fibrosis treatment it plans to have produced locally.

Auckland-based Breathe Easy aims to produce Citramel, a spray designed to dissolve biofilms on the mucus which accumulates in cystic fibrosis sufferers’ lungs.  It is launching a $500,000 share offer on online investment company Snowball Effect.

Chief executive and former Timaru resident Andrea Miller, said the company had already raised more than $1 million from “angel investors”, including at least one South Cantabrian and through investment companies New Zealand Venture Investment Fund and Pacific Channel. Breathe Easy director Brent Ogilvie is also a director of Pacific Channel.

Read more on www.stuff.co.nz

Auckland accelerator startups win seed funding

More great ‘angel-food’ in the hopper. Congratulations to all the Lightning Lab companies selected in this next cohort of inspirational startups who will be seeking investment in three months time.  A web business that helps guys get advice from girls on what clothes to buy is among nine Auckland startups that have won seed funding and free advice.

Wear it Her Way and the other winners were selected from 200 entrants to receive assistance from “digital accelerator” Lightning Lab.  The companies get $18,000 in seed funding and will join a three-month course that provides “intense mentoring”, culminating in the opportunity to pitch their business to 200 angel investors.

Read more from Stuff.co.nz

‘Chunk of capital’ puts Rocket Lab on launch countdown

Congratulations to the team at Rocket Lab on raising their latest round of funding. Andrew spoke compellingly at the Angel Summit last year about the ability to build global companies from NZ and this is another proof point.

Rocket Lab has attracted new financial backing from one of the United States’ oldest venture capital firms and aerospace giant Lockheed Martin to put it on course to launch its latest vehicle into orbit this year.

The Auckland-based company aims to send satellites into space for a fraction of the price of bigger existing ventures. Founder and sole director Peter Beck said the latest financing round would allow the company to test launch its Electron rocket this year and a commercial launch next year. Existing backers have also committed further towards the firm.

“The size of the investment is commercially sensitive [but] you can see by the size of these projects these are not trivial amounts of money. This is a significant chunk of capital that will hopefully bring us into commercial operations in 2016.”

The company said it would soon announce its New Zealand launch site.
The 18m tall carbon composite Electron could be launched from a site the size of a rugby field. The site required a northeasterly aspect and had to be clear of populated areas.

The firm aims to transport small satellites into space for less than $6 million, compared with more than $160 million for an average launch overseas using rockets 60m tall.

The lead-time for businesses to launch a satellite would be reduced from years to weeks.

Beck said Lockheed Martin has had a relationship with his firm for the past five years but the strategic equity funding was the first financial investment it had made.

While the Maryland-headquartered firm is among America’s military giants, Electron rockets had no weapons capability because they couldn’t carry sufficient mass and flew on the wrong trajectory.

Lockheed has been involved in the US space programme since its inception and launched satellites using Atlas rockets. Last year it earned more than $10 billion from the services and “strategic missiles lines of business”.

Venture capital firm Bessemer Venture Partners is more than a century old and has provided seed funding for companies ranging from International Paper, retailer Staples to high-tech firms Skype, and LinkedIn.

David Cowan, a BVP partner, has joined Rocket Lab’s board as part of BVP’s funding.

The Electron rocket would revolutionise aerospace, Cowan said.

Existing backers, Silicon Valley’s Khosla Ventures and Sir Stephen Tindall’s K1W1 investment fund participated fully in the latest funding round, Beck said.

The eight-year-old company has developed and launched a number of rockets and received up to $25 million of government funding over five years.

He said Rocket Lab was able to raise funds from venture capital firms very quickly which was important as there was growing competition in the small rocket market.

“The market opportunity for small satellites is massive at the moment and we see a number of competitors in the US. Their biggest issue is trying to get funding.”

Lockheed Martin chief scientist Ned Allen said his company invested in technology to help keep up with innovation across the industry.

“Rocket Lab’s work could have application in a number of aerospace domains, and we look forward to working with them to complement our overall efforts in small lift capabilities and hypersonic flight technologies.”

Rocket Lab expects to unveil further details about the Electron at the Space Symposium in Colorado Springs next month.

First published on nzherald.co.nz 3rd March 2015

Kiwi tech start-up spearheads global smart textile market

Congrats to Pacific Channel for the amazing work they have done to champion this fantastic angel backed company.  Another great illustration of the power of kiwi inspired innovation.

Kiwi tech start-up spearheads global smart textile market with major licensing deal
New Zealand smart fabric technology start-up, Footfalls & Heartbeats announced today the signing of an exclusive ongoing licensing deal with one of the world’s largest medical compression therapy companies, securing its foothold as a key emerging player in the smart textiles market.

The deal ensures significant ongoing funding for growth for the Kiwi company.

