A STQRY of our times: How a Kiwi start-up’s soaring valuation shows we may be entering an investment boom time

In this interesting article, angel-backed StQry, now called Area360, talks about raising capital in the US with observations from NZTE’s Quentin Quin and well known NZ angel, Chip Dawson.

Taking advantage of a US-tech sector awash with cash, Wellington-born start-up Area360 raises $5.5 million from US-based venture capitalists and opens its US headquarters.

“This is the best time to raise money ever,” Stewart Butterfield told the New York Times recently. Butterfield is CEO of Slack, an instant-message-based team communication company, whose valuation rose from $US1 billion to $US2.8 billion in little over a month early in 2015.

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Giving wings to business risks

From humble beginnings in Kolkata, India, engineer-turned-serial angel (early stage) investor Jayesh Parekh is poised to close his second fund with Jungle Ventures.

The seed and Series-A US$100 million pan-Asia investment fund, comes hot on the heels of the Singapore-based venture firm fully investing its first US$10 million pan-Asia Angel fund, which invested in 30 start-ups including two with Kiwi origins: video transfer firm Ebus; and inventory management company Tradegecko.

A self-confessed Kiwiphile, start-up mentor and social enterprise champion, Jayesh took time out from sharing his wisdom (and humour) at the combined 2015 Angel Summit and Asian Business Angels Forum in Queenstown last month to tell NZBusiness whether being an entrepreneur is more nature or nurture, and why an entrepreneurial mindset is important for business growth. Lesley Springall asked the questions.

There are people who are born-risk-takers. It’s handed to them genetically.

Then there are people who are from a business background, but not a risk-taking background, but that does not mean those people can never be entrepreneurs. If you can cultivate a risk-taking ability then you can become an entrepreneur.

But why is an entrepreneurial mindset important for businesspeople?
Jayesh: “There are two things about an entrepreneurial mindset – one is that risk-taking ability and the second, and most important, is what I call ‘business acumen’, a visionary who sees opportunities and how to make money from them.

“There are people who have business acumen, but don’t have the risk-taking ability. They can grow to very senior levels in Apple, Facebook and Microsoft, but they never start their own business because they don’t have that risk-taking ability. The only risks they take are ‘intrapreneurship’ risks; they don’t risk their own money.
“You need both to grow a business.

“An entrepreneur often thinks just because they have started a business, they have taken a risk, but there are three levels of risks: the first is to graduate from college and start a business or work for two years then start a business, but that’s not really much of a risk for anyone. Then there’s the next risk level, when you first take someone else’s money. The third level is growth money, when you take $5 million or $10 million dollars to energise and change the company from a secure path to a growth path.
“That’s a big level of risk because that businessperson could just stay where they are – they’ve got a good life, why do they want to take $5 million more, why put everything at stake? So there is some risk taking at each level, but it’s extremely important to be entrepreneurial at the third level, because that’s when there’s the most risk and that’s when you need the vision to see the opportunity to scale.”

NZB: Is that something a business person can hire in?
Jayesh: “Yes and no. In India you can, for example, hire in a graduate from the Indian Institute of Technology or an MBA graduate from the Institute of Management. However, the economics of making profits out of a business must really come from the business owner because it is their vision and strategy and any person they hire in, however business savvy, will still just be executing this strategy.”

NZB: What do you look for when choosing to invest in someone?
Jayesh: “There are three things I look for. The first is ‘who’. Who is the entrepreneur who’s standing in front of me?

What is their background? What is their passion? What is their vision? And what is their business acumen and risk-taking ability?

“If they pass that only then will I move on to the next step – the ‘what’. What is the idea? Is it scalable? Is it a repeatable? What are the economics of it? Is it well thought through? Is this something that I can see growing in leaps and bounds? Is it an innovative idea? Is it a disruptive idea? Is it a ‘me too’ idea? As soon as I know that and if I like it, I will go on to the next question, which is ‘how’.

“So I go to this hugely important risk factor, the one most people look at first, and look at it third. How are you going to execute this? Is this really going to work? Is this just multiplying 20 percent per quarter growth? Is this something the entrepreneurial team can defend? Do they have the ability to do this? Do they have the ability to hire and plug the holes in the team if they don’t?”

NZB: What percentage get to ‘how’?
Jayesh: “At Jungle Ventures we see a few thousand ideas, but we can only make three to five investments a year.
“Sometimes I do come across some amazing people, but the idea might not fit the Jungle thesis, as we are four partners – whereas before when I was just an angel investor, the percentage was a lot higher. I used to be a lot more all over the place; as soon as I liked something I’d fall in love, and I fall in love very easily.”

NZB: What gets you excited?
Jayesh: “Personally I get excited about innovation and disruption and therefore I look for intellectual property (IP). If the idea is defensible, that really excites me.”

NZB: What’s the most common mistake entrepreneurs make when they try to approach investors?
Jayesh: “They get really carried away with the market size and the top down approach. They say, ‘look the market is $3 billion and I just want two percent of it and therefore I’m going to make $50 million, $60 million or $100 million’.

“In the past, the economic model was all important. But nowadays anyone can build a community so it’s not so dramatically important; but I see entrepreneurs getting hung up on it. They throw in things like 100 million users or $100 million revenue in three years and that’s in the unbelievable category.

“So, really, the biggest mistake I see entrepreneurs making is undermining the ability of an investor to see through the rosy picture they are painting. Yes, we like our entrepreneurs to be passionate and to think big, but if they are honest and show a little bit of self-doubt that gives the impression they will listen. And a good entrepreneur has to be smart, savvy, but he also needs to understand other people’s points of view and then be able to make a decision and follow it.”

First published on nzbusiness.co.nz on 7th December 2015

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Beating the shopping baby blues

Aisleworx, a company making specialised, child-friendly shopping carts, is aiming to transform unhappy shopping experiences with children into happy ones by using the latest technology to entertain kids while turning a profit. And some of the world’s largest retailers are taking notice.

