New Zealand’s Angel Investment Market #ABAF15NZ

#ABAF15NZ: New Zealand’s Angel Investment Market

The largest gathering of early-stage angel investors in New Zealand along with more than 50 international angels with interest in cross-boarder investment joined together in Queenstown, NZ in October 2015.

# Debra Hall from Ice Angels NZ kicks off proceedings with an outline of the angel market in New Zealand and highlights of the year.

Presentation available here.

Click here to view video on youtube

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Selecting Potential Acquirers #ABAF15NZ

#ABAF15NZ : Selecting Potential Acquirers

Angel investors invest to support young companies to grow, however ultimately they can only continue to do this work if the companies they invest in are driving towards an exit which will provide a return greater than the amount they invested.

Panelists in this session consist of representatives from acquirers that are looking to buy (acquire) great companies and enable that return to happen. Who are they, where are they, and what’s motivating them? The session also touches on how acquirers view venture capital firms, the role of investment bankers and common problems to avoid.

Moderator – Bill Murphy (Enterprise Angels NZ)

# Bob Kelly (Microsoft, USA)
# Johan Smet (Trimble Navigation, NZ)
# Kara Frederick (Growth Point, Aus & NZ)

Click here to view video on youtube

 

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Key Components of a Successfully Executed Capital Strategy #ABAF15NZ

#ABAFNZ15 : Key Components of a Successfully Executed Capital Strategy

Focusing on the future, in this #ABAF15NZ session Ron Weissman outlines the key components of a successful capital strategy. What does that strategy need to give investors the best chance of liquidity?

#Ron Weissman (Band of Angels, USA)
#Marcel van den Assum (Angel Association New Zealand, NZ) and Ron then expose the practical implications of implementing a capital strategy in a fireside chat.

Slides available here

Click here to view video on youtube.

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Generating Quality Angel Investment Deal Flow #ABAF15NZ

Angel Association Summit and Asian Business Angels Forum 2015

#ABAFNZ15 : Generating Quality Angel Investment Deal Flow

The different sources of deal flow are discussed in this session including the role of accelerators, incubators, universities and tech transfer offices in generating deal flow.

Speakers cover the latest trends in deal stage and sector preferences.

Moderator – Dr Ray Thomson (Ice Angels NZ)

# Carolynn and Jon Levy (YCombinator, USA)
# David Hughes (Director, Kiwinet)
# Jamie Rhodes (Central Texas Angel Network, USA)
# Brett Holland (Lightning Lab, NZ)
# Harveen Narulla (Hatcher, Singapore)
# Wilem Van der Steen (Callaghan Innovation, NZ)

Click here to view video on youtube

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The Angel Evangelist

John May is founding chair of America’s Angel Capital Association (ACA). He’s championed the cause of entrepreneurs and angel investors since realising big organisations weren’t for him, establishing five US angel groups and now working internationally to establish more. He’s co-authored books on the subject, is managing partner of angel investment firm New Vantage Group and is investment director for UK-based global venture fund, Seraphim. He came to New Zealand to meet our angel community. We asked him why?

I loved it when I was here before, but I wanted to come back for longer, not just for a four-day thing… to get a better feel for the New Zealand business community, the angel community, but also the neighbourhood. It hasn’t disappointed.

 

But to what end, exactly?

I’ve been around the world running the (Ewing Marion Kauffman Foundation’s) Power of Angel Investing series and trying to get a better feel for what’s going on in different countries and how best to collaborate.

We’re not looking for countries that have the best deals to go write cheques, that’s the big fallacy: we’re not running international angel development workshops and building global networks because we’re deal orientated; we’re movement orientated.

What happens when your company wants to go from here to a bigger market in Southern California? Wouldn’t it be nice if there was communication between the angels of Southern California and the angels backing the company here? You don’t want to hire a lawyer in Southern California to tell you how to run a business in Southern California…wouldn’t it be better to have mentors and supporters in Southern California who are co-investors.

So you wanted to come here to build connections?

Yes and more. One of my big things is to get more overseas investors to come to our ACA conference to learn what we are doing.

Here’s some sobering statistics: even in the US – the largest economy in the world, the largest venture capital community in the world – we believe only about 5% of households are wealthy enough to be angels, not friends or family, but proper angels. And my definition of a proper angel is an individual who invests their own money in a stranger’s business, in a minority position, gives their time as well as their money and there is no one else in-between.

And of those 5% who can, we think there’s only 5% who do. And now we’re getting to the bottomline: not only do we think that only 5% of those who can, do, only 5% of those who do, ever do it in a structured, disciplined, portfolio diversification, networked group way and I bet New Zealand is pretty similar.

You really push the group concept. But why is it so important for that 5% of 5% to be part of an investment group?

What we’ve learnt is that we need to diversify our portfolios, which means getting out of our comfort zones. It also takes more money than we have personally to take a company that’s going to be significant from startup to breakeven and it takes time to do due diligence on the opportunity. Who’s going to make the phone calls? Who’s going to have the meetings? Who’s going to do the market research? So if you decide you’re going to diversify, if you’re going to do due diligence to make you comfortable, and you’re going to have enough money on the table to make it a viable company, what you learn very quickly is you can’t be a solo angel and do this.

What our companies need are cheques for US$250,000 to US$1 million and to deliver that and diversify your portfolio you need to be in a group, even better, a syndicate of groups – that’s the big movement in the US right now – the syndication of groups.

Why is that so important?

Well if you need US$2 million, it may be above the capacity of an individual group, but you may be able to bundle four angel groups or funds together and all of a sudden you’ve got a couple of million dollars, so then the company can finish developing their product or get their first sales and really get on their way.

You wrote the book: “Every business needs an angel” – why does every business need an angel?

The real wink is every high-growth, successful business, as opposed to a mom and pop store, needs an angel because it’s lonely out there doing it on your own; you need a mentor; you need risk capital; there’s so many reasons why angels are important for companies…an entrepreneur gets a board member, a friend, an adviser.

Doesn’t it depend on the angel they get?

Yes, and it depends on the entrepreneur. Some entrepreneurs just give lip service to the help; they really just want the money. Then there’s the lip service of an angel who says I’m going to be your friend, I’m going to be your adviser, I’m going to be available and then doesn’t answer the phone. It doesn’t always work. But it’s an art not a science.

The real wink is getting the right angel with the right entrepreneur because some angels can be great board members, but aren’t good at helping to find staff, sales or marketing; while some are good as a shoulder to cry on, but aren’t good at financials; some are good for startup and some are good for growth companies. That’s another reason why groups are better than individuals.

The right angel should always be a joint decision between the entrepreneur and the investors. There should be a chemistry between them and there should be a staging of the need, so the right investor for the company at the right time.

Should angel investors always have representative on the board?

Advisory boards are very important, but companies don’t need boards of directors until they’ve grown a little bit.

It’s also very important for [the chosen investor representative] to have a way of communicating to the other angel investors, so the entrepreneur doesn’t have to waste their time communicating with all of them.

What’s the most common mistake entrepreneurs make when they seek investment

Thinking they know it all. It’s quite rare to find a coachable, industry-savvy, less egotistical entrepreneur their first time around.

I’m a big believer in investing in second-time entrepreneurs. A serial entrepreneur is a wonderful thing to invest in, because someone has already paid for their mistakes the first time round. But that’s another thing that’s fascinating about here: New Zealand is a place where almost everyone is a first time entrepreneur.

Entrepreneurs need to understand the first thing angels look for is management, management, management; the second thing is a large market; and the third, if we’re smart, is the product or service, the technology, whatever. Yet most entrepreneurs want to sell us on the fact their thing is faster, cheaper, better, slicker, more fun first. But we invest in the jockey not the horse.

The problem is an entrepreneur has to have the dream and the ego to handle it. So there is a natural tendency to want to invest in someone who has a lot of confidence and a lot of energy. But if they are really going to grow their business into a significant company, they need to be humble enough to understand they can’t know everything: they are going to have to hire people; they are going to have to listen to people, so finding someone who is coachable is important.

What’s the most common thing angels do wrong?

Hearts over heads… and not providing enough tough love once we’ve invested: are you being direct enough; are you talking about the exit; are you educating the entrepreneur; are you telling it like it is instead of waiting until it gets worse to say something? That’s why you have to have the right chemistry; you can’t be in awe of each other. The entrepreneur shouldn’t think we’re just money and we shouldn’t think they are running the company so we shouldn’t give them our frank opinion.

Why do you love this area so much?

It’s the people. It’s the entrepreneurs. They are so important because they make businesses; they make money. We benefit from the vision, the energy, the business model of the entrepreneur…so the excitement for me is being a part of this journey.

Plus it’s what it does. It boosts any economy, any city to find a way to finance innovative new technologies and products. Economies will go backward if they don’t stay in touch with newer, faster ways of meeting their needs. And it creates jobs, futures. Major corporations are net job losers; they cut costs, find efficiencies. All the research shows startups and SMEs are the net job creators of modern economies.

But angels also have to make money in the end or it’s a losing proposition and will fade away.

What should we be doing more of in New Zealand to improve our angel ecosystem

Find as many ways as possible to educate the media, the government, the wider community that supporting high-growth companies matters; make people aware of the benefits to the entire economy of making this work, of encouraging more entrepreneurs, of making smarter entrepreneurs and of helping to make more and smarter angels.

We need to encourage more angels to increase the amount of capital available, because the more capital there is available the more likely people are to diversify and thus the more capital there is for different sectors to develop new products, and we need more angels to bring different skills into the mix. There is so much going on in social media and some of the new technology, for example, that you almost have to find a way to search out the recently cashed-out, under 40-year olds because they can make a material difference to understanding the current consumer market for those sorts of companies. It’s also hard to be an investor and help an entrepreneur and do due diligence on them if you don’t understand what they are doing.

We tend to talk to ourselves far too much.