Read more on www.scoop.co.nz

 

Angel expert shares vision about investing in NZ

American Angel Capital Assn Chair Emeritus, John May is having an inspirational impact as he tours New Zealand. In this article he commends Tauranga for the quality of its innovation and startup community.

Tauranga is a tier-one city for angel investing, says American early-stage capital pioneer John May.

“Tier one cities understand it’s something where you’re really helping the local economy, while you’re working on your own financings as an angel. And that you can’t do this without a group of entrepreneurs coming up with great ideas.”

Mr May, former chairman of the US Angel Capital Association, last visited New Zealand briefly five years ago, and this time will spend a month in the country.

During his visit to Tauranga, Mr May took part in a number of networking events with local entrepreneurs, investors and businesspeople. He also ran a workshop for members of host organisation Enterprise Angels, one of the most active early-stage investing groups in New Zealand.

“The three components of a vibrant angel group are investable deals, active angels not just dumb money, and charismatic leadership with people willing to volunteer their time to grow the local angel community,” he told the Bay of Plenty Times yesterday.
All of those elements were present in Tauranga, he said.

“We’re not just trying to make money off the entrepreneur, we’re trying to help them grow,” he said. “This is patient capital – it’s mentor capital.”

Mr May said New Zealand shared a history of entrepreneurial activity with countries such as Canada, Australia and the US.

“There’s an understanding you have to take risks to get rewards, there’s the important element of the rule of law, and a tax structure oriented towards protecting minority interests, which helps create a positive environment for small businesses trying to grow.”

Enterprises Angels executive director Bill Murphy said the experienced US investors the group had invited to Tauranga over the years brought expertise from a market that had been angel investing for two or three times as long as New Zealand.

“We’re still getting new angel investors coming on board all the time so the Angel Investing 101 workshop is incredibly useful for them,” said Mr Murphy.

“But the Enterprise Angels management team are now working on the nuances around effective investing and most especially the post-investment relationship with the start-up company. We need to learn how we can do everything we can to make sure they’re successful.”

Mr Murphy said most US angel groups were made up of cashed-up, wealthy retired businessmen with plenty of time to work with their investee companies.

“In New Zealand, nearly all of our angels are still working fulltime,” he said. “Enterprise Angels has to manage a lot of the process and use our angels in defined areas of their expertise because they don’t have a lot of time. And that creates some challenges in terms of how you resource that. Conversations with experienced angel investors like John are very valuable to us.”

Entrepreneurs focussed on how best they can help

John May also joined a panel – including local angel investors Daryl French, Beppie Holm and John MacDonald – for the Angels at My Table event last night, organised by the Venture Centre.

The event brought the angels before 50 local entrepreneurs, with panelists pitching their ability help get new companies off the ground.

Mr May said he had been impressed with the types of deals available in New Zealand.
“In terms of entrepreneurship and hi-tech, in the horticultural and agri-business and dairy sectors, you’re finding it easy to put knowledge and expertise together with resources, to be state-of-the-art and to find ways to grow even outside your region,” he said.

“The thing to do is to focus on the businesses where you have historic roots and look for ways to deal with the most scalable and innovative aspects of those industries,” he said.
Jo Allum, a co-founder of Venture Centre, said it had been great to have so many entrepreneurs with potentially good ideas getting to know some local angels.

“And some of the best advice from the angels was to tell entrepreneurs they shouldn’t just be looking for money,” she said. “You should also do your due diligence on the angel, find out how he is to work with and whether, as well as investing, he helps you along and is interested in developing your business.”

Darren Bruning of Tauranga-based startup financialme said: “I thought it was a really good idea and nice to get a bit of visibility into how these angel-types think.”

Mr May also visited the Newnham Park Horticultural Innovation Centre in Te Puna, which nine companies, including PlusGroup, Kiwifruitz, Southern Produce, Plus Group, Heilala Vanilla, and industrial design company Locus Research.

Plus Group managing director and Enterprise Angels board member Steve Saunders, who lives in Te Puna, later hosted Mr May to an informal dinner with a group of angel investors. The dinner was catered by MasterChef New Zealand 2014 winners, sisters Kasey and Karena Bird from Maketu, and was designed to give Mr May “a taste of Kiwiana,” said Mr Saunders.

“John’s very interested in cross-border investing and that’s one of the things he’s been looking at here,” he said. That could result in American and New Zealand angel investors interacting more on potential deals, he said.

“There is some potential for cross-border trading,” said Mr Saunders.

“I think being able to get those connections internationally is hugely valuable from a New Zealand perspective. Especially when you’re looking at a technology in New Zealand you think has real relevance to an international market.”

First published on nzherald.co.nz 25 February 2015

Executive success: Aim high to hit overseas targets

Want a sense of the personality profile required to be an angel investor? Miles Valentine, profiled in this fascinating story of his path to angel investment, provides a great example. High energy, tenacious, loves sales, ambitious and all with an innate belief in New Zealander’s ability to make a mark in global markets.
Valentine says New Zealand companies aiming for overseas markets need to think big right from the start.