For Aisleworx founder and CEO, Doug Bartlett, the story begins more than a decade ago after removing his own five year-old son, “kicking and screaming”, from a supermarket. It got him thinking there must be an easier way to keep children (and subsequently, everyone else) happy while doing the groceries.

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Ashton Kutcher and Samsung invest in virtual reality start-up’s NZ$20 million Series A round [VIDEO]

8i has just closed an exciting funding round with uber-angel, Ashton Kutcher being one of the backers. Some of AngelHQ’s investors are proud shareholders in this venture.

Wellington founded virtual reality start-up 8i recently secured NZ$20 million from global investors in a Series A funding round. Investors include major names like Samsung Ventures, RRE Ventures, and even Ashton Kutcher (through his fund Sound Ventures).

8i’s consumer media platform lets users create, experience and share truly immersive lifelike 3D video of real people with the freedom to move around in a VR environment.

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FLNT’s ideas app named top startup

Eight teams took part in this month’s successful tech-focused Startup Weekend for entrepreneurs in Tauranga, with the winners FLNT already signing up beta testers during the 54-hour session.

More than 40 individuals took part, pitching their ideas, then forming into teams to develop their proposals. FLNT’s idea was for an app to revolutionise employee engagement and spark employee innovation. The support of the potential beta testers helped validate the potential value of the concept.

The judging panel was made up of Carl Jones, head of local innovation incubator WNT Ventures, Suse Reynolds of the Angel Association, Jodie Tipping from local firm Cucumber Media and Dr Simon McDonald from Rhondium, a Katikati-based innovator in the global dental products market. All the judges were glowing in their praise for this year’s pitches, with three teams narrowly finishing as joint runners up.

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(Dr Simon McDonald (left), Carl Jones, Suse Reynolds, Jodie Tipping. Image: Claudia Silva)

Dr McDonald said it had been really difficult for the judges to decide on the winner.

“I thought it was fabulous event and the quality was very high,” he said.

“The FLNT app is an online suggestion box where anyone can suggest an idea, which would then transcend the multiple layers of management bureaucracy that often kill good ideas.”

FLNT team member Clayton Morgan said the original concept was for an app called “Tinder for Ideas” where each suggestion was voted on, much like someone on Tinder.

“A team was formed around this concept, made up of talented people with diverse backgrounds. FLNT then developed when we started our research and validating. We determined that applying this concept to businesses would engage employees and enable senior manages to tap into feedback and creative ideas from their workforce.”

Mr Morgan said the team had several organisations signed up to take part in testing FLNT.

“Going from idea to a full-formed business is thrilling and team FLNT is looking forward to working hard to create another successful Tauranga business.”

A high-calibre group of mentors supported all the teams throughout the weekend, which was being organised for the fourth year.

Held again at Basestation, the tech focused co-working space, Tauranga Startup Weekend was this year also part of the Global Startup Battle, with events running in more than 200 cities worldwide over the weekend.

Clever concepts

In addition to FLNT’s employee engagement app, the other pitches included:

* U! Get Off the Couch’s app to help parents get their kids out of the house

* Flapp’s system for connecting backpackers

* Be There Too’s easy live streaming solution for large family events

* Safe Out’s smart emergency evacuation system

* Happy Sprout’s kitchen garden starter kits

* Arrive Social’s carpooling app for students

* Tap’s social recruitment model, which rewards referrers and successful applicants

First published on nzherald.co.nz 25 Nov 2015

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Balex Marine strengthens its board

Enterprise Angels backed, Balex Marine, continues to surge ahead with the appointment of new board members to assist with growth plans.

Tauranga startup Balex Marine this week announced the appointment of Comvita co-founder Alan Bougen as an independent director and Tuatara Breweries chief executive Richard Shirtcliffe as board adviser.

The company also announced it had successfully closed its second fundraising round on $1.2million.

Mr Bougen is the co-founder, deputy chairman and a director of NZX-listed Bay of Plenty honey and health products company Comvita. Mr Shirtcliffe’s former roles include heading up global marketing at export success story phil&teds.

“We were looking for people with strong governance experience who had grown significant companies from small startups,” said Balex Marine’s chairman Daryl French.

“Alan is an ideal fit. He has experience in taking Comvita from a startup all the way to it becoming a significant large publicly listed entity.

He brings governance experience and will add to our capabilities, particularly if we decide to look to an IPO as part of a future exit strategy.

“Richard has experience in taking a number of companies from startups through to medium size, great marketing expertise and real passion and enthusiasm. Together, they will really strengthen the board.”

Balex Marine makes the hydraulically powered Automatic Boat Loader 2500, installed on trailers, which lets users launch and retrieve their boat by remote control. “The ABL makes launching so stress-free we believe it will become an automatic add-on for trailer boat owners,” said Balex Marine’s managing director Paul Symes.

Mr Bougen, an investor in the second round and long-time Bay of Plenty resident and boatie, said the fact Balex was a local company was a key element in his becoming involved.

“When I first saw the ABL, I thought it was a great idea with tremendous potential. What got it over the line for me though was seeing the work they had done on developing their IP and assessing market opportunities.

“Balex has a strong, creative team under the leadership of Paul Symes and I feel they have a good chance of creating substantial future value.”

Mr Shirtcliffe previously worked at phil&teds with Balex Marine’s sales director Paul Yarrall. “I’m attracted to smart people who are very committed, very passionate and very forward thinking. And I’m attracted to very smart ideas that can fundamentally change elements of the world. Balex has a wonderful intersection of those elements.”