By Lesley Springall

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#ABAFNZ15 Pitch on the peak

The first ever Asian Business Angels Forum in New Zealand will kick off on Wednesday 14th October with our country’s best ABC’s (Angel Backed Company’s) getting in front of up to 200 guests, with over 50 international Angels from 12 countries at ‘Pitch on a Peak’.

NZTE is partnering with the New Zealand Angel Association and Callaghan Innovation to host the Pitch on a Peak showcase, which features exciting emerging technologies through to high-growth internationalising tech ventures.

The event will be held in Queenstown at the spectacularly elevated Skyline Gondola Restaurant.

About Pitch on a Peak

The aim is to showcase the pinnacle of New Zealand’s high-growth technology companies to a domestic and international investor audience.

There are three groups of companies participating in Pitch on a Peak:

·     Early stage technologies – demonstrating the best of the best coming out of labs across New Zealand

·     Companies looking for their first round of domestic angel funding – investment critical for businesses on a high-growth trajectory

·     Internationalising companies – taking New Zealand to the world

Companies are seeking a mix of investment, valuable connections, and/or the experience and skills that investors can bring to fastrack their success.

Each group of companies will be introduced by an experienced investor who will discuss return horizons at seed and expansion stage, possible growth plans, capital strategies, liquidity scenarios and acquirer activity

The showcase is powered by NZTE’s Better by Capital programme, and wraps a bespoke plan and a dedicated NZTE Investment Manager around each company. Companies receive:

·     Capital readiness assistance

·     Pitch training

·     A platform to present their investment offering and network with up to 200 investors

·     Targeted investor matching

·     Access to the international NZTE Capital team and our contracted external industry experts Deloitte, Lance Wiggs, Grant Thornton and Catalyst Advisory

It is a challenging, fast paced and highly valuable experience for any company, and each participant’s highlights are different from the next.

Attendance at Pitch on a Peak is limited to qualified investors and is strictly by invitation only. Guests can expect the following at Pitch on a Peak:

·     A jaw-dropping ascent to the showcase via priority gondola

·     The best of New Zealand’s tech innovation showcased in one of our most iconic venues

·     A stimulating evening of compelling investment opportunities and creative technology demonstrations

·     Quality food and beverage offerings from some of New Zealand’s top producers

·     An exclusive opportunity to mingle in a unique investment community from all over the world

Pre-registration is open for investors. Click here to complete the form and book your place at this exclusive event

Please note that investment opportunities do not represent offers of securities to the public. Before investing it will be necessary to determine your eligibility in accordance with the Financial Markets Conduct Act 2013.

 

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Canterbury Angels

Canterbury Angels is the region’s angel investment network. We connect our members with high growth potential companies driven by New Zealand entrepreneurs.

Connect with Canterbury Angels at http://canterburyangels.nz/

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AANZ Update for Investors about FMCA Compliance

AANZ Advice on FMCA Compliance

Introduction

Late last year the Financial Markets Conduct Act 2013 (the FMCA) came into force and brought with it a new regime for regulation of the capital markets. The “bright line” definition of an eligible person (net assets of at least $2m or gross annual income of $200,000 for the previous two years) was abandoned.

Rather than tick-box compliance, this new regime approaches compliance through the lens of what is appropriate in light of the FMCA’s purpose and acting professionally. The focus is on promoting fair, efficient and transparent markets, which means more useable disclosure documents for investors, but also appropriate exclusions so that regulatory burdens are more proportionate to the risk of potential harms being addressed.

It’s not practical or economic for early stage companies to comply with the disclosure requirements of the FMCA when raising capital so they therefore look to rely on the FMCA exclusion regime. These are generally referred to as “Schedule 1 Exemptions”.

A clear understanding of the application of these exclusions by early stage companies, their investors and advisers is therefore an important component of the vigour and health of the early stage ecosystem.

The FMA has a set of useful FAQs, which can be found here.

The FMCA specifies three broad categories of exclusion:

  • wholesale investors;
  • close relationships; and
  • exclusions based on the nature of the offer.

Within these three categories there are two key exemptions applicable to angel investors. Satisfying the conditions of these exemptions minimises the risk of action by a disgruntled founder or fellow investor.

Angel investors fit most neatly as either meeting:

  • “eligible investor” criteria under the ‘wholesale investor’ exemptions, or
  • the requirements of the “small offers” regime under the ‘certain offers as a whole’ exemptions.

In our recent discussions with the FMA two additional issues have been clarified with respect to small offers:

  • the implications of investors using a nominee structure; and
  • the implication for angel deals of the advertising strictures under the FMCA.

Wholesale Investors

There are a range of categories of wholesale investor but the one most angels will rely on is the “eligible investor”. Eligible investors may self-certify but a third party must verify the self-certification; either a lawyer, chartered accountant or authorised financial advisor.

An “eligible investor” is defined, in summary, as having “previous experience in dealing with financial products such that they can assess the risks, information needs and adequacy of the information provided.”

There was some initial concern that verifiers of eligible investor certificates would be unwilling to do so because they were left exposed due to the subjectivity implicit in making this assessment and the risk that the previous experience could be found to be insufficient.

The FMA has subsequently provided a substantial degree of comfort for certifiers and offerors.

The FMA advised that the certifier need only:

       ensure that the person self-certifying has been sufficiently advised as to the consequences of being certified; and

       assess whether, factually, the “relevant experience” cited has actually occurred (i.e. they do not need to provide a value judgment as to whether or not the experience cited is, in fact “relevant” experience). 

By way of example, if a person, wishing to make an investment in a start up company, cites previous experience in trading listed stocks, a third party lawyer, counter signing the certificate can be comfortable in doing so as long as:

       they are comfortable that the investor has been sufficiently advised as to the consequences of giving the certificate; and

       they have no reason to believe that the stock trading never actually occurred (i.e. he/she does not need to consider whether or not the experience in listed stocks was actually “relevant”).

In summing up, unless there is reason to believe that the actual facts stated in the certificate are incorrect or the certificate does not include statements that it is required to include, the offeror will be able to rely on an eligible investor certificate and no action could be brought against the independent advisor on the basis that their only role is to advise the relevant person as to the consequences of self-certifying as an eligible investor.

We have been assured there is no need to certify angels on a deal by deal basis. This is certainly the case if they fall under any of the “wholesale” investor definitions. As long as wholesale investors are certified every two years and the certificate relates to the class of financial products (in most instances for angels this means acquiring equity securities or making loans convertible into equity securities) this is sufficient.

Small offers

The small offers exemption (often referred to as an SOE) is a personal offer of equity or debt securities:

       where no more than 20 people are issued or sold the financial products;

       in any 12 month period; and

       where no more than $2m is raised in the same time period.

A personal offer is one made to, and that may only be accepted by, a person who is likely to be interested in the offer having regard to:

       previous contact or a professional or other connection between the offeror and the person;

       statements or actions made by the person indicating that they might be interested in such offers (such as the person’s membership of an Angel network); and

An offer will also be a personal offer if it is made in the same manner to a person who has had an annual gross income of more than $200,000 per annum over the past two years. 

It is also important for an angel backed company to be aware there is an obligation on them to notify the FMA within a month of the relevant accounting period that they have made a small offer. In clarifying the extent of this obligation the FMA made it clear the issuer need only report once a year on a very simple basis:

       the name of company seeking investment,

       note the type of securities offered,

       the date of distribution of the document containing the key terms,

       the number of investors (no names required); and

       the amount raised.

The ‘personal offer’ nature of this exclusion has a fairly high degree of subjectivity. It is therefore important, particularly in an angel network context that any investment event is clearly introduced with the disclaimer that the offers made at the event are “personal” and do not “constitutea regulated offer of financial products i.e. an offer to the wider public”. Investors will not be able to take up any offer unless they clearly meet the criteria of FMCA Schedule 1 exemptions.

It is also important to be aware that relying on this exclusion requires the company raising funds to be very careful that ONLY those people who fit into one of the personal offer categories receive the offer. Advertising has a wide meaning under the FMCA as essentially “any communication promoting an investment offer, or intended offer, to a section of the public”.

Advertising when wholesale and ‘small offers’ investors are involved

Issues arise when a company is pitching to both wholesale investors and those who seek to invest under the ‘small offers’ criteria. The FMA’s guidance is that the company must take “all reasonable steps” to ensure any advertisement about the small offer is not received by any investors that don’t meet the ‘personal offer’ requirements.

So a company may advertise a contemporaneous wholesale offer as long as in that advertisement it is clear the ‘wholesale offer’ may only be accepted by people meeting the requirements of a wholesale investor.

It is of course common for angel investor networks to notify their existing members about new offers, and those members may then pass on information to others. For contemporaneous ‘small’ and ‘wholesale’ offers the company should ensure that any communication to the angel investor network makes it clear that there are two offers and that only the wholesale offer communication is able to be passed on to other wholesale investors.

The FMA have made it clear that they are very happy to be approached if anyone has concerns about advertising. The first port of call is [email protected] to raise these concerns. 

Nominee structure and the Small Offers Exclusion

A number of angel networks operate nominee companies. These entities hold the shares of their members who invest in any individual angel deal. The nominee in most of these instances operates as a bare trustee holding the shares for the individual angel. The nominee structure minimizes the number of shareholders on the capitalization table.

In our discussions with the FMA we have been assured that the nominee structure does not limit the usefulness of the small offers exemption.

We explored a number of different factual scenarios with the FMA that lead to different assessments of how the FMCA applies, but in general, to reiterate the point just made, we were advised that the small offers exclusion does not prevent investors investing through a nominee company.

Where investors are relying on the ‘small offers’ exemption, the 20-investor limit applies to the number of persons to whom financial products are issued or sold. Where a nominee company holds shares on bare trust for an underlying investor, the effect of the FMCA is that the underlying investor is still receiving an equity security therefore the underlying investors count in the 20-investor limit, because they are still being sold financial products.