“And we don’t. We were guilty of this at Zeacom, absolutely.

“It took us a long time to figure out how wrong we were.”

He says New Zealand companies heading to North America need to lift their eyes above the small-to-medium business market and aim for corporates.

“Sell the sales that are worth hundreds and hundreds of thousands of dollars as opposed to 30 to 40 [thousand] because that’s what makes it worthwhile.

“That’s what makes you more successful but because we do come from small-to-medium, we feel very good at that space and we feel an affinity for it and so inevitably we find ourselves doing it.

“You’ve got to sell an awful lot of things at 20 to 30 grand to make a meaningful number, as opposed to selling something for $200,000 or $300,000 or $400,000.”

In the case of PitchMetrics, he says, a good-sized sale in New Zealand would be to a company with a sales force of 300 people.

In the United States he wants it to push a market where it’s selling to companies with no less than 1000 people in a sales team. To do that, PitchMetrics needs to be structuring its product now to match the scale and demands of those clients, he says.

Valentine doesn’t just have an affinity with PitchMetrics’ goals to conquer the US; he also loves the product.

Since his first business selling telephones in the late 1980s, Valentine has been very sales-driven and he could see the potential to add substantial value beyond his investment stake, incorporating his sales experience into the product design.

He’s also taking his passion for selling to help salespeople hone their skills with a training business, Sales Builder.

Valentine says most people get into sales because they have the “gift of the gab” but very few have any understanding of the different sales theories, models and process.

“Frankly I’ve always loved that.” The importance of having a well-trained sales force came from his telephone selling days, when the company adopted methods espoused by training guru Brian Tracy and destroyed the competition, growing sales from nothing to $12 million in four years before selling the business to U-Bix.

He says sales is a dirty word in business, thanks to the “horrible old sales methods” used by the likes of the Encyclopaedia Britannica salesmen.

“For me, for my career, it’s always been about sales and therefore this thing that I’m doing now, this sales training, it’s almost the conclusion of all the things that I’ve done previously.

“It’s always been about sales.

“Every single business that you think of right now, it’s all about revenue and we as the managers often don’t give it enough focus.”

First published on nzherald.co.nz 13 February 2015

Drone company Aeronavics’ funding takes off

Another indicator of the appeal of inspirational early stage companies with high growth potential is the speed with which investors have committed to Aeronavics through Snowball, one of New Zealand’s new equity crowd funding platforms. Equity crowd funding is another valuable source of early stage funding. Of course we all need to keep reminding ourselves that early stage, high growth also means high risk – capital committed at this end of the capital markets is money we want to see make a return but should also be money we can afford to lose.

Read more

Firm speeds data to cloud with help of Angel Investor

Jason Gleason and his business partner Nigel Thomas had that “eureka” moment for their company, Eight Wire, when they were working in the salt mines of IT consulting.

“The work we were doing was a very manual process. It was the IT equivalent to digging a ditch. It was frustrating,” Gleason says.

One data warehouse project they worked on required them to integrate data from 40 different sources, such as emails and different databases, with each feed requiring so many lines of code it was just one big error factory. As each information stream changed, so did the rules for sorting it, which meant a lot of very dull manual work, Gleason says.

So Thomas and Gleason left their “safe jobs” to build some technology to solve the problem and speed the integration of big data to the cloud. Less than two years and nearly half a million dollars later, Eight Wire is filling a vacuum in the cloud market.

“When we started we were surprised there was nothing like what we wanted to do out there. We saw startups that were raising tens of millions of dollars overseas for what were really just small, incremental changes to system integration. That was eye-opening,” Gleason says.

Thomas and Gleason have more than 35 years’ IT experience between them, spanning programming and management roles, where they oversaw teams of developers, but they knew they lacked the business acumen they would need as incipient entrepreneurs so they nurtured their idea at the Creative HQ business incubator in Wellington.

They attracted the attention of Wellington-based, tech-savvy (early stage) angel investor Darryl Lundy, the former chief financial officer of New Zealand tech success story GreenButton.

GreenButton specialised in high-performance cloud computing for clients which required huge amounts of data but didn’t want to invest in their own hardware. Lundy helped oversee GreenButton’s rise from rapid-growth startup to its acquisition by Microsoft in May last year.

“What these guys were doing was a similar story to GreenButton so I really liked what they were doing,” Lundy says.

Eight Wire helps companies move data, inexpensively, without the need to know how to code. It automates all the steps that once cost Gleason and Thomas hours of valuable time.

Tables of information are copied from old sources, moved to a database in the cloud and checked for common errors automatically in minutes instead of manually in hours.

Lundy said there were other tools available previously, but these were difficult to use, even for IT staff.