By the numbers

Balex Marine’s successful second fundraising round of $1.2 million included a strong commitment from first-round investors, as well as substantial new investors. A number of the investors are members of the Bay of Plenty’s Enterprise Angels and the startup funding group’s sidecar fund EA 1 made a follow-on investment of $50,000.

In addition, the Government’s Seed Capital Investment Fund came in with a $175,000 follow-on commitment – in the top quarter in size of follow-on investments for the New Zealand Investment Fund’s portfolio.

Enterprise Angels executive director Bill Murphy said the reason Balex was attracting continued investment support was because it not only met its milestones, but exceeded them.

“Investment in these startup companies is the first step. What’s so important is the post-investment management. Appointing directors with relevant skills, such as these appointees bring to the table, will be critically important to the success of the company.”

First published on nzherald.co.nz 26 Nov 2015

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TV campaign for innovative system

Another Enterprise Angels backed venture doing great things with cool technology.

THE Tauranga team behind the Roholm Inverse Conditioning System has reached an agreement with Brand Developers, the biggest direct response marketing (DRM) company in Australasia.

A DRM TV campaign for the innovative hair conditioning product will be launched this month, said Timothy Allan, managing director of product development and innovation company Locus Research, which is also an equity investor in Roholm.

Brand Developers developed, manufactures and distributes the Thin Lizzy women’s beauty line, among other products.

Roholm was close to signing a deal for distribution into professional hair care companies in the UK and was also in advanced discussions for distribution in the Middle East, said Mr Allan.

“I think the potential of Inverse is substantial. It represents a paradigm change in women’s hair conditioning. Inverse is probably the first significant new product category since the advent of hair straighteners.”
The concept was the brainchild of Tauranga hairdresser David Roe, who was inspired by his wife using an ice-rinse on her hair.

The system uses sub-zero temperature to induce a natural conditioning effect, using removable ice cores that are frozen to set the sub-zero temperature. When run through the hair like a traditional hot tool, the cold temperatures lock in moisture.

Members of Bay of Plenty startup funding group Enterprise Angels invested in and set up Roholm to develop the concept and Locus has worked closely with the company to refine the design, develop the manufacturing process and bring the product to market.

The Inverse system will be assembled in New Zealand and most of the product is also made in New Zealand.

Mr Allen praised the contribution of Hamilton-based Millennium Plastics, which has evolved from providing components to leading the supply chain process.

Tony Rutz, Millenium Plastics general manager, said his company had helped refine the product for manufacturing.

“We deal with a lot of brand owners who compete on the international stage,” said Mr Rutz. “So we work pretty hard to make sure we can drive out wasteful costs and remain competitive.”

Brand Developers director Wendy Nowell-Usticke said the company was in the business of creating brands.

“We are always looking for something which is innovative. Inverse is a great concept. It’s a chemical free way of improving hair – all you need is a freezer.”

Ms Nowell-Usticke said Brand Developers had done its own testing with a sample group of users and was very satisfied with the results.

She said the company expected to follow its usual model, beginning with DRM television marketing, and would then move the product into retail outlets.

First published on nzherald.co.nz 12 November 2015

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East Meets West

East Meets West brings together entrepreneurs and investors from Asia, U.S., and Hawaii for deal making, learning, and networking in Honolulu, Hawaii.  Building on our inaugural event last year, EMW’16 has attracted the participation of the some of the most relevant speakers, startups, and decision makers from around the Pacific Rim.

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NZ teen’s billionaire backer

Angel backed Crimson Consulting continues to go from strength to strength recently raising $7.5m in venture funding and now valued at $75m.

A Kiwi whizz-kid has bought up another tertiary tutoring business and drawn the attention of New York billionaires as he cast his eyes further afield.

Crimson Consulting this week completed the purchase of Dunedin-based Unitutor. The move follows Crimson last year acquiring Auckland University medical school prep service MedView.

Crimson, founded by two Auckland teenagers in February 2014, offers consultancy services to those applying for highly competitive slots in university in the United States and England. Last month it hired Max Key, the son of Prime Minister John Key, as a consultant.

Crimson managing director Jamie Beaton, 20, said from the United States where he is studying at Harvard University, that the acquisition of UniTutor would see its Otago University-focused undergraduate tutoring services rolled out nationwide.

UniTutor was founded in 2011 by Otago University graduate Samantha Berry. She said the opportunity to expand nationally was exciting. “It’s been a long ride, but it’s most definitely been worth it.”
Beaton was unwilling to discuss a purchase price, but said UniTutor had revenues last year of $200,000 that he hoped would triple within 12 months, and the acquisition was part of a strategy focused on expanding quickly overseas.

He said the market was internationally very fragmented, making buying existing players an easier proposition. “The strategy at the moment is to go around and buy all these businesses for cheap multiples and quickly build up the brand of Crimson.”

Beaton said his acquisition targets were old-school brick and mortar businesses that typically traded at lower valuation multiples but could benefit from the scalability of Crimson’s online model.

He said the deal showed the “beautiful synergies between brick and mortar academics and online education companies”.

Beaton said he was in discussions with four similar business in Sydney, and hoped to make a play for one soon with plans to begin focusing on China in the middle of next year.

He said a recent round of capital raising pulled in $7.5 million, including $6 million from New York billionaire and retired hedge fund manger Julian Robertson, with the offering valued the business at $75 million. Such a valuation would have Beaton – who was only able to legally become a director of Crimson last year after he turned 18 – knocking on the door of the National Business Review Rich List. Crimson is 49.48 per cent owned by Beaton with co-founder Sharndre Kushor holding a 14.37 per cent stake.

Beaton said Robertson’s interest in the business was mirrored by his hedge fund Tiger Management, who were intrigued at the possibility of Crimson breaking into the $100 billion Chinese market for tutoring.

Young Kiwi success stories:

• Tech entrepreneur Derek Handley is New Zealand’s youngest managing director of a listed company and has featured on the Silicon Alley 100 list of the most influential people in technology.