The impact of the advice we have received is that it is necessary for AANZ members to keep clear records, on a deal by deal basis of the relevant exemption under which individuals are investing. The more members categorized as ‘wholesale investors’ the easier this aspect of network administration will be.

Conclusion

In an ideal world, all this would be more straightforward and we would have unequivocal advice that the way we are operating is legally robust and all participants are safe. There is no such thing as an ideal world! The AANZ is nevertheless satisfied the FMA has a high level of understanding about how we operate and even more fundamentally about our intention to do so in good faith within the confines of the Act.

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#ABAF15NZ Speakers – Raiyo Nariman

Meet the speakers #ABAF15NZ – Raiyo Nariman

The Angel Association of New Zealand brings the 2015 Asian Business Angel Forum to Queenstown this October. Leading investors and early stage business specialists from around the globe will share their knowledge and make their New Zealand connection at this premier global investor forum

Presenters sharing personal learnings garnered from years of investing with the carefully curated audience of Angel groups, network and fund members from across this dynamic country include Raiyo Nariman founding VC of the Malaysian Business Angel Network.

Register-now

Raiyo Nariman specializes in commercialization of technology, research & IP, and the development, funding and growth of start-ups. As a Venture Manager, Raiyo personally invests and partners with founders, taking a hands-on role to ensure successful execution of commercialization & growth strategies, including international market entry and capital raising.

Raiyo’s entry into the venture arena started in New Zealand, as part of the founding executive team for a Foundation, where his focus was on the development, funding and incubation of new ventures. Raiyo’s executive-level engagements include CEO of Canterprise, the venture company at University of Canterbury, and MD of Encore Professional Services, a business he spun-out, established and grew for a PE fund in Hong Kong.

As the founding VP for the Malaysian Business Angel Network, Raiyo played a key role in establishing the current angel investor community in Malaysia and has also established, developed and managed angel networks in Hong Kong and Singapore, and works with angel clubs and associations across Asia and the West.

Raiyo is MD and Partner for Mercatus Ventures, a Malaysian-based early stage venture firm that invests in, and takes a hands-on role to develop, regional ventures. He is also a Partner in Serendipity Ventures, a Hong Kong-based boutique venture management firm, where he personally invests in early stage ventures and takes them to market.

Meet Raiyo, along with a host of angels from New Zealand’s angel investment community and the world at the Asian Business Angels Forum, Queenstown, October 14-15. Only a handful of seats remain.

Be quick to register yours. ABAF2015, NZ

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ABAF presenter Jon Medved talks Chinese Investment

Successful investor Jon Medved visits New Zealand in October for ABAF. In this recent interview for Bloomberg News he shares his view around Chinese investment internationally. He briefly outlines the need for technology and investment opportunities from countries with connected ecosystems (like Israel’s 300+ R&D centres – in a country a 10th of the size of New Zealand, or Silicon Valley in the US)  to develop those technologies for the Chinese market.

Jon’s view is opportunities based on game-changing technologies such as IoT, big data and data analysis, robotics are the areas of most interest with innovators all over the world being sort to deliver.

http://www.bloomberg.com/news/videos/2015-08-12/will-tech-see-a-venture-capital-drag-from-china-

Meet Jon Medved, along with a host of angels from New Zealand’s angel investment community and the world at the Asian Business Angels Forum, Queenstown, October 14-15.

Seats are now very limited. Be quick to register yours.

Register-now

ABAF2015, NZ

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Research Delivers Investment Lessons for Achieving International ROI

In May 2014, New Zealand tech success story GreenButton was acquired by US software giant Microsoft adding the company to a small but growing list of successful Angel funded kiwi technology exits. 

Dan Khan a tech entrepreneur, investor and former director of Lightning Lab, New Zealand’s first tech company accelerator, has conducted in-depth research on behalf of AANZ and NZVIF into the journey of the company from startup to exit. The resulting papers provide valuable insights for kiwis driving towards doing international deals, the subject of this years Asian Business Angels Forum (#ABAFNZ15) in Queenstown, October 14-16 2015.

ABAF2015, NZ

GreenButton’s success was not born overnight. The reality is one of relentless determination by the founder; big, bold decisions, backed by serious hard work; emotional challenges resulting from financial strains and extensive periods of being away from friends and family; an unrelenting focus on the end goal and a substantial commitment of expertise, time and effort by lead investors.

Angels invested in, or working on investing in Kiwi tech companies can learn how to achieve the highs and bear the lows of tech success on the world stage from the detailed research paper which steps through the “Anatomy of a Successful Exit: The GreenButton story”. Download it here.

Dan has also written a short form overview of his findings in a personal “Reflections on a Successful Exit: A Post-Post-Mortem of the GreenButton Story”, to entrepreneurs as he tours the country. His travel is being supported by the Angel Association of New Zealand and The New Zealand Venture Investment Fund. To receive a copy of the overview paper click here.

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Venture Accelerator

VA-logo-website

Venture Accelerator Limited (Venture Accelerator) is a Nelson based group of angel investors interested in funding start-up companies in New Zealand, with an emphasis on the Tasman region. Typically we are interested in highly scalable technology businesses that have global opportunities.

Our objective is to connect our investor members with entrepreneurs and innovators, and provide them with the capital and guidance necessary to ensure their business venture has the best chance of succeeding. Members often act as mentors and board members drawing on their skills, experience and success as business people and investors. Other members are more passive investors.

Members invest individually, collectively and with other angel groups.

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Angel Association attracts major global investors to NZ

Hosted by the Angel Association of New Zealand, the 2015 Asian Business Angel Forum takes place in Queenstown, New Zealand, 14 – 16 October 2015.

The event, an expertly curated, three day and completely investor-centric summit subsumes the AANZ’s annual summit this year.

It brings together leading investors from around the world to share their knowledge and join together in celebrating this small country’s big contribution to early stage investment.

The AANZ is pleased to have attracted a stellar line-up of international speakers who bring with them hundreds of investment experiences and personal involvement in the most significant international investment funds and angel groups.

Their combined portfolios include some of the biggest, most important and well known early-stage companies in the world.

Thought-leaders gathering to present at ABAF in New Zealand’s beautiful Queenstown’s include:

Jayesh Parekh – Jungle Ventures, 500 Startups and Mumbai Angels

David Chen – AngelVest

Sasha Mirchandani  – Kae Capital and Mumbai Angels

Nelson Gray – LINC Scotland, Firth Ventures and winner of the Queen’s Award for Enterprise Promotion for individuals who have played an important role in promoting enterprise skills and supporting entrepreneurs,

Bill Payne – ACA, Hans Severiens Memorial Award for Outstanding Contributions to Angel Investing and 2010 New Zealand Arch Angel Award for his impact on angel investing in New Zealand

Jon Medved – OurCrowd

Ian Sobieski – Band of Angels

Jamie Rhodes – ACA, Central Texas Angel Network (CTAN) and Texas into the Alliance of Texas Angel Networks

Marcia Dawood – ACA Board member, MD, Golden Seeds and Blue Tree

Allan May – Life Science Angels, Emergent Medical Partners

and Carolynn and Jon Levy – the legal team from the United States most successful incubator – Y Combinator, which has launched the likes of Airbnb, Dropbox and Stripe.

Register-now

To see the entire stream of social media as Angels actively connect New Zealand to the globe, the latest from international guests, hashtags and other social networks in one place click here.

Using twitter you can follow the Angel Association of New Zealand at @AngelAssn, and keep up to date with the Asian Business Angels Forum news and the event itself as it unfolds by using the hashtag #ABAFNZ15.

To meet and hear from New Zealand’s largest gathering of global investment thought leaders, along with a host of angels from New Zealand’s angel investment community in person secure your seat now.

There are only 30 places left at one the southern hemisphere’s largest and exclusive investor events Asian Business Angels Forum, Queenstown, New Zealand, October 14-15 2015.

 ABAF2015, NZ

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#ABAF15NZ Speakers – Marcia Rick Dawood, Jamie Rhodes

Meet the speakers #ABAF15NZ – Marcia Rick Dawood, Jamie Rhodes

A truly international trio rounds out an exceptional line-up of speakers at the 2015 Asian Business Angel Forum (ABAF) hosted by the Angel Association of New Zealand. ABAF event plays a pivotal role in bringing together speakers and delegates from 12 of the most active and connected early-stage investment ecosystems in the world.

Marcia Rick Dawood, Sasha Mirchandani, Jamie Rhodes all come to ABAF with intent to share a combined 100 years of experience in founding, finding, screening, funding, growing and exiting startups.

It’s an honour to welcome all three to Queenstown, New Zealand, from 14th until 16th of October to share their insights at #ABAFNZ15.

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Marcia Rick Dawood is on the Board of the Angel Capital Association (ACA) in the United States an organisation which represents over 12,000 accredited investor members, 220 angel groups and accredited platforms who have invested in well over 10,000 entrepreneurial companies.

Marcia is also Managing Director of Golden Seeds, an investment firm dedicated to delivering above market returns through the empowerment of women entrepreneurs and those who invest in them. The firm’s nationwide angel network is the fourth largest and most active in the US with 250 members. Its venture capital group has $35million under management. The firm, headquartered in New York, also has groups in Boston, San Francisco, Dallas and LA and has invested over $50million into 52 companies since 2005.

Syndication of deals between Golden Seeds and BlueTree Allied Angels is also lead by Marcia where she is also a member and Chairman of the Education committee. BlueTree’s focus is investing in regional, early-stage companies.

Not content with the ACA and 2 angel funds Marcia is Managing Director of OneHEEL Partners in Greater New York too. She focuses on helping businesses grow, through direct investment and expert consulting services. The firm also offer a laboratory with resources to grow, develop and encourage business ideas and investments, identifying those concepts with the highest potential, and providing the financial and business expertise required, leveraging the background and network diversity of its partner members.