“Eight Wire is a simple solution for what doesn’t have to be a big problem.” Lundy has invested in about a dozen companies.

“Top of my list is to find good people who you think will take an idea and make a success out of it. Spend a good amount of time with them, ask them questions … and see how the process goes.”

Eight Wire secured $400,000 from a group of angel investors, including Lundy, last year. The capital will take the company through the next 12 months as Gleason and Thomas build up clients, attract system-integrator partners and establish an office in Dallas, Texas. The company has five employees and is expecting to appoint a sixth shortly.

Gleason says this year is about gaining traction in the US and Australia as well as NZ. “The capital we’ve raised allows us to finally press the gas on things. It’s very exciting.”

• Produced in conjunction with the Angel Association of New Zealand.

First published on nzherald.co.nz 19 February 2015

Put social ‘good’ on agenda, firms told

Internationally renowned Kiwi entrepreneur and social responsibility advocate Derek Handley sees Tauranga as well placed to embrace an evolving new business model in which doing good is as important as doing well.

The key theme of Mr Handley’s presentation and his discussions in Tauranga was the growing global trend to try and build business models where the product or service models created a significant social impact. That represented an evolution of the older corporate social responsibility model of using a portion of business profit to do good in the community or elsewhere, he said.

Mr Handley’s presentation received a warm welcome from more than 350 people at the ASB Arena last Friday. The event was sponsored by Priority One, whose chief executive Andrew Coker had been working on securing Mr Handley’s visit since seeing him speak in 2011. Mr Handley also attended a private dinner with about 20 major stakeholders in the Tauranga business community.
“There are a lot of interesting things happening here and they seem to be picking up pace,” Mr Handley told the Bay of Plenty Times. He pointed to the Enterprise Angels investor network, projects such as the WNT Ventures business incubator, which had attracted government matching funds, and the growth of co-working spaces, amongst other developments.

Mr Handley said he came to Tauranga to understand what was going on in the local entrepreneurial sector. He also learned about the various communities working on initiatives to create great communities and lifestyles in the region without compromising the things that made it special.

“I think we’re at the beginning of a new wave of trying to do things in the world and how businesses and entrepreneurs see the purpose of their organisations, and moving that from a purely financial to a much more socially or environmentally aware viewpoint,” he said.

The new mindset would co-exist alongside traditional models of philanthropy, he said.

“We are also entering a renaissance of philanthropy with things like the Givealittle pledges, with more and more billionaires planning to give away half or more of their wealth, and a really fast-rising proportion of people starting to give significantly when they are very young.”

Holland Becket partner Bill Holland, who chairs Community Foundations of New Zealand, attended the private dinner. He said the interesting part of the concept was about building the concept of philanthropy into a business from the start.

“It’s not just a matter of people being successful and then deciding to be philanthropic,” he said.

“The philanthropic side is incorporated in the business plan and it’s quite interesting how that in itself can help make the business successful … there’s no question people are looking at the bigger picture. Environmental and sustainability concerns are important not only to business, but to their customers.”

How business can give back to society

A private dinner brought Derek Handley together with some 20 Tauranga leaders in business excellence, academia, entrepreneurship, philanthropy, iwi fund management, early-stage investment, government and social enterprise.

It was hosted by Nicki Wilkins, general manager of the Acorn Foundation, and her lawyer husband Marcus, and arranged by Tina Jennen, who works with Enterprise Angels and local entrepreneurs.

The Acorn Foundation encourages people to consider leaving a gift either in their will or during their lifetime to benefit the local community and Ms Wilkins said the dinner provided an opportunity to hear more about what was happening in the business sector in terms of philanthropy. She is a board member of Community Foundations of New Zealand.

“The desire for people to give is growing significantly,” she said. “I can see real benefits in Derek’s desire to help people in business to give in a way they know they are truly making a difference.”

Tina Jennen said Tauranga had the capability to become a national – and global – leader in the new and more socially responsible way of doing business.

“When you bring disparate people together a powerful cross-pollination of ideas can occur,” she said. “We wanted a diverse group of key community leaders to hear Derek’s plans so we can get ready to take action.”

Derek Handley said the dinner had been a great opportunity to have more in-depth discussions.

“As small as New Zealand is, you don’t get a chance to meet these people that often,” he said. “It’s fascinating what’s going on here in Tauranga and it was really interesting and inspiring for me.”

Tauranga was also beautiful, said Mr Handley, who stayed on for the weekend. He noted one of the roles of business and entrepreneurship in society was to enable people to have a fulfilling balance of holistic lifestyle for people. “In a city like this you can almost feel it being 21st century holistic living, but able to build interesting ventures that mean something. That’s a great place to be.”