He quit his job as a 23-year-old in pursuit of a career as a business owner, and eventually stumbled across global mobile marketing businesses. In 2001 he co-founded The Hyperfactory. After the success of this business, Handley started several others.

Senior Google executive Victoria Ransom is ranked #19 on Fortune Magazine’s 40 under 40 list and was named one of Fortune Magazine’s Most Powerful Women Entrepreneurs 2012. Most recently, Ransom has won a Kea World Class New Zealand Award.

During her short entrepreneurial career Ransom has developed three companies, the most recent being Wildfire – a social software company that helps brands reach customers over social media networks such as Facebook and Twitter.

• Trade Me founder Sam Morgan sold New Zealand’s largest online auction site in 2006 to Australian media company Fairfax for over NZ$750 million.

Morgan formerly worked for IT consultancy Deloitte before founding Trade Me in 1999, at the age of 23. Trade Me is the most visited website in New Zealand. It has 1.2 million members who are expected to host 35 million auctions this year.
• US-based Kiwi entrepreneur, Claudia Batten, last year became the youngest winner of the Supreme Award at the World Class New Zealand Awards.

In her twenties she switched from commercial law and moved from Wellington to New York where she helped co-found two groundbreaking digital businesses: Massive Inc, later sold to Microsoft for a reported US$200-$400 million, and Victor & Spoils, the first advertising agency built on the principles of crowd-sourcing.

• Scott Bartlett is chief executive of state-owned transmission company Kordia and formerly CEO of internet service provider Orcon. He started his telecommunications career in 2002 as CEO of Quik Internet which he later sold to Vodafone.

In 2007 Bartlett was listed as the 18th most influential person in the PC World Internet top 20.

First published on nzherald.co.nz 10th November 2015

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New Zealand: Angel Investment activity by Harveen Narulla

This week I attended the Asian Business Angels Forum in Queenstown, New Zealand. It was well attended. I noticed some things and gained valuable insights from speaking with members of the community.

A few things jumped out at me:

  • How many people in New Zealand were interested in angel investing;
  • That they recognized the limitations of the help that they could give to the companies, but still persisted undeterred;
  • That the angel community had over time coalesced in groups, mainly geographic based;
  • That the government was aware of the angel investment community and it had ministerial attention and support from heavyweight ministers;
  • That there were strong co-investment programs (which I need to learn more about);
  • That increasingly the angel community was looking within itself for leadership to better organise itself with a view to making better decisions (on for example due diligence) and getting better results from its investment activity;
  • Leaders had emerged from within the community, and were well supported by most of the community; there was also a big push from these individuals to disseminate best practices among the angel community;
  • That deals were shared among the different angel investment hubs, so in practice almost the entire community could participate in deals.
  • Some startup founders I engaged with there had interesting perspectives in relation to the need to build sound businesses that generated profit, more than just aiming for a big exit.

It seems much of the mechanics of the community’s working are a result of having to deal with the circumstances in which the community operates:

  • Follow-on or growth funding is limited;
  • the domestic market is small and not of meaningful size to fulfill the ambitions of most of the startups; hence companies need to head overseas early or turn profitable quickly;
  • being a relatively large and sparsely populated country, it was natural for personalities and individuals instead of group structures to have taken precedence in the early growth phases of the community.
  • However, there had then been a phase of experimentation with various incubator structures. Many of these had not yielded outstanding results, and the lessons were still being discerned and digested.
  • The size of the country also led to an understandable push to move organized activity around the country, when it may have yielded more return just being allowed to take root in particular places.
  • The lack of follow on funding and advice and market opportunities for growth had led the community to turn to the US. This in turn had led to valuation inflation, and migration of companies out of New Zealand.

What I appreciated about the community was that there was recognition that some of the early phenomena resulting from the natural evolution of the community should be corrected. In particular, it used to be seen as a badge of honour for startups to do second or third rounds at large valuations, which ended up trapping some start-ups up a tree they then had to make the unpleasant decision to climb down from. Today there seems to be more understanding that valuations need to be explainable by reference to where the company was in its growth journey.

The community was also very open to learning how to do things better.

There, I feel the experience we have had growing Hatcher’s processes and portfolio could add some value. Points I made in my panel session about the value of applying process and intensive involvement as a venture builder, focusing on a niche (B2B in our case), having a clear idea of founder profile (we preferred older founding teams that had a range of experience and competences), were not lost on those listening. I had many good conversations about this after my panel session at the event and look forward to more such exchanges.

Another thing that struck me – and this is larger than just the angel or venture scene – was how down to earth, open and sincere people in the community were. There was a lot of warmth, tremendous amounts of kind sentiment, and a willingness among people I spoke with to make introductions. This community clearly has a strong ethic and all the ingredients for progress together.

Hatcher looks forward to being involved with the New Zealand venture community in the years ahead.

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Angel HQ set to back more Wellington start-ups

Wellington start-ups should see around $20 million of investment over the next four years after investment network Angel HQ and the New Zealand Venture Investment Fund renewed their co-investment partnership.

In 2011, Angel HQ became a co-investor alongside NZVIF’s Seed Co-investment Fund. Since then they have combined to invest just under $20 million into young technology companies such as GreenButton, Wipster, and Hunter Safety Lab.

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Angel input gives consultant wings

It was a tough decision for James Beale to strike out on his own in February this year after a successful 14-year career with Craigs Investment Partners in Tauranga, where he had been head of investment management.

“The firm looked after me so well and for so many years,” he said. “But I thought it was time to broaden my horizons.”

Mr Beale said that, at 42, he felt he had a good opportunity to re-establish himself and build a career down another path.

Although he hasn’t ruled out another corporate role at some stage, for now he is focused on his new firm, Beale Capital Consultants, which is already becoming well established. The firm has been meeting a need in the region to assist private companies in raising capital.