She supports women led, impact as well as tech/life sciences and overall fun companies and is passionate about education as well as investment. In her 16+ year career prior to becoming an active investor she gained experience and success in operations, sales and marketing with Kaplan Higher Education Campuses (KHEC). She has also walked the road of an entrepreneur as a founder, owner/operator of a professional sports franchise.

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Jamie Rhodes is a serial entrepreneur and investor with deep experience in science and technology. He is co-founder of National NanoMaterials, manufacturer of Graphenol™, a functionalized form of graphene and previously founded Perceptive Sciences Corporation.

He brings over 30 years of experience managing investment in technology with him to his presentation at ABAF based on nine years in management at IBM, being co-founder of a venture capital funded start-up focused on the telecom industry (which IPO’ed in 2011) and, in the early years of his career, working with numerous start-ups, most notably National Instruments in its early stage. He holds both a Bachelor’s of Science degree and a Master’s of Science degree from the University of Texas at Austin.

A leader in his community in Texas, Jamie has been named one of ‘The 30 Most Influential People in Central Texas in the Last 30 Years’ by the Austin Business Journal and ‘Technology Volunteer of the Year’ by the Greater Austin Chamber of Commerce where he previously served on the board.

Among other advisory and governance roles Jamie also counts his position on the board of the Central Texas Regional Center of Innovation and Commercialization and the Texas Tri-Cities Chapter of the National Association of Corporate Directors, St. Edward’s University, Texas State University and the University of Texas. He is also an IC2 Fellow.

With the support of the GACC in 2006 Jamie founded the Central Texas Angel Network (CTAN), which provides funding and support to Texas entrepreneurs across a broad spectrum of industries. Jamie, along with a group of local investors and community leaders, were among the early adopters who believed that early-stage investing could provide a meaningful return for investors while also spurring local economic growth and so CTAN was formed as a not-for-profit corporation. Like most angel groups CTAN began with individual members of the organization volunteering their time and expertise to review potential investments, assist entrepreneurs and take care of administrative duties.

Jamie has also organized angel groups around the state of Texas into the Alliance of Texas Angel Networks, which represents over 300 investors and investment in over 60 companies in 2012. He is vice chair of the board of directors of the Angel Capital Association, a national organization spun out of the Kauffman Foundation representing seed stage investors.

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Meet the trio in person, along with a host of angels from New Zealand’s angel investment community and the world at the Asian Business Angels Forum, Queenstown, October 14-15. Seats are now very limited. Be quick to register yours. ABAF2015, NZ

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#ABAF15NZ Speakers – Carolynn and Jon Levy

Meet the speakers #ABAF15NZ – Carolynn and Jon Levy

Hosted by the Angel Association of New Zealand, the 2015 Asian Business Angel Forum brings together leading investors and early stage business specialists from around the globe to share their knowledge make their New Zealand connection.

They join a carefully curated audience of investor members of Angel groups, network and fund members from across this dynamic country bought together by the AANZ to celebrate this small country’s big contribution to early stage investment and build international relationships.

Among the highly experienced line up of speakers AANZ is extremely pleased to be able to bring Carolynn and Jon Levy from Y Combinator, one of the most successful incubators in the US to ABAF to share their insights and experience at #ABAFNZ15.

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Carolynn Levy is a partner at Y Combinator (YC). She was previously at renowned West Coast US firm Wilson Sonsini Goodrich and Rosati, where she helped hundreds of startups with legal questions and acted as Y Combinators counsel for 6 years. She has a BA in political science from UCLA and JD from the USF School of Law, and is a member of the State Bar of California.

Jon Levy, is also a partner at Y Combinator and previously counselled public and private technology companies as an attorney for Wilson Sonsini Goodrich and Rosati. He ran ThinkEquity’s private placement department and worked as a Managing Director at Merriman Curhan & Ford. Jon earned a J.D. from the University of Michigan Law School, and a B.A. in English Literature and Religious Studies from Wesleyan University.

Both Carolynn and Jon are skilled and experienced in dealing with entrepreneurs at all stages of the lifecycle, offering services to those beginning their ventures, those exiting and experiencing the process of merger or acquisition and those that recycle their capital investing in the new. They make themselves available for office hours at YC and Carolynn is active in entrepreneur education via Stanford University providing insights to founders Finance and Legal Mechanics for Startups helping them to get the structure right at the start.

Joining YC was a natural move for the couple, Carolynn says “YC was becoming bi-coastal and needed legal help on the west coast.  So for years, as an associate at WSGR, I helped YC’s portfolio companies with formations, fund raising, etc.  YC kept getting bigger, and my husband Jon joined YC as a legal consultant.  Jon was (is) so happy working with YC because of the people and the culture.  So eventually, since YC kept getting bigger, I decided to leave WSGR and come to YC as a full time partner.  It was a great decision.”

She councils startups with pragmatic guidance, for instance “It doesn’t matter who thought of the idea, who did the coding, who built the prototype, or which one has an MBA. It will feel better to the whole team if the allocation is equal because the whole team is necessary for execution. The take away on this point: in the top YC companies, which we call those with the highest valuations, there are zero instances where the founders have a significantly disproportionate equity split.

Y Combinator itself has an impressive track record, so in their time as independent and in-house council Carolyn and Jon have been involved in some of the biggest deals and best known companies in technology today, including: Airbnb (valued at approx $10B), Dropbox (valued at approx $10B), Stripe (over $1B and growing), Twitch, Heroku and Reddit. Twitch (formerly known as Justin TV) was acquired by Amazon for $970M, Heroku was acquired by Salesforce for $212M.

As detailed by investors following YC’s progress tens of other YC companies have been acquired, those “based on reports had a price greater than $10M were Parse (Facebook, $85M), SocialCam(Autodesk, $60M), Xobni (Yahoo, $48M), Cloudkick (Rackspace, ~$50M),Loopt (GreenDot, $43M), Wufoo (SurveyMonkey, $35M), Omnisio(Google, ~$15M), 280 North (Motorola Mobility, $20M), and Appjet(Google). Parakey‘s acquisition by Facebook likely involved Facebook stock which is now worth a greater amount also. Others that were smaller but non trivial and were likely deemed successes by the founders were Auctomaticand Zenter.

Meet Carolynn and Jon Levy, along with a host of angels from New Zealand’s angel investment community and the world at the Asian Business Angels Forum, Queenstown, October 14-15. Seats are now very limited. Be quick to register yours. ABAF2015, NZ

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Steve Blank – Angels and the Lean Startup #ACAAngelSummit15

Angels Connect NZ series – Bill Murphy from Enterprise Angels reports from ACA Conference 2015

A major highlight of the American Capital Associations annual conference was Steve Blank’s presentation of his customer development methodology – a process which has had an impressive impact on the teaching of enterprise creation in the last decade.

Steve, an academician, serial entrepreneur and investor with over thirty years experience in the technology industry who has founded or worked within eight startup companies, (four of which have gone public), is recognised for being one of three founders of the Lean Startup movement.

His contribution was recognising that commercialisation is a process of testing a series of hypothesis. He currently shares his theories at Haas School of Business, University of California Berkeley, Columbia University and the California Institute of Technology (Caltech). His methods are now being taught in more than 200 universities worldwide, and are recommended by the National Science Foundation and National Institutes of Health in connection with federal grants.

Prior to the lean startup movement and wide spread use of Steve’s customer development methodology investors assumed because they funded a company the entrepreneur would follow a set plan and the board simply monitored it. Investors were treating startups like they were big companies – work out a business plan and then simply implement it.

Great tools were built for execution against plans in large corporations and then used in early-stage ventures and it was assumed this was enough. People who didn’t execute were fired.

Steve proposed that while large companies execute known or proven business models, startups don’t. What angels and other early-stage investors thought they were funding – execution – was actually the search for a scaleable business model that created true value. Instead of assuming entrepreneurs were ‘doing it wrong’ the question that should have been asked was ‘are the critical assumptions about the business plan wrong’?

He has gone on to show that a large percentage of the time entrepreneurs are just guessing about execution. There are no models for early stage venture execution – and no-one is executing in that first year. They are in fact just burning cash conducting a search for that business model – performing a series of experiments to test a problem, solution, a product and a market.

He then went on to create a much-needed methodology to do this work in a robust and repeatable way.

The customer development methodology is now well documented. A good place to start learning more about it is at www.steveblank.com or on his free Udacity Lean Startup course.

Here are the key points Steve shared with angel investors at ACA:

  • Customer development is a process – founders need to get out of building and turn hypotheses into fact by testing the problem exists, the solution is valuable, the product will work and the market wants it.
  • Only then should they build a minimum viable product.
  • Founders need to do the work themselves so that they hear first hand that ‘this or that’ is a bad idea or ‘I wouldn’t pay for it’, read non-verbal signals and pick up on leads to alternatives that might prove to be the solution, ‘Oh we don’t want that – but if you could invent X we would…’
  • Talking to a minimum of 10 to 15 customers a week is the role of everyone working on the startup, with a goal of talking to 100 to 150 potential customers being the benchmark. This number is shown to produce the best results.
  • Then the founder can report back, ‘here’s what I thought, here’s what I learned, here’s what I’m going to do’.

At the conference Steve also pointed out a great thing about this process is tech founders already understand it. The process of defining hypothesis and testing it is used in their work to create and test software and hardware. Striving for evidence based commercialisation is similar to the process engineers go through to work towards deploying programmes and technologies that work.

Its a proven process for minimising time, money and resources.

So, what should angels learn and do that’s different in light of the lean startup movement and in particular customer development methodology?