First published on nzherald.co.nz 17 February 2015

SmartShow app to enhance CeBIT

CeBIT, Australasia’s largest technology expo – taking place 05 – 07 May 2015 at Sydney Olympic Park – has contracted New Zealand-based SmartShow to provide its event apps via flagship product ShowGizmo.

“We’ve had event apps in previous years, but mobile technology is constantly evolving and the ShowGizmo app is an international market leader with an impressive feature set,” said Jan-Peter Lauchart, chief operating officer of Deutsche Messe, organisers of CeBIT Australia.

Read more on www.impactpub.com.au

Jones to head tech incubator

Former Seed Co-Investment Fund team member, Carl Jones is profiled in this story as he takes up the CEO role at WNT Tech Incubator in Tauranga putting the Enterprise Angels in the front seat to receive some high quality ‘angel food’ in the near future.

Carl Jones, a former Tauranga local with a strong track record in government-led venture capital investment, has relocated back from Auckland to take on the role of chief executive with new local technology business incubator WNT Ventures.

Mr Jones, who began his career with Craigs Investment Partners, was previously investment manager for the Government’s New Zealand Venture Investment Fund (NZVIF). He also played a leading role in NZVIF’s Seed Co-investment Fund (SCIF), which provides matched investment alongside selected partners, including Tauranga early-stage investment group Enterprise Angels.

“Our partners are extremely important,” said Mr Jones, who took up his new role late last year. He noted WNT Ventures was a collaboration bringing together virtually all of the key early stage and technology investment entities in the region.

“The WNT Ventures structure is unusual, but the real selling point for me is to be able to walk into a Crown research institute or university and say, I have this really deep and wide network of not only people and capability, but experience and capital.
That’s really attractive to them.”

WNT Ventures was one of only three new technology incubators announced by the Government last year. It will access a repayable grant programme from Callaghan Innovation for start-up businesses based on locally developed intellectual property and novel technologies.

“There is a gap in the market I call where angels fear to tread, between post-research and where the angel investors get involved.”

While angel investors may like the look of a new technology, they usually required a degree of incubation to prepare it for commercialisation, he said. “We can leverage our internal funding and our Callaghan funding and take on the risk to help the people with the technology to get to the next stage where angels want to invest.”

He added WNT Venture’s ability to help new companies was greatly enhanced by the experience of its partners, as well as Enterprise Angels’ 150-plus members, who have invested almost $12 million in 37 early-stage deals to date.

The incubator had a goal of investing in four early stage technologies a year.

First published on nzherald.co.nz 12 February 2015

Leading angel set to impart wisdom

He’s been in NZ barely a week and John May is spreading the word about the power of angel investment. He’ll be in Tauranga this week and you can catch him in Wellington, Palmerston North and Christchurch over the next fortnight.

Tauranga investors interested in learning more about the angel investment space will get an opportunity later this month when American chair-emeritus of the Angel Capital Association John May visits the region.

“There are two ways of learning about angel investing ” by doing it and by hearing from people who have done it a lot,” said Bill Murphy, executive director of Enterprise Angels, the Bay of Plenty-based group which has become one of the largest and most active angel groups in New Zealand.

“Any of us who have been involved in EA for a while will tell you that the visits of people like Bill Payne and John Huston to EA have been critical in deepening our knowledge and making us better investors.”

The Angel Association of New Zealand is bringing Mr May out from the US.

Mr May has been at the forefront of the angel investor movement and is managing partner of the New Vantage Group, which has organised five angel investing organisations in Washington, D.C. placing funds into more than 50 companies.

In addition to having chaired the national US angel association, he is a lead instructor for the “Power of Angel Investing” seminars, a programme of the Angel Resource Institute.

He is also the co-author of two books, Every Business Needs an Angel and State of the Art: An Executive Briefing on Cutting-Edge Practices in American Angel Investing. Washingtonian Magazine named Mr May one of its 100 Tech Titans of DC, and he was awarded the Hans Severiens Award for the contributions to the angel investing industry at the Angel Capital Association Summit in San Francisco in 2010.

Currently, Mr May is active in cross-border angel investing and developing angel investment ecosystems in emerging markets.

He will speak at three events in Tauranga:

-A networking event from 5pm to 7pm on Thursday, 19 February, hosted by Enterprise Angels and Priority One, at the Ignition co-working space, Ground Floor, Rydal House, Grey Street.

-A half day workshop from 9am to 12pm on Monday, 23 February, at the BaseStation, Durham Street, hosted by Enterprise Angels

-An “angel at my table” event at Tauranga Art Gallery at 5pm on the Monday.

First published on nzherald.co.nz 12 February 2015

The touch of an angel

Angel investors are often an entrepreneur’s first port of call for capital. But what’s it like dealing with angels? Is it more halos or hassle? NZBusiness sat in on the Angel Investor Summit where entrepreneurs shared their highs and lows.