And it has also worked on some major transactions. A recent highlight was advising omega-3 oil producer Sea Dragon on a $10 million capital raise, in which Bay of Plenty health and honey products company Comvita become a cornerstone investor.
“It was a fantastic opportunity for Comvita in providing them with access to omega-3 oil and a great result for Sea Dragon to get such a top-drawer shareholder with a strong brand.”

Mr Beale didn’t follow the usual route into high finance. He was born in Wellington and grew up in Wainuiomata, going to college in Lower Hutt. He went straight from high school to a job at Prudential Assurance as a clerk doing unit trust administration.

“I started at the bottom,” he said.

But while at Prudential, he forged a strong relationship with his boss, Cameron Watson, an influential mentor, who encouraged him to go to university. Mr Beale completed a bachelor of commerce and administration in economics and finance then went on to work first as an index funds manager at Tower Managed Funds and then as a superannuation product manager for AMP.

Mr Watson had by now moved on to Craigs in Tauranga, and encouraged Mr Beale to join him, so in 2001 he relocated to the Bay of Plenty for a job as a research analyst.

Mr Beale steadily worked his way up through the ranks, serving successively as associate director, director and then head of equity capital markets. In that role he advised on a number of major transactions, including the initial public offerings for Delegats Group and Methven. As the global financial crisis began to bite and capital markets slowed down, he shifted across to become head of equities and advisory, taking charge of Craigs’ national broker network.

At the end of 2009 he became head of private wealth then, in 2011, head of investment management, responsible for Craigs’ private wealth research team and its output, with more than $8 billion in funds under management. “Transactions are always tough and there are always challenges,” said Mr Beale, who credits Craigs’ founder and executive chairman Neil Craig as a key mentor. “Neil’s incredibly good at thinking creatively about solving problems and finding structures that work for all parties. He taught me there’s always a better way of doing something to get a result and you have to be tenacious and chase hard and think creatively to come up with a solution.”

About four years ago, Mr Beale joined the Bay of Plenty early stage funding group Enterprise Angels. He sits on the board of Enterprise Angels and of its sidecar fund, EA Fund 1. “I think angel investing is incredibly dynamic and interesting,” he said. “You need to be a little bit more hands-on and get in and understand the business. It appeals to me as a really interesting space with people who are passionate and fired up about achieving things in their business.”

The involvement with early stage investing has helped focus the direction of Beale Capital Consultants. His former boss, Neil Craig, said the firm had encouraged Mr Beale’s move, adding that he was playing a key role in the region’s funding, especially for smaller businesses. He described Mr Beale as a “complete” adviser.

“James has been a research analyst, an investment banker and a fund manager, so he’s had those three careers in Craigs and all of them come to pass when you’re raising capital. It’s harder to raise capital for smaller businesses, which he’s specialising in, than big ones. I would say we are incredibly lucky to have someone of James’ skills willing to stay in the area and raise capital.”

First published on nzherald.co.nz 23rd October 2015

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The California Drought And Standards Of IoT

The Internet of Things (IoT) has a remote control problem — devices are operating independently with no knowledge of each other’s existence. Even systems that are supposed to work together don’t do so easily, such as the Apple TV and just about any output device.

We need a digital age of enlightenment and openness to unleash the full potential of the IoT. This means standardizing cross-device and multi-platform communication, and building user interfaces that are easy to use.

Read more on techcrunch.com

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Valuable Advice from Lowndes BIS Workshop 5

Some of our wonderful international visitors who spoke at ABAF also spent some time in Auckland. Here are a selection of insights from the Lowndes Associates sponsored event which addressed “Effective Investment in Growth Companies.

Read more on www.business-intelligence.co.nz

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Angel advice for Tauranga’s entrepreneurs

Making the most of the recent conference, we tour some of our rock star angel visitors around the country.

Leading American angel investor Bill Payne will be part of a panel at next week’s [email protected] event in Tauranga for aspiring entrepreneurs.

Organised by the Venture Centre as part of its buildup to next month’s Tauranga Start Up Weekend, the event aims to expose people embarking on start-ups to how angel investors think, said Venture Centre co-founder Jo Allum.

“We want to give entrepreneurs a good idea of all the different elements involved in the journey of building their start-up company,” she said. “Getting capital into the business is an important part of it and one of the ways of doing that is through angels.”

Ms Allum described the event as a “reverse” Dragon’s Den.

“Instead of entrepreneurs pitching ideas, they will be able to question the angel investors on how they can contribute to their business and what they require.”

Mr Payne sold his first company to Du Pont and for the last three decades has invested in more than 55 start-up companies. From 1995 to 2007 in his role as Entrepreneur-in-Residence with the Kauffman Foundation (Kansas City), he worked on educational programs for entrepreneurs and their investors.

In 2010 he concluded a five month stay in New Zealand at the BNZ University of Auckland Business School advising investors and entrepreneurs.

A frequent visitor to Tauranga, Mr Payne told NZME during an interview in 2013 he thought Kiwi deals and pitches had improved significantly. “There are all kinds of opportunities here,” he said. In addition to Mr Payne, this year’s panel will include investment adviser James Beale, lawyer John Gordon and power engineer Deion Campbell, who are all members of Tauranga’s Enterprise Angels, the country’s biggest start-up funding angel group. Since launching in 2008, Enterprise Angels has facilitated the investment of more than $14 million in more than 40 early stage and established businesses.

[email protected] is from 5.30 till 8.30pm on Wednesday, October 28, Tauranga Art Gallery.

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The Seven Secrets Of Top Angel Investors

A useful and interesting framework for angel investors is set out in this article from Forbes.