  • Recognise that often all the entrepreneur has in reality is a hypotheses – ask for evidence or at least what the plan is to collect the evidence.
  • Understand that a startup is a temporary organisation designed to search for repeatable and scaleable executable business model – it is not a business yet.
  • Know the goal is not to stay a startup, but rather to build something which has real value to a set of customers – a sustainable enterprise – and if it scales too you are going to increase the speed of growth and hopefully the size of your returns.
  • Don’t fund people to execute on an idea, that shouldn’t be done on angel money. Before investing check what evidence the entrepreneur has collected that who they say are customers, really are the customers of the product or service they propose. Ask who they have talked to (and how many) and how they have tested their hypotheses. Rather than angels finding out by funding entrepreneurs ideas and blowing $500k, get the founder to go out and do this validation work themselves. Take the time.
  • Then insist you get access to all those conversations and get the founders perspective on the evolution of the idea.
  • Work with founders who are passionate about doing the quantitive and qualitative validation of facts themselves, using a marketing research company to validate the market is not as effective. It is critical is that the people with skin in the game validate whether anything a marketing company tells you is true.
  • Get out of the building yourselves as angels too, make validation your work too – the purpose being to inform the founder’s vision.
  • Your job is not to fund someone to just do focus groups which come up with superficial data such as ’47 say one thing 3 say another’ the skill you’re investing in may be a founder’s ability to pick up on the feedback from the 3 and testing the opportunity to build a business model around them. (47 say sell it for $9.99 – 3 say its an enterprise play and we’ll pay $200k).
  • Once you have a marketing plan aim to test it yourself and see what you learn that’s different from the entrepreneur’s plan.
  • Celebrate the fact that the startup is a search for that executable business model rather than focus on the original business plan and its implementation. Be glad when you and the entrepreneurs learned these new important things instead of beating up the founder for not delivering on a plan.
  • Do the customer validation test yourselves. When you hear ‘I want to order now’, say ‘OK give me $20 I’ll hold it and give you the product when its done’.
  • Invest with the full understanding the initial goal of a startup is to maximise learning not revenue. Returns come from real value-creating scaleable, sustainable business models that are born from that learning.

Bill Murphy

For more highlights from attendees who attended the conference clik.vc/Angels_connectNZ

To meet and hear from international angels and leaders in New Zealand’s angel investment community secure your seat at one the southern hemisphere’s largest international exclusive investor events Asian Business Angels Forum, being held in Queenstown, New Zealand, October 14-15 2015.

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#ABAF15NZ Speaker – Ian Sobieski

Meet the speakers #ABAF15NZ – Ian Sobieski

The Asian Business Angels Forum 2015 takes place in Queenstown, New Zealand and will run 14-16 October. The event has attracted an impressive line up of speakers from all over the world.

The AANZ is particularly proud to have secured Ian Sobieski as a key presenter. Ian leads the Band of Angels, one of the United States most active and successful angel groups.

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The Band of Angels is an impressive group of high-net worth individuals who are all former officers or founders of the kinds of high tech companies that have made Silicon Valley famous. They have invested approximately $231M into 270 startup companies helping to create more than 3,000 jobs. More than 55 of these companies have had successful exits and 10 have IPO’ed.

Growing up in Virginia close to a significant US naval base, Ian was inspired to look into how to make submarines quieter. This led to him being a finalist in the 1987 Westinghouse Science Talent Search.

Ian held senior roles at Evite.com and engineering positions at medical device company Enact Health Management and Kaman Aerospace. He earned an aerospace engineering PhD from Stanford University and a BA in Philosophy from Virginia Tech – an interesting path which took him from submarine acoustics to financial modeling as a venture capitalist.

Ian’s portfolio includes over a hundred early stage investments and he has served on over twenty boards. Seven of his investments have successfully exited via ‘M&A’ including SeaDragon Software, Quorum Systems, Nellix, Novus Packaging, and Ordinate. Two of his investments have been listed on Nasdaq: Genitope and PortalPlayer.

As a founding partner of three seed venture funds, Ian has raised $US65M and a further $US120M as a partner in an early stage venture fund. The Band of Angel’s Acorn Fund backs entrepreneurs with a strategy to build profitable companies or exit on the sole investment of the fund.

Highly active in the early-stage ecosystem in the US, Ian is a founding board member of the Angel Capital Association and is a member of the Young Venture Capitalists Association, as well the American Institute of Aeronautics and Astronautics.

He is author of a dozen technical publications, a former lecturer at the Center for Entrepreneurship and Technology at the University of California at Berkeley, and is a frequent speaker, lecturer, and commentator in Silicon Valley.

In this video from a series on the popular investment platform ‘Gust’ he talks about the angel experience and how angel investment offers entrepreneurs the opportunity to benefit not only from the capital, but also the intellectual investment of angel investors.

Register your place at Asian Business Angels Forum, Queenstown, New Zealand, October 14-15 2015, one the southern hemisphere’s largest international angel investor events, to meet Ian Sobieski in person. Seats are limited, act now. ABAF2015, NZ

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#ABAF15NZ Speaker – Allan May

Meet the speakers #ABAF15NZ – Allan May

The 2015 Asian Business Angel Forum is our country’s big opportunity to meet and build connections with some of the world’s most successful and insightful investors from around the world.

AANZ is pleased to welcome Allan May – Founder, Life Science Angels and General Partner, Emergent Medical Partners as one of its international line-up of thought-leaders.

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As a founder of Life Science Angels (LSA), focused solely on medical device and biotech startups, Allan has curated a group comprised of high net worth individuals who are veterans from the medical device or biotech fields in the US.

The group have, since 2005, invested over $35M in 32 early stage companies who have gained over $700M in follow-on funding. The LSA portfolio also boasts five favourable exits.

Allan’s experience spans founder, CEO, board member and Chairman roles on a number of early stage companies in life sciences – including Intella Interventional Systems, MAST Immunosystems, ImmuneTech, Athenagen (Comentis), Nanostim, nSpine, and BioMimedica. In 2007 Allan joined renowned inventor, entrepreneur and cardiac surgeon, Dr. Thomas Fogarty, in co-founding Emergent Medical Partners. EMP is a boutique venture fund focused on early stage medical device company creation and investing. It has made 25 investments to date with 4 successful exits, including eValve and Ardian.

In 2010, Allan was elected Chairman of the Board of the Kauffman Foundation’s Angel Capital Education Foundation, now known as the Angel Resource Institute. ARI is devoted to the promotion and study of angel investing.

A strong advocate for developing angel investing as a complex ecosystem of peer-to-peer support and mentorship and also the formalization of angel investment engines, Allan has been outspoken on the benefits early-stage investing to the growth of ecosystems. For instance in a 2011 piece for The Atlantic he goes so far as to say angels were key to ‘saving Silicon Valley’; operating as they do on the clear understanding “capitalism still works, and the higher the risk the higher the return”.

Allan began his academic career at Case Western Reserve University where he received his Juris Doctorate. He earned a Bachelor of Arts degree in 1969 from Kent State University and is a graduate of the Stanford Executive Program for Small Business. Allan now frequents conferences and government programs as a lecturer on trends and developments affecting investing in life science. He has co-chaired Singularity University’s Innovation and Entrepreneurship Track at its FutureMed Program and is a member of the editorial board of Elsevier Windhover’s In Vivo magazine.

Allan brings to New Zealand insights from his extensive background of involvement in negotiating mergers, acquisitions, strategic alliances and successfully completing transactions with both public and private companies.

Meet Allan along with New Zealand’s angel investment community and other thought leaders from over a dozen countries by securing your seat now at one the southern hemisphere’s largest international exclusive investor events Asian Business Angels Forum, Queenstown, New Zealand.

 ABAF2015, NZ

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#ABAF15NZ Speakers – Jayesh Parekh

Meet the speakers #ABAF15NZ – Jayesh Parekh

Queenstown, New Zealand, is gearing up for 2015’s Asian Business Angel Forum. The event runs from 14-16 October 2015 with an impressive line-up of business angels from all over the world.

Among the investment experts coming to New Zealand to share their knowledge and networks is managing partner of Jungle Ventures, Jayesh Parekh.

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Mr Parekh has accumulated an extensive portfolio of technology, media and social impact investments with over ten exit or acquisition events among them.

He is also well placed to provide attendees of #ABAF15NZ with an authoritative view on funds and the benefit of angel networks, incubators and accelerators as a partner in a wide range of early-stage business growth and investment vehicles including Jungle Ventures, 500 Startups and Mumbai Angels.

Jayesh is a Singapore citizen and lives there with his family where he is actively involved in the ecosystem. He is Chief Mentor at the Hub Singapore, an Entrepreneur-in-Residence at INSEAD, an Executive Advisor to NUS (National University of Singapore) Enterprise and a TiE (Tech In Asia) Charter Member. As a judge at TiE’s Startup arena in Jakarta in 2014, Tech in Asia’s biggest Startup Asia to date with 2,202 participants, Jayesh was on the judging panel coaching founders to clearly articulate their monetization strategies.

Drawing on his background as an engineer with a Bachelor’s degree in Electrical Engineering from MS University in Baroda, India, a Master’s degree in Electrical Engineering from the University of Texas at Austin, USA and over 12 years at IBM based in Houston and Singapore, he supplies valuable guidance around product believing “best of class product is extremely important and that means the user experience fits across all regions.”

Jayesh also works with existing businesses to help them apply a more entrepreneurial mindset and approach to their enterprises. He delivers in-company presentations and often facilitates deep discussions with sales and marketing and business development teams to help them embrace corporate entrepreneurship as a way to identify new business opportunities.

In his long list of achievements Jayesh counts being a co-founder of Sony Entertainment Television, a major network launched in collaboration with Sony Pictures Entertainment and his board membership of One Animation, Shemaroo, Milaap, and investment in Asvathaa (gaming & animation), Game Ventures (online gaming) and eBus (TV commercial digital distribution).