Scantily-clad forms don’t tend to dominate investment gatherings. So perhaps it wasn’t surprising that there was a palpable feeling of renewed interest when Kiwi entrepreneur Paul Cameron flicked up a slide of a rather beautiful female ‘angel’ at the recent Angel Investor Summit in Auckland.

“We really like angels. They are beautiful people. And this is what I think about when I think about my angels,” Cameron said to howls of laughter from the mainly male, mainly older and mainly well-to-do and (thankfully) fully dressed audience.

Cameron says he likes his angels for a number of reasons outside the cash they bring. Key for him has been the support they’ve given him and his business, Booktrack.

Booktrack’s patented technology lets anyone add a synchronized movie-style soundtrack, including sound effects, to an e-book or other digital content, with the audio paced to the reader’s own reading speed. The idea dates back to 2009, but it wasn’t until 2011 that Cameron sought help and capital. Since then, Booktrack has raised more than $2 million from early stage investors including Sparkbox, The Warehouse founder Stephen Tindall’s K1W1, Kiwi entrepreneur Derek Handley and US tech entrepreneur and investor (and self-proclaimed Kiwiphile) Peter Thiel.

Quoting boxer Mike Tyson, Cameron says “Everyone has a plan until you are punched in the face,” and that’s what it’s like for entrepreneurs; things often don’t go to plan. When that happens you need to know there’s support there; that someone is guarding your back, he says.

Right from the beginning Sparkbox’s Greg Sitters has always been there for him, with almost daily contact at the beginning of his angel journey, he says. “It had been eleven months. It was 9.30 at night and my phone rang. It was Greg and he goes ‘How you going?’, and I reply ‘Good, what’s going on?’ He says ‘Nothing, I just haven’t heard from you so I was just checking in that everything was all right’.

“It was the first time in months we hadn’t actually touched base for more than 24 hours,” Cameron laughs.

But knowing that sort of support is there when you’re trying to build up a business and trying to raise capital is invaluable, he says.

Another thing angels bring to the table is connections and networks, says Cameron. When Kiwi entrepreneur Derek Handley sold his successful mobile marketing company, The Hyperfactory, a friend suggested he get in touch with him. Cameron went to Sitters and asked if he knew Handley. He did, and a meeting was arranged. Soon Handley was an investor and had arranged for Cameron to go to Silicon Valley to meet some members of his own network. These introductions led to Cameron netting Thiel as an investor and the rest, as they say, is history.

Antony Dixon, founder of super slimline radio frequency identification product manufacturer Times-7, says without his Kiwi angels’ encouragement and networks, he’d have never have got on a plane and met, let alone landed, his current Silicon Valley partners.

Similarly Marie-Claire Andrews, co-founder and CEO of smartphone event app ShowGizmo, says connections are vital, especially when you head off overseas. But it’s not just connections for sales or investment that are important, she says: “It can be connections for anything: a place to sleep; a desk.”

Another big plus is just the belief angels bring to an entrepreneur, says Cameron. “When someone says they want to invest in your business, as an entrepreneur you feel 100ft tall; like you can take on the whole world. It gives you amazing self-belief and the motivation to go an extra 200 percent when you’re already giving it 100 percent.

“That’s probably my favourite part of working with the angels; that belief they give us and how they bring that to the whole entrepreneurial ecosystem.”

Andrews was also upbeat about her angel experience, even highlighting how important the frequent pitches were to both testing and honing her business strategy and as an important dress rehearsal for getting sales. “Practising pitching is practising selling… and that’s what we have to do every day as entrepreneurs.”

But the downside of all this relationship-building is the time involved for what is often not a lot of capital at the end of the day, she says. “It’s been the time pressure that’s been the hardest for us; the involved time, my time.” Every pitch is different and it differs between angel groups, but angels should streamline their processes more and be far more transparent about what’s happening and how as an entrepreneur you’re doing, so there’s no time wasted just wondering what’s going on, she says.

After three years, ShowGizmo has netted just under a million in external investor capital, compared with US$40 million raised by the company’s biggest competitor in the US, says Andrews. “Our last round was a simple just under $100,000 top-up for a specific reason. Admittedly it only took three months, but it still took about 80 hours of my time.”

Mind the time

John Huston, founder of one of North America’s largest Angel Groups, the Ohio Tech Angel Fund and a key note speaker at the 2014 Angel Summit, says the only constant entrepreneurs have is 168: the number of hours in a week.

“The most successful entrepreneurs are those who use those 168 hours most effectively.

“Angel groups who squander the time of entrepreneurs are not just unkind, they are evil,” he laughs. Investors need to get wise about “harmonising the size of their cheque with how much time they are going to take,” he says. “It just drives these folk crazy when they have to spend as much time with some $10,000 cheque writer as they do with someone who ran a $1 million round.”