Angel investors, sometimes known as business angels, typically invest between $25,000 and $500,000 in new start-ups, often with the aim of taking them on to the stage where they can attract venture capital funding. The rewards for top angel investors can be significant, but it can also be risky. So how can angel investors maximize their chances of success and avoid feeling like they are pouring money down the drain?

Read more on www.forbes.com

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Marcel van den Assum named as New Zealand Arch Angel 2015

Marcel van den Assum, the current chair of the Angel Association of New Zealand (AANZ) has been awarded the prestigious Arch Angel Award at the 2015 combined Angel Summit and Asian Business Angels Forum (ABAF) in Queenstown.

The Arch Angel Award is the highest honour New Zealand’s angel investment community can bestow. It recognises someone who has steadfastly championed the cause of angel investment and the investors who are willing to give a significant amount of time and money to help those start-ups and early stage companies, and particularly the entrepreneurs who risk all to establish those companies, to reach their potential.

The Committee deciding the award (comprised of past Arch Angel awardees) noted Marcel has not only been a particularly active angel investor but has taken a leading role in the governance of a number of angel investee companies, distinguishing himself with his widely acknowledged assistance in the Green Button exit last year.

“However, it is his contribution to the administration and promotion of New Zealand’s angel investment world that was key to Marcel becoming this year’s Arch Angel,” says 2014 New Zealand Arch Angel and former AANZ chair Ray Thomson. “Not only has he been heavily involved in the development of the Wellington-based Angel HQ group, which was instrumental in founding New Zealand’s first startup accelerator Lightning Lab, but he has generously given his time to the development of New Zealand’s angel community, serving two years as deputy chair and then, for the last two years, chair of the AANZ.”

Marcel was presented with this year’s award in front of more than 170 angels, including 50 representatives from overseas, in the first event of its kind in New Zealand combining the eighth annual Angel Summit with ABAF.

Andy Hamilton, chief executive of Auckland’s angel, startup and business education hub, the Icehouse, and another former Arch Angel, says giving this year’s award to Marcel in front of so many national and international angels was fitting as Marcel has always strived to help build overseas connections to help our startups succeed. “Like all business angels, Marcel is completely dedicated to helping entrepreneurs achieve their potential and to do that we need to build international connections to provide the capital and connections our young businesses need to compete in a global marketplace.”

Marcel is AANZ chair, a professional director and an angel investor. He serves on the boards of Flick, Voco, Simplhealth, Yonix, CropX and the Wellington-based angel group AngelHQ. He was an investor in and chair of GreenButton, a successful angel-backed company that was acquired by Microsoft in 2014. He is a founding investor in Lightning Lab, a member of the GD1 (Global from Day one) investment committee, and he holds a number of advisory board positions with private and public sector entities. Prior to donning his wings, Marcel was CIO of Fonterra and managing principal of Unisys New Zealand.

Former Arch Angel winners include Phil McCaw, managing partner of investment firm Movac; The Warehouse founder and long-time angel investor Stephen Tindall; Andy Hamilton, chief executive of Auckland-based incubator and business educator The Icehouse; US super angel Bill Payne, and last year’s awardee veteran angel investor Dr Ray Thomson.

For more information, please contact:

Suse Reynolds, AANZ executive director, on mob: 021 490 974 or email: [email protected]

Dr Ray Thomson, former AANZ chair and 2014 Arch Angel, on mob: 021 646483 or email: [email protected]

The Angel Association of New Zealand (AANZ)

The Angel Association is an organisation that aims to increase the quantity, quality and success of angel investments in New Zealand and in doing so create a greater pool of capital for innovative start-up companies. It was established in 2008 to bring together New Zealand angels and early stage funds; to support the angel networks and help create new networks; to promote the growth of angel investment in New Zealand by encouraging and educating entrepreneurs, new angel investors and angel groups; and to ensure the ongoing success of the angel movement through developing industry strategy, encouraging collaboration and educating the wider New Zealand public about the importance of angel investing in growing our economy.  AANZ currently has 14 members representing more than 650 individual angels associated with New Zealand’s key angel networks and funds. Recent NZ Venture Investment Fund data revealed angels have invested more than $NZ370 million in over 640 deals in the last 8 years. For more, please visit: www.angelassociation.co.nz

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Building investment in New Zealand’s future

This year New Zealand is hosting the Asian Business Angels Forum, combining it with its own Angel Summit to strengthen ties, build alliances and make it possible for our entrepreneurs to have the cash and the connections they need to become New Zealand’s businesses of tomorrow.

On October 14th to October 16th 2015, in the stunning surrounds of Queenstown, alliances will be forged and best practices shared at the combined eighth annual New Zealand Angel Summit and the Asian Business Angels Forum (ABAF).

More than 150 angels, including 50 representatives from about a dozen countries, are expected at the event. All are dedicated to helping young businesses achieve their potential by building the networks they need to thrive in today’s global world and providing the capital they need to compete.

“Having this many investors visit with an appetite for early stage entrepreneurial ventures rather than property, and from such a range of countries is unique, if not a first for New Zealand,” says Marcel van den Assum, chair of the New Zealand Angel Association (AANZ).

“Angels invest their own ‘courageous capital’ in high growth startups. They are largely motivated by the desire to ‘give back’ and support their local economies. It’s not a financially rational endeavour because on a deal-by-deal basis angels are more likely to lose their money than not. So it’s a portfolio game where, both personally and from a wider economic benefit perspective, investors plant a lot of small seedlings to grow the giants in the forest.”

That’s why building alliances with other angels nationally and overseas is so important as it opens up a wealth of educational and experiential talent for the investee entrepreneurs and helps spread the risks and diversify angel portfolios, says van den Assum.

Given the tie-up with ABAF, the theme of this year’s Summit is Doing Business Together.

The summit kicks off with a a New Zealand Trade & Enterprise (NZTE) hosted technology showcase where 15 ventures, most of them angel-backed, will pitch to the gathered national and international angels on the Wednesday evening.