He is also a passionate advocate and investor in ventures which give back to the community with roles on the Boards of social enterprise focused ventures such as the Investment Committee of Aavishkaar India, which invests in enterprises active in the social infrastructure sector in rural and underserved India. He was on the board of SONG, a fund owned by George Soros which invests in SMEs in India that meet social objectives. He served on the Board of United Way International for six years and is a founder of ProPoor, a non-profit portal for Non-Governmental Organizations in South Asia, and now a service of CharityFocus.

You can follow Jayesh on Twitter and meet and hear from him in person, along with a host of angels from New Zealand’s angel investment community and the world at one the southern hemisphere’s largest angel investor events Asian Business Angels Forum, Queenstown, October 14-15. Seats are now very limited. Be quick to register yours. ABAF2015, NZ

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Crowdfunding – Today & Tomorrow #ACAAngelSummit15

Angels Connect NZ series – Chris Twiss from NZVIF reports from ACA Conference 2015

There was a palpable tension in the room between equity crowdfunding operators and traditional Angel groups/operators for Track 1 at the ACA Conference.

Setting the stage Bill Payne outlined how crowdfunding has been reported in the media as everything from ‘the end of the road for Angels’ to being ‘doomed to failure’ itself – which explains the tension.

For some more concrete perspective Bill began his presentation by laying out some facts and figures around current crowdfunding activity in the World, US and UK/Europe for all forms of crowdfunding; Donation based; Rewards based; Lending based; Real Estate based (Equity and Debt); and finally Equity Crowdfunding (EC) which can either be from accredited and/or unaccredited (i.e. the general public) investors.

Quoting figures from Tabb Group;
– total crowdfunding worldwide in 2014 ran at about US$10bn.
– the bulk (60%) came from US, 30% from Europe followed by Oceania at 3%
– by far the biggest category stateside in 2014 was lending based crowdfunding (50% of the US total of $8.0bn or so)
– a mere 5% of the total investment was Equity Crowdfunding, which at @$0.3bn was only 2% of the size of the US Angel investment market
– In the UK, where equity crowd funding to the public is permitted (it still isn’t in the US) equity crowd funding is a relatively small proportion of the total amount of early stage funding activity. Bill suggested, based on this data, that it is therefore not obviously “taking off” – at least not yet.

Having delivered the numbers Bill gave up the stage to Matthew LeMerie an ex McKinsey analyst now working with the Keiritsu Forum who outlined some scenario planning work that he had recently done on the likely near future of EC.

The overall outcome the scenario planning identified two critical uncertainties for EC.

First, the regulatory environment – and within that the question of whether it will become more or less supportive in the future; and second, the failure rate in EC (i.e. numbers of companies funded though EC that will fail).

Matthew’s personal view was that the regulatory environment will get less supportive for EC overtime – largely because regulators will find that they have been too “lite” with the current regulatory settings.  The antcipated outcome is this will lead to the significant consolidation of EC operators and the emergence of a small number of big players as the hurdles end up becoming too great for small and even mid-sized operators to cope with.

Speaking to the second point the predicted uncomfortably high rates of “failure” will manifest because the key things that need to be done to mitigate that risk when doing this type of investment (i.e. appropriate levels of DD, strong terms setting  – including appropriate valuations, and post investment monitoring etc) will not be done well enough by the majority of EC platforms.

There will be winners and losers. The winners will be those able to demonstrate that they have robust risk mitigating processes in place and, critically, be totally transparent about their failure rates.

Mathew’s analysis was crowdfunding is still a fairly/very modest part of the early-stage funding landscape, and the EC market overall is in borderline wild-west territory in terms of current levels of integrity of process and overall risk mitigation for investors.

Those views were explored further by the third presenter from Seedrs (UK based EC platform) CEO Jeff Lynn. In the ensuing Q&A he passionately rebuked much of what had been said before.

In short, Jeff’s view was in general the future impact of EC was totally underestimated – and disruptive to the current Angel investment models being practiced around the world. He believes that EC has the potential to deliver better investment returns.

Why? The answer was not clear, maybe because having 300 extra people to help your company out leads to greater investment outcomes – right?

And so the debate continued… the crowd shuffled out of the room, ready for the next instalment of it, somewhere nearby, a few sessions later.

 Chris Twiss

 

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#ABAF15NZ Speakers – David Chen

Meet the speakers #ABAF15NZ – David Chen

The 2015 Asian Business Angel Forum takes place in Queenstown, New Zealand, 14 – 16 October 2015.

Hosted by the Angel Association of New Zealand, the 2015 Forum brings together leading investors from around the world to share their knowledge and join together in celebrating this small country’s big contribution to early stage investment.

The AANZ is pleased to be able to bring David Chen – Co-founder, AngelVest to ABAF to share his insights and experience at ABAF.

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Mr. David Chen is a seasoned business leader and entrepreneur with over 20 years of global experience focusing on investments, operations, and business development in China and the United States. He has led and participated in M&A transactions valued at over US $7 billion and has deep investment experience in China and the US.

A co-founder of AngelVest, an investment interest group helping individual angel investors identify and invest in compelling early stage companies in China, he has grown the group to be one of the largest angel groups in China. With over 80 members in Beijing, Shanghai, and Hong Kong they have funded over 35 companies.

Entrepreneurs typically seek to raise from $US100-$500K from AngelVest and enjoy the benefits of continued interaction and mentorship by its strong group of angel investors. They provide hands-on execution support to help companies achieve their strategic and operating goals.

Unlike the United States and other developed countries, there are few, if any institutionalised angel groups in China today.  AngelVest is the leading the industry in China with presences mainly in Shanghai, Beijing, Hong Kong and Singapore.

Increasingly, AngelVest is actively pursuing middle-market cross-border investment opportunities between China and Europe/USA while capturing the growth opportunities in China.

Mr. Chen is originally from New York and has been living in Shanghai for the last eight years. He started as an Engineer with a BS in Electrical Engineering from the University of Rochester and MBA from Harvard Business School, as well as studying Chinese at Peking University.

He came to Angel investing through his experience as a founder and manager of technology start-ups (as lead on strategy, operations, finance), his work with large institutions (including Salomon Brothers, Advanced Micro Devices, Honda Motor) and specialty boutique investment banks, where he helped a number of clients pursue and complete cross-border M&A (particularly China inbound) and financing transactions.

Mr Chen is a highly sort after thought-leader, particularly on the subject of cross-border investments. He has presented at the APEC Accelerator leadership summit, is a member of the Harvard Business School Business Angels alumni dedicating time and commitment to providing investor expertise as a judge in the HBS New Ventures Competition for the “best investment” category.

You can follow Mr Chen’s activities on twitter @AngelVestGroup

To meet and hear from Mr Chen in person, along with a host of angels from New Zealand’s angel investment community and the world make your New Zealand connection and secure your seat now at one the southern hemisphere’s largest international exclusive investor events Asian Business Angels Forum, Queenstown, New Zealand, October 14-15 2015.

 ABAF2015, NZ

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#ABAF15NZ Speakers – Jonathan Medved

Meet the speakers #ABAF15NZ – Jonathan Medved

A key feature of the 2015 Asian Business Angel Forum is its international focus. The forum, brought to New Zealand by the AANZ, runs from 14-16 October and has attracted leading early-stage investors from over a dozen countries.

Among a stellar group of thought-leaders the AANZ is pleased to welcome Jonathan Medved,  founder of OurCrowd, an equity crowd-funding platform based in Jerusalem, Israel. He will share his thoughts on ‘thinking, acting and investing globally’ and how to build the culture needed for startups to flourish.

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Jon grew up in San Diego, went to Berkeley University, and first visited Israel when he was 24 . Since then he has been part of the energy making Israel the 3rd largest source of startups after north America and China.

Israel has attracted over 300 multinational R&D centres which provide a ‘built-in exit mechanism’ for Israeli startups to be acquired by American technology companies. Israel has been described in Forbes as the world’s outsourced R&D lab for big companies.

Named as one of the top 10 most influential Americans who have impacted Israel (NY Times Supplement “Israel at 60”) and “one of Israel’s leading high tech venture capitalists” (Washington Post) Jon, through his most recent venture, OurCrowd, has funnelled $120 million in investments into 67 startups since 2013.

An investor himself, serial entrepreneur and experienced director, Jon has been part of the founding teams in several successful Israeli startups which now have valuations in excess of $100 Million. He currently has over 30 companies in his personal angel investor portfolio.

In a report from the Jewish Journal taken from a presentation at Cross Campus, a shared work space in Santa Monica Jon describes OurCrowd as an “equity-based crowdfunding platform that allows accredited investors to put as little as $10,000 into a select number of approved and vetted Israeli startups, all of which need cash to grow and stay afloat, until business operations kick into full gear”. Through OurCrowd he says investors are “able to take the best of venture capital — the professionalism, the diligence, the protection you get — and combine it with the fun, and discretion, and the freedom, and the low entry price of being an ‘angel’ [who invests after falling in love with a company]”.

Jon is a sort after TV commentator on CNN, CNBC, Bloomberg TV and speaks regularly to groups both in Israel and abroad. He has briefed scores of journalists, business leaders and public officials – including New Zealanders – on Israel’s tech miracle, travelling from his home in Jerusalem where he lives with his wife Jane, his four children and three grandchildren to all corners of the globe to do so.

In this video from Kauffman foundation he talks about the special elements of the Israeli ecosystem and suggests looking past macro-economics and support the heart of startup success – the culture that needs to exist to support early-stage growth. A culture that sustains, encourages and allows people to take the entrepreneurial leap and create new value and new companies. Included in this culture, he says, is the requirement for risk tolerance, the importance of access and the intent of all parts of a country to support and structure the ecosystem in which angels and venture capitalists exist.