The process to actually getting capital is really, really hard, admits Rachel Lacy, founder and director of Drikolor, which plans to revolutionise the paint market by introducing dry pigments that can be mixed by anyone. “It’s dating and we just want to get married.”

To improve the process Cameron says some angel groups need to realise it’s okay to say “no”. There’s nothing worse than having a great meeting, a seemingly great pitch and then never hearing anything again, he says.

“We’re feedback junkies,” agrees Andrews. “We need to know why.”

Comments like, “we did not invest because it’s not right for us at this time,” mean nothing, says Cameron. “Tell us if it’s because we look funny. It’s even best to say it in the meeting so we don’t waste any more time.”

Lacy says now there are more angel groups in New Zealand, they should be a little smarter about matching investors to companies and their founders – as you can’t, and you shouldn’t even try, to separate one from the other. “It would be really good if I didn’t have to endlessly pitch to people who just want to invest in the next Facebook.

“Starting up is hard enough, so you want as much investment alignment as you can. You want a group of angels to invest who understand and are interested in your space; and share a similar business philosophy as that will affect how your company develops. You can’t retrofit culture.”

Know the business

Understanding their space better was a common grumble among the entrepreneurs who shared their experiences. Andrews says it was still early days in the smartphone revolution when she started out, but she was a little shocked and dismayed when one potential investor asked not about the markets she was heading into, her financials or her team, but simply, how they could get her app on their phone.

Cameron says if investors want to be involved in tech companies they should learn more about it and the best way to do that was to actually start using it. “Go buy a smart watch and use it; go for a run and measure your heart beat online; start tweeting; just do it.”

It amazes him when some investors say they want to help him develop his company. “But hey, you have to get your kids to help teach you how to use your phone, so why do you think you know anything about the consumer Internet.”

Investors should ask themselves how relevant their experience really is, he says. “It doesn’t mean they can’t help with the strategy, but they need to recognise their own limitations.”

That said new entrepreneurs do need a lot of education, says Cameron. Even the terms investors use are like a foreign language.

Lacy says it would be useful if investors forced entrepreneurs to do a five-day Institute of Directors course on what your responsibilities as a board director actually are after they invest.

As to boards, it’s really vital you get the right people on your board at the right time, she says, and just because someone invests in your company, it doesn’t mean they should have a board seat.

“We have a fantastic first board with loads of sales and marketing experience, which is brilliant; it was just 18 months too early.”

Today Lacy’s company Drikolor has finally caught up to her board’s experience and she says she wouldn’t hesitate to recommend the angel investment route to other budding entrepreneurs.

“If you get the right mix, it’s phenomenal.” After all, without the angels, their knowhow, their connections and their cash, we wouldn’t be here, she says. “But obviously the reverse is true as well.”

First published on nzbusiness.co.nz 29 January 2015

More wonderful validation for angel-backed ShowGizmo rocking the event app space

A Wellington company’s “virtual goody bag” will be part of the actual goody bag at Australasia’s largest technology expo in May this year.

With more than 20,000 visitors from 30 countries expected to attend CeBIT in Sydney, SmartShow is gearing up for the next phase of expansion.

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Web design aid catapults students from Dunedin to Silicon Valley

George Phillips and Mike Neumegen were a couple of Dunedin uni students when their part-time work as freelance web designers led them to hit on a business idea.

Less than two years later that idea has taken them to Silicon Valley, garnered them customers in Europe and the US and been backed by big-name Kiwi investors like Trade Me founder Sam Morgan.

It’s been a wild ride for the pair behind Cloud Cannon, a software company whose solution is aimed at making life simpler for web designers by automating some of their backend work.

“I still have moments where I’ll sit back and listen to one of my team talking about why we should be doing something, and how it fits with the company’s philosophies, and I’m like, ‘Holy crap, this isn’t two guys just making something in their bedroom anymore’,” Neumegen says.

Phillips and Neumegen were computer science students at Otago University and freelancing for local companies in their spare time when they first hit the pain point their company Cloud Cannon aims to soothe.
As designers their brief was to come up with a web design for clients, get sign-off on it, then create the site itself. At that point clients were thinking the job was done, but in reality the designers then had to spend hours on back-end coding and other work that would then allow the client to edit the site themselves.

The pair began spending their evenings working on a solution. Their initial project looked at solving the core issue, but also aimed to address a whole host of web designers’ needs. But the solution ended up being bloated and unusable, says Neumegen.

They scrapped all their code and started over.

The pair launched a pared-back and far more defined solution. After a handful of people started using it, they got a lucky break, featuring in tech industry blog TechCrunch.

“Startup entrepreneurs would chew their own arm off to get on TechCrunch and we just randomly happened to get covered by it,” Neumegen says. “Out of that we got a lot of traction, and a few months later we put in a business model, started charging and found people were willing to pay for it.” Early last year, Cloud Cannon was among the companies accepted into the Lightning Lab digital accelerator in Wellington. While there the pair met John Holt, managing director of the Kiwi Landing Pad – the government-funded base for Kiwi tech companies in the US. Holt sensed their potential and organised funding through New Zealand Trade and Enterprise to put Neumegen on a plane to Silicon Valley to fast-track networking.