“While it will be terrific if some of the inbound visitors invest in these companies, the real value is in building an international network,” says van den Assum. “Angels are collaborative by nature. And without doubt the New Zealand angel-backed success stories have benefited from relationships built with prominent US angels over a number of years, which we are now extending into Asia.”

Building a global business from New Zealand is challenging, says van den Assum. “It’s a bit like climbing Everest – you need a good team behind you. A connected international network of support is critical to their success and that is what ABAF is all about: connecting Kiwi entrepreneurs and angel investors with angels in other places where we want and need to do business.”

For more information, please contact:

Marcel van den Assum, AANZ Chair, on mob: 021 963 459 or email: [email protected]; or

Suse Reynolds, AANZ Executive Director, on mob: 021 490 974 or email: [email protected]

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The Globalization of Angel Investments

A fascinating Harvard/MIT study released in August this year and looking at the impact of angel investment on things such as firm survival, likelihood of follow on funding and employment, determines that angels have a positive impact on the growth, performance and survival of a company.

Nature and consequences of the globalization of angel investments across a variety of geographies with varying levels of venture capital markets and other forms of risk capital.

Read more

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New England Venture Summit calls for promising early-stage startups

youngStartup Venture are bringing together a large group of VCs, Corporate VCs, angel Investors, Investment Bankers and CEOs of early stage and emerging companies for the New England Venture Summit being held on December 9th, 2015 at the Hlton in Boston, Deham and wanted to see if any of our colleagues at Angel Association New Zealand or any of the startups in your portfolio would like to attend.

Nominations are now being accepted for promising early-stage startups from the Tech, Life Sciences/Healthcare, Ed-tech, and Clean-tech sectors.

To nominate a company click here.

More information

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In search of the next global agritech superstar

Angels should be looking forward to seeing what sort of ‘angel food’ Sprout, the recently announced agritech accelerator generates.

Business talent scouts are looking for a startup with the potential to be New Zealand’s next global agritech superstar.
Sprout, a national agritech business accelerator, is searching the country for eight budding entrepreneurs with embryonic agritech businesses for a new development programme.
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KPMG: Make migrants take a risk

The AANZ backs calls for more wealthy migrant money to be directed into early stage ventures. Some of our most active and effective angels are migrants. We need more!

Growth-focused investments should be required over passive ones such as government bonds, says report.

High-profile business organisations are calling for investor migrants to be required to channel more cash into productive, growth-focused New Zealand investments rather than safer options such as bonds.

Almost 80 per cent of investor visa recipients’ funds currently ends up in government and corporate bonds, according a paper published by professional services firm KPMG.

“Whilst these [bond investments] are still beneficial to New Zealand, some simple changes to our immigration policies can bring diversity and may help better leverage these migrants’ funds and valuable networks to help New Zealand business grow and expand,” KPMG said.

Business incubator The Icehouse, which is also calling for a policy overhaul, describes passive investments such as bonds as “lazy money” that does nothing to address capital constraints facing companies.

“Changing the rules on entry and for allocation could better align investment with the need to grow New Zealand’s economy and to increase its productivity, while aligning a stream of investment from the private sector, rather than relying on the Government to step in.”
KPMG said Kiwi businesses would require more than $420 billion in capital by 2025 to support the export growth required to achieve the Government’s Growth Agenda.

Its analysis suggested a $115 billion shortfall that would need to be funded by foreign investment.

“KPMG believes the best way to grow the economy is for investor migrants’ capital to be deployed in funding New Zealand businesses, particularly start-ups and early-stage businesses.”

Canada and Australia already require a portion of investor migrants’ funds to go into “at risk” investments.

New Zealand’s current investor immigration policy, which came into force in 2009, has attracted over 1600 applicants with over $3.7 billion to be invested into this country, according to KPMG.

There are two visa categories – Investor Plus and Investor – for migrants who want to use their capital to gain residence in New Zealand.

The latter requires a minimum of $1.5 million to be invested for four years, but applicants must be 65 or younger, meet English language requirements and spend at least 146 days in New Zealand in each of the last three years of the four-year investment period. They must also provide $1 million in settlement funds.

Investor Plus migrants must invest at least $10 million for three years but face no language or age requirements and have to spend only 44 days in New Zealand in each of the final two years of the investment period.

The Icehouse suggests some policy changes that could help channel migrant funds into more productive investments, including:

• Introducing a third investor visa category requiring $5 million to be invested, 10 to 20 per cent of which would have to go into growth investments such as angel, venture capital or small cap private equity funds. In return, other requirements would be reduced or eliminated.

• Amending the Investor Plus category to require a 10 per cent (or higher) investment in growth capital funds or direct investments.

Icehouse chief executive Andy Hamilton said migrant capital could also be deployed in other areas, such as creating new residential housing stock or regional economic development. KPMG said a portion of migrant investor funds – possibly 20 per cent – should be invested into angel or venture capital.

“This could be through a designated fund which has the same investment profile as the [government-backed] New Zealand Venture Investment Fund (VIF).

“This would offer some comfort to migrant investors that the portion of their investment capital at risk is being invested in early-stage companies that the New Zealand Government is happy to support through VIF.”

Yue Wang, KPMG’s director of immigration services, said most investor migrants would welcome such changes if they came with benefits such as faster visa processing or reduced requirements. “I don’t think it’s going to necessarily put them off.”

Angel Association executive director Suse Reynolds said changing investor migrant rules to direct a portion into growth investments would provide a “terrific boost” for early-stage companies.

“If wealthy migrants were required to invest into the growth areas of our economy, it will bring the New Zealand rules into line with what is happening in other developed countries.”

She said early stage investment would also help migrants integrate into New Zealand society as it was “a very collaborative affair”.

“It’s not just the capital but the networks and skills the providers of that capital bring to the table.”