Follow Jonathan on Twitter and meet him in person, along with a host of angels from New Zealand’s angel investment community and the world by securing your seat now at one the southern hemisphere’s largest exclusive angel investor events Asian Business Angels Forum, Queenstown, New Zealand, October 14-15.

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#ABAF15NZ Summit Speakers – Nelson Gray

Meet the speakers #ABAF15NZ – Nelson Gray

The 2015 Asian Business Angel Forum, proudly bought to New Zealand by the AANZ, and runs from 14 to 16 October 2015. 

Among the international guest speakers at ABAF is Nelson Gray winner of 2015’s prestigious Queen’s Award for Enterprise Promotion and an internationally recognised thought-leader in early-stage investment.

Nelson will share his insights on angel investment models, international connectivity and portfolio companies gleaned from over 20 years of experience as an angel investor.

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Following the sale of his own successful business in 1995 Nelson Gray became an educator, angel investor, mentor, non-executive director, and fund manager.

A key player in the development of the business angel community in Scotland, Nelson was central to the widespread international recognition and adoption of the LINC model (Local Investment Networking Company). He is now a non-executive director of the Scottish Angel Capital Association established in 1993 to promote Business Angel Investing – LINC Scotland.

A passionate promoter of angel investing’s important role in the development of the economic success, in BQ, one of the United Kingdoms key online publications Nelson says “people like myself become business angels because we want to invest our capital and knowledge into local businesses with the potential to make a significant economic difference.  Seventeen years ago my wife and I invested in a Borders company which has grown into one of the largest employers in the area.

“I feel that we’ve put something back into Scotland, particularly for young people, it’s not just a financial payback but a social one.  I am a ‘hands-on’ investor and like to help businesses as well as providing money and if we can have fun along the way, even better.”

Using his qualifications as a UK Financial Services Authority fund manager, Nelson has managed two early stage investment funds responsible for funding over 50 Scottish SMEs in addition to 25 companies personally.

Beyond his tireless work in Scotland Nelson is also recognised internationally. He has worked with development and government agencies around the world to develop and implement policies which facilitate growth and effective operation of local investment communities. This work has contributed to his achievements helping build angel groups in Latvia, Jordan, Russia and Jamaica.

Global engagements have included United Nations Economic Commission for Europe (UNECE), The Inter America Development Bank – Washington, The International Science and Technology Centre – Moscow, the Estonian Development Fund – Arengufond, the Latvian Enterprise Department, Intertrade Ireland and Enterprise Ireland, El Hassan Science City– Amman, Jordan, the National Agency for Technological Development – Kazakhstan, advice on the establishment of Angel tax incentives in Finland and the expansion of Angel groups and syndication in Estonia. In these special project director roles he acts as a mentor to new investment groups and develops tools and procedures to further best practice in Angel investing.

Nelson was the European Business Angel Network ‘Business Angel of the Year’ in 2008, and is now Vice-President. He is a director of ESEP Ltd, which administers European Union Structural Funds Programmes on behalf of the Scottish Government.

He has provided advice on the establishment and structuring of a number of innovative early stage investment funds (both in Scotland and overseas) is a member of the investment committee for the £50m UK Angel CoFund, a non-executive director for the Genomia Seedcorn Investment Fund which targets the research outputs of the animal and life sciences sector. Formally the locum Fund Manager for Clyde Blowers Capital IM LLP, a £250 million venture fund. As a member of the Advisory Board of SU2P, a collaboration of 6 universities (Strathclyde, St Andrews, Heriot-Watt, Glasgow, Stanford and the California Institute of Technology), he has supported the increase in academic and industry interaction between the USA and the UK.

He has been chairman of Firth Ventures for over 15 years and is also a member of the Investment Advisory Board to the UK Government’s US$160 million Co-Investment Fund and a member of the advisory panel to the Welsh Government for the establishment of a development bank for Wales.

As the former locum Fund Manager for Clyde Blowers Capital IM LLP, he managed a US$400 million venture fund; and, from 2001 to 2010, was a board member of Scotland’s Entrepreneurial Exchange, which has some 400 members heading-up companies that employ more than 150,000 people and with a collective turnover of over US$25 billion.

It is no surprise therefore that this year Nelson won the Queen’s Award for Enterprise Promotion for individuals who have played an important role in promoting enterprise skills and supporting entrepreneurs.

Follow Nelson Gray on Twitter and meet this giant of early-stage investment in person at ABAF in Queenstown this October. By securing your seat at the forum you are joining the southern hemisphere’s largest international exclusive investor event.

Register now, Asian Business Angels Forum, Queenstown, New Zealand, October 14-15 2015.

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#ABAF15NZ Speaker – Bill Payne

Meet the speakers #ABAF15NZ – Bill Payne

A key feature of the 2015 Asian Business Angel Forum is its international focus. The forum, bought to New Zealand by the AANZ, runs 14-16 October and has attracted leading early-stage investors from over a dozen countries.

Among a stellar group of thought-leaders the AANZ is pleased to welcome Bill Payne. A genuine rock star of angel investment. Bill is internationally recognized as one of the most senior and experienced experts in angel investment. He is an engineer, entrepreneur, angel investor and educator.

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For over three decades, Bill has successfully founded and invested in over 50 start-up companies, including Solid State Dielectrics, Inc., an electronic materials company he founded in 1971 and sold to E. I. DuPont in 1982.

Bill has delivered over 120 man-years of service on private company and non-profit boards of directors and has served as an Entrepreneur-in-Residence to;

  • Ewing Marion Kauffman Foundation – 1995-2007
  • McGuire Entrepreneurship Program, University of Arizona 2004
  • BNZ-University of Auckland – 2010
  • i2E – Innovation to Enterprise, Oklahoma City – 2010 to present

He has served on the founding committee of the Angel Capital Association (US), on six university advisory boards and as a founding organizer and member of four angel groups in the US

  • Aztec Venture Network – 1999 San Diego
  • Tech Coast Angels – 2000 San Diego
  • Vegas Valley Angels – 2004 Las Vegas
  • Frontier Angel Fund – 2006 Northwest Montana

In addition to facilitating over 100 workshops and seminars on angel investing in six countries Bill has been recognized by his angel investing peers and honored with the following awards:

  • 2009 Hans Severiens Memorial Award for Outstanding Contributions to Angel Investing
  • 2010 New Zealand Arch Angel Award for his impact on angel investing in New Zealand
  • William H. Payne Active Angel Award – presented annually to the outstanding angel investor in Auckland’s ICE Angels

From 1995 to 2007 in his role with as an Entrepreneur-in-Residence with the Kauffman Foundation (Kansas City), he worked on educational programs for entrepreneurs and their investors, including eVenturing.com and the Power of Angel Investing seminar series. While with Kauffman, he was also actively engaged in the formation and startup of the Angel Capital Education Foundation (now the Angel Resource Institute) and the Angel Capital Association.

For five months in 2010, Bill served as the BNZ University of Auckland Entrepreneur-in-Residence in New Zealand.  During this service, he delivered 20 seminars, 45 public lectures and mentored 75 entrepreneurs.  The ICEHOUSE chief executive Andy Hamilton said, “We were fortunate to have had Bill here working so closely with businesses and angel groups around New Zealand.  His guidance will have a positive effect on the start-up and investment community for a long time.”

Bill graduated with BS and MS degrees in Ceramic Engineering from the University of Illinois, where he has served on the Dean’s Board of Visitors of the College of Engineering.  His eBook, the Definitive Guide to Raising Money from Angels is available on his website at www.billpayne.com. He and his wife Ann are residents of Henderson, Nevada and Whitefish, Montana.

 

 

You can meet Bill in person, along with a host of angels from New Zealand’s angel investment community and the world by securing your seat now at one the southern hemisphere’s largest international exclusive angel investor events Asian Business Angels Forum, Queenstown, New Zealand, October 14-15.

 ABAF2015, NZ

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More Cross Border Investment #ACAAngelSummit15

Angels Connect NZ Series, Brent Ogilvie from Pacific Channel reports from the International Exchange Workshop at the ACA Conference 2015

I last attended an ACA conference two years ago. This year there was clearly not only far greater interest in doing cross-border deals, but angel investors making it happen.

Panelists at the ACA’s International Exchange workshop were up beat about the quality and quantity of opportunities globally. Those on the panel included Audrey Jacobs from Our Crowd the equity crowd funders based in Israel, and Jeff Lynn from another equity crowd funding platform, Seedrs, based in London.

All of the panelists discussed their activity and structures openly to encourage more interest and engagement from investors around the world, whether in groups, networks or funds. They agreed that as an industry angels need to focus more on the outputs of their investment – creating high value jobs and exits.

Audrey Jacob’s view is that the current VC model is ‘broken’. She estimated there are only 100 VCs in the world investing in more than 3 deals per annum. Most general partners now only receive their annual 2% fees from funded capital (not on committed capital).

OurCrowd invests its fund alongside its equity crowd funding members who are all accredited business angels. The crowd funding investors participate as ‘limited partners’. Audrey Jacobs explained OurCrowd negotiate the deal terms and participate as a ‘general partner’. OurCrowd put in a minimum of $50k per deal and will contribute up to 10% of the round.

To date OurCrowd have invested $US110m in 64 companies. They are agnostic about the company’s stage, sector or country of origin and are currently reviewing deals from Brazil and Spain. (Editors note: OurCrowd have invested in Varigate, a NZ company, commercialising an irrigation technology).

Audrey Jacobs’ insights set the theme for the session with multiple examples of early stage investors pooling capital, allowing smaller investors in the ecosystem to participate in deals and securing similar returns to larger lead investors.

Backing up this increased interest in cross border deals Jeff Lynn sited a recent survey where 22% of British angels said they would invest outside the UK. In a later session on US angel investor preferences, more than half said they had no geographic preference. This compares to just six years ago when two thirds said they would only invest in deals no more than a two hour drive away.