Neumegen returned to New Zealand in time to prepare for Demo Day – the penultimate event in each Lightning Lab intake where companies pitch for investment. Cloud Cannon ended up gaining $650,000 from 16 investors including Sam Morgan, Datacom deputy chairman Simon Holdsworth and early stage investment company Movac’s managing partner Phil McCaw.

Among the investors was Laura Reitel, the former manager of the more well-known TechStars digital accelerator in Boulder Colorado, who later mentored Neumegen and Phillips at Lightning Lab.

“The funny thing is I’ve never made an investment before,” Reitel says. “But I found myself thinking, ‘If I’m ever going to bet on any team it’s a team like theirs’. I’ve seen a lot of investment activity and I’ve seen a lot of teams, and you always bet on people who you know you can work with and who really pour their heart and soul and energy into a venture.” Reitel says the ever-increasing number of websites being created annually means Cloud Cannon is in a fast-growing market.

“And there’s real demand for tools that help make websites more beautiful and easy and intuitive to use.” The investment has allowed the company to grow to a team of four and for Neumegen to spend six months in the company’s primary markets of Europe and the US.

Growing the number of freelance web designers using its software has been the main focus of the company in recent months. Connecting with those prospects has been made easier because web designers tend to be well-connected and vocal in online communities, Neumegen says.

Another opportunity the company is now pursuing is the enterprise market, and they’re currently talking to some large organisations about how they might use Cloud Cannon’s solution.

“Enterprises have a lot of websites they’re managing and they need non-technical teams to be able to update those websites. That’s not something we had really thought of, but once we started looking at it we realised we could solve some big problems for some very big companies,” Neumegen says. “And that’s a great feeling.”

First published on nzherald.co.nz 22 January 2015

Angels fund expansion by Vocado

Vocado is using its latest round of $600,000 in angel financing to boost its sales and marketing capabilities and ensure it can meet the supply needs of the biggest global fast-food chains, say the Tauranga-based company’s directors.

Vocado has developed a proprietary method of processing avocados into pulp for use in guacamole and other food products. The method allows the refrigerated pulp to have a longer usable life.

After building up domestic sales, Vocado was now close to securing one of the biggest international fast food companies as a client, following a rigorous audit process, said director and shareholder Andrew Darling. The company cannot be named because of a non-disclosure agreement.

“We’ve established sales, the factory is operating and the base of the business is there,” said Mr Darling. “We’re growing new sales and to do that we need to invest in our sales and marketing capability.”

The new funding would go in the first instance towards recruiting a general manager and build up stocks to ensure the company was well-placed to supply bigger clients.
Company founder and managing director Collin Elder, who developed the processing technology, said the business had built up the capacity to secure local fast food franchise and other food service industry clients. “With these big global fast food groups, it takes a lot to get them, and it’s a big drama for them to change, so once they change they are reluctant to move. They live in a world of needing to know the supply lines are in place.”

That meant Vocado had to be able to compete on every level to win global clients, he said, and not just on price and taste, though that was essential. “They need to be assured that we can give them security of supply.”

Vocado uses a mechanical production process that aims to get the avocado pulp into an oxygen-free environment as soon as possible so that the fruit doesn’t brown. Competitors mostly use a system called High Pressure Processing (HPP), said Enterprises Angels executive director Bill Murphy, who is on Vocado’s board.

Mr Murphy said Vocado’s process was more efficient than HPP, did not require millions of dollars in equipment, and resulted in a product that lasted longer and stayed fresher.

“Collin is a smart Kiwi who was determined to find a new solution,” said Mr Murphy.

Mr Elder said all the companies Vocado had approached had given them an opportunity to compete. As well as domestic clients, the company had also now begun to pick up some export work, shipping five containers to Australia this year.

Mr Darling, whose own company Just Avocados grows and packs avocados, said Vocado was in a hugely exciting category internationally.

First published on nzherald.co.nz on 23 December 2014

Our own Suse is joins the Board of Wellington based incubator, Creative HQ. Joining the dots!!

Creative HQ, Wellington’s startup base, has appointed two new directors to its Board – Victoria Crone of Xero and Suse Reynolds of Angel Association New Zealand.

Both Suse and Victoria bring diversity, perspective and enthusiasm to the board, says Creative HQ CE Stefan Korn. “We are privileged to have business leaders of such high esteem join us in our goal of making New Zealand the startup hub of the Southern Hemisphere.”

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Lead Partners

NZTE NZVIF PWC

Expert Partner

AVID “FNZC.jpg”

AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”