See KPMG paper here

First published on nzherald.co.nz 14 Sept 2015

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Angel Association backs investor migrant rule changes

MEDIA STATEMENT

14 September 2015

Angel Association’s executive director Suse Reynolds says that changing investor migrant rules to direct a portion of investor migrant capital into angel, venture capital or private equity funds would be a terrific boost for early stage companies.

“We have seen considerable growth in the early stage investment sector over the past decade.  This has helped the development of a growing number of promising high growth companies.

“The lack of a meaningful pool of capital remains a key constraint.  If that pool was to be increased, we would have the capacity to be able to deploy greater levels of capital into startup and emerging growth companies.

“If wealthy migrants were required to invest into the growth areas of our economy, it will bring the New Zealand rules into line with what is happening in other developed countries.  Early stage investing is a long-term investment, so it will appeal to migrants who have a long-term commitment to shifting to New Zealand and investing here.

“It provides a powerful mechanism to integrate migrants into New Zealand society as early stage investment is a very collaborative affair. It’s not just the capital but the networks and skills the providers of that capital bring to the table.

“Some of the angel community’s most active investors and contributors are migrants – such as Trevor Dickinson, an active investor with AngelHQ in Wellington, who is from the UK and Dave Moskovitz, an immigrant from the US, who set up Webfund.  These new rules will appeal to angels who are interested in migrating to New Zealand.”

ENDS

For more information contact AANZ Executive Director, Suse Reynolds on 021 490 974 or [email protected]

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NZVIF’s Franceska Banga signals departure

New Zealand Venture Investment Fund chief executive Franceska Banga is standing down from the position she has held since the Crown entity was established in 2001.  NZVIF chairman Murray Gribben said the Board is launching a search for a replacement CEO, and the aim is for a transition to occur with Ms Banga departing sometime during the first half of 2016.
“Franceska has been an outstanding CEO for NZVIF and a leader for the venture capital and angel fund sectors in
New Zealand.

Read more

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App developer gains $5m in US funding round

Congrats to StQry Inc – now Area360 – who have raised US venture funding. Terrific to see the acknowledgement they have given to the wider ecosystem including angel investors in their success to date.

Wellington startup Stqry (pronunced “story”) has closed an initial $5.5 million funding round and announced a name change as it expands off-shore.

Now named Area360, the company’s software allows organisations such as museums, art galleries, airports and hospitals to engage with customers through geo-location technology – including beacons, GPS and WiFi – helping them to discover, connect and engage with what’s around them.

The startup was formed in 2012 by Chris Smith and Ezel Kokcu and now counts more than 400 customers worldwide – including Emirates, Te Papa, Seattle-Tacoma International Airport and the Smithsonian Museum in Washington D.C.

Read also:
Mentors help hotelier develop new app
Crimson Consulting flush with new funds

“We started AREA360 to give organisations the ability to enhance their customer experience by providing navigation as well as relevant information and unique opportunities along their path,” Smith said.

“Using beacon and other location data, our platform enables customers to create a broad portfolio of useful services.

“For example, airports can deliver navigation to and from gates, along with a stop at the nearest Starbucks, museums can bring to life that new piece of art by presenting a video on the artist’s inspiration, and an operations manager can track their most valuable assets in real time.”

The funding round was led by US technology venture group Madrona Venture Group and comes as they were expanding their Wellington office and opening their US headquarters in Seattle, Smith said.

Area360 had received support in New Zealand from advisors Gareth Morgan, Dion Mortensen, Alan Gourdie and Sven Baker, as well support from organisations including the Callaghan Innovation, NZTE, Grow Wellington, and the ICE Angels.

“The support from New Zealand’s startup community helped us to thrive and our customer response has been overwhelming,” Smith said.

“We look forward to continuing to grow our business in the US, New Zealand and the rest of the world.”

New Zealand Trade and Enterprise (NZTE) customer manager Mike Evans said the company was a great example of an ambitious New Zealand tech company growing internationally by entering new markets.

“Their partnership with Madrona is an important endorsement of their already considerable success.”

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

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Crimson Consulting flush with new funds

Every angel looks for exponential growth in their ventures and Crimson Consulting’s 300% growth in revenue is just the sort of metric they love….

An education consultancy founded by two New Zealand entrepreneurs has raised more than $7 million from international hedge fund managers in a US$50 million valuation of the company.

Crimson Consulting, the brainchild of Jamie Beaton, 20, and Sharndre Kushor, 21, secured US$5 million ($7.7 million) from national and international investors, including Tiger Management founder Julian Robertson.

The latest round of capital raising comes 10 months after the startup raised $1.4 million in Icehouse’s Ice Angel Showcase.

Since then, Crimson has reported a 300 per cent increase in revenue.

Crimson Consulting offers programmes to help high school and university students excel academically while applying equal effort to extracurricular activity.

It contracts the services of 300 subject matter experts and former admissions staff from universities and corporate organisations including Harvard, Yale, Cambridge, Google, McKinsey and Goldman Sachs.
Aside from focusing on expanding, Crimson has been engaging in horizontal integration, acquiring pre-medical tutoring company MedView, sports consultancy PlayAtlantic, and youth initiative Motivational Corner.

The latest investment round would help the business expand its global operation, Beaton said.

“Our aim is to extend our offering to more students around the world, offering targeted, personalised programmes that build trajectories for ongoing success.”

Crimson clients were usually focused on gaining admission to specific university programmes, or pursuing competitive career pathways in organisations such as Google, Beaton said.

In the past 12 months, clients had gained admission to eight top-ranking schools in the United States and Britain, and to schools including Monash and Sydney, Beaton said.

Crimson has also made the shortlist for the Rising Star category of Deloitte Fast 50 2015.

First published on nzherald.co.nz 27 August 2015

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Lead Partners

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