Another example of international capital pooling came from Swiss based angel group, Go Beyond, which syndicates with angel groups in 7 countries and has the ability to “transfer shares” among the groups.

Go Beyond has invested in US ventures and put money into deals sourced in France, Spain and Switzerland. The group hold monthly virtual meetings to discuss deal flow. The lead angel in each deal takes a “free carry” and is responsible for quarterly reporting to shareholders.

Blake Witkin, the Chairman of Ontario’s Network of Angel Organizations outlined the problem pooling capital solves. He had found some local angel groups were missing out on deals because their investment processes were too slow. Establishing a fund offers a neat solution as it provides a pool of capital with a mandate to invest quickly and secure an option for its angel participants to invest in follow-on rounds.

Dreamfunded.com, formed by a San Francisco angel group, has 3,400 accredited investors who want more deal-flow. This group would also like to hear from angel groups internationally who have deals to syndicate.

The session bodes well for New Zealand’s focus on exporting knowledge and spreading kiwi innovation internationally.

Brent Ogilvie

For more highlights from attendees who attended the conference clik.vc/Angels_connectNZ

To meet and hear from international angels and leaders in New Zealand’s angel investment community secure your seat at one the southern hemisphere’s largest international exclusive investor events Asian Business Angels Forum, being held in Queenstown, New Zealand, October 14-15 2015.ABAF2015, NZ

 

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How to write a good financial forecast for Angel investment

In the first of our Angel insights content series – Dave Allison from Angel HQ shares his knowledge gained from reviewing 100’s of deals on how to write good financial forecast for Angel investment

Financial forecasts are a crucial part of the business plan and can help to attract investment to your startup or product launch, however the balance between reality and ambition is a challenge when building these documents.

Bare in mind that no two angels are alike and what may seem an important point to one may be meaningless to another. Some angels want you to get them excited and others will ask you to tone things down. The best way to present your financial projections to investors is to walk them through different scenarios in order to show potential. But consider pitching what you are most comfortable with.

For every forecast, a list of all your key assumptions is absolutely a requirement as well as the ability to support them with accurate quality information and to explain how they were measured.

Key assumptions are critical to all aspects of the financial forecast and professional support to develop a model can be useful but two words of warning:

  •   Experience is more important than the big name. Ask your expert what they have modelled and who they have done it for.
  •   You can’t hand off responsibility for the forecast – you have to own it and own all the assumptions

Tracking and testing these assumptions on an ongoing basis is the best way to react to them quickly if they don’t show a real chance of success.

It is important to have an intimate knowledge of how your forecast works and what the key levers are. This is a model of your business so what happens if sales or prices slide by a few months (or a few million dollars) is not just important – you HAVE to know.

Your investors will want to know who your customers will be and at what price they will be eager to buy your product.
Bill Payne – The Definitive Guide to Raising Money from Angels

Every angel expects and accepts that the numbers are not correct but you will lose credibility if your assumptions are not defensible. Look for comparisons to other companies. Build your evidence and know your stance. Feel free to highlight the biggest, riskiest assumption but back yourself with what you are doing to manage that risk.

Don’t put all the detail in your pitch. Too many columns just invite people to do maths instead of listening to you. Pull out key figures, key events and timescales to show the impact it will have on your business with reasonable explanations. Have the detail of your model for follow up – PowerPoint and Excel are separate programs for a reason!

ABAF2015, NZ

To meet international angels, leaders in New Zealand’s angel investment community and make your New Zealand connection secure your seat at one the southern hemisphere’s largest international exclusive investor events Asian Business Angels Forum, being held in Queenstown, New Zealand, October 14-15 2015.

Register now. Limited places available.

 

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Angel evangelist making the New Zealand connection

John May is founding chair of America’s Angel Capital Association (ACA). He’s championed the cause of entrepreneurs and angel investors all over the world since realising big organisations weren’t for him, establishing five US angel groups and working internationally to establish more. He’s co-authored books on the subject, is managing partner of angel investment firm New Vantage Group and is investment director for UK-based global venture fund, Seraphim. He came to New Zealand to meet our angel community setting the scene for ABAF 2015 in October, Queenstown, NZ. We asked him why?

I loved it when I was here before, but I wanted to come back for longer, not just for a four-day thing… to get a better feel for the New Zealand business community, the angel community, but also the neighbourhood.

It hasn’t disappointed.

But to what end, exactly?

I’ve been around the world running the (Ewing Marion Kauffman Foundation’s) Power of Angel Investing series and trying to get a better feel for what’s going on in different countries and how best to collaborate.

We’re not looking for countries that have the best deals to go write cheques, that’s the big fallacy: we’re not running international angel development workshops and building global networks because we’re deal orientated; we’re movement orientated.

What happens when your company wants to go from here to a bigger market in Southern California? Wouldn’t it be nice if there was communication between the angels of Southern California and the angels backing the company here? You don’t want to hire a lawyer in Southern California to tell you how to run a business in Southern California… wouldn’t it be better to have mentors and supporters in Southern California who are co-investors.

So you wanted to come here to build connections?

Yes and more. One of my big things is to get more overseas investors to come to our ACA conference to learn what we are doing.

Here’s some sobering statistics: even in the US – the largest economy in the world, the largest venture capital community in the world – we believe only about 5% of households are wealthy enough to be angels, not friends or family, but proper angels. And my definition of a proper angel is an individual who invests their own money in a stranger’s business, in a minority position, gives their time as well as their money and there is no one else in-between.

And of those 5% who can, we think there’s only 5% who do. And now we’re getting to the bottomline: not only do we think that only 5% of those who can, do, only 5% of those who do, ever do it in a structured, disciplined, portfolio diversification, networked group way and I bet New Zealand is pretty similar.

 

JohnMay_Dinner

 

You really push the group concept. But why is it so important for that 5% of 5% to be part of an investment group?

What we’ve learnt is that we need to diversify our portfolios, which means getting out of our comfort zones. It also takes more money than we have personally to take a company that’s going to be significant from startup to breakeven and it takes time to do due diligence on the opportunity. Who’s going to make the phone calls? Who’s going to have the meetings? Who’s going to do the market research? So if you decide you’re going to diversify, if you’re going to do due diligence to make you comfortable, and you’re going to have enough money on the table to make it a viable company, what you learn very quickly is you can’t be a solo angel and do this.

What our companies need are cheques for US$250,000 to US$1 million and to deliver that and diversify your portfolio you need to be in a group, even better, a syndicate of groups – that’s the big movement in the US right now – the syndication of groups.

Why is that so important?

Well if you need US$2 million, it may be above the capacity of an individual group, but you may be able to bundle four angel groups or funds together and all of a sudden you’ve got a couple of million dollars, so then the company can finish developing their product or get their first sales and really get on their way.

 You wrote the book: “Every business needs an angel” – why does every business need an angel?

The real wink is every high-growth, successful business, as opposed to a mom and pop store, needs an angel because it’s lonely out there doing it on your own; you need a mentor; you need risk capital; there’s so many reasons why angels are important for companies…an entrepreneur gets a board member, a friend, an adviser.

Doesn’t it depend on the angel they get?

Yes, and it depends on the entrepreneur. Some entrepreneurs just give lip service to the help; they really just want the money. Then there’s the lip service of an angel who says I’m going to be your friend, I’m going to be your adviser, I’m going to be available and then doesn’t answer the phone. It doesn’t always work. But it’s an art not a science.

The real wink is getting the right angel with the right entrepreneur because some angels can be great board members, but aren’t good at helping to find staff, sales or marketing; while some are good as a shoulder to cry on, but aren’t good at financials; some are good for startup and some are good for growth companies. That’s another reason why groups are better than individuals.

The right angel should always be a joint decision between the entrepreneur and the investors. There should be a chemistry between them and there should be a staging of the need, so the right investor for the company at the right time.

Should angel investors always have representative on the board?

Advisory boards are very important, but companies don’t need boards of directors until they’ve grown a little bit.

It’s also very important for [the chosen investor representative] to have a way of communicating to the other angel investors, so the entrepreneur doesn’t have to waste their time communicating with all of them.

What’s the most common mistake entrepreneurs make when they seek investment?

Thinking they know it all. It’s quite rare to find a coachable, industry-savvy, less egotistical entrepreneur their first time around.

I’m a big believer in investing in second-time entrepreneurs. A serial entrepreneur is a wonderful thing to invest in, because someone has already paid for their mistakes the first time round. But that’s another thing that’s fascinating about here: New Zealand is a place where almost everyone is a first time entrepreneur.

Entrepreneurs need to understand the first thing angels look for is management, management, management; the second thing is a large market; and the third, if we’re smart, is the product or service, the technology, whatever. Yet most entrepreneurs want to sell us on the fact their thing is faster, cheaper, better, slicker, more fun first. But we invest in the jockey not the horse.

The problem is an entrepreneur has to have the dream and the ego to handle it. So there is a natural tendency to want to invest in someone who has a lot of confidence and a lot of energy. But if they are really going to grow their business into a significant company, they need to be humble enough to understand they can’t know everything: they are going to have to hire people; they are going to have to listen to people, so finding someone who is coachable is important.

What’s the most common thing angels do wrong?

Hearts over heads…and not providing enough tough love once we’ve invested: are you being direct enough; are you talking about the exit; are you educating the entrepreneur; are you telling it like it is instead of waiting until it gets worse to say something? That’s why you have to have the right chemistry; you can’t be in awe of each other. The entrepreneur shouldn’t think we’re just money and we shouldn’t think they are running the company so we shouldn’t give them our frank opinion.

Why do you love this area so much?

It’s the people. It’s the entrepreneurs. They are so important because they make businesses; they make money. We benefit from the vision, the energy, the business model of the entrepreneur…so the excitement for me is being a part of this journey.

Plus it’s what it does. It boosts any economy, any city to find a way to finance innovative new technologies and products. Economies will go backward if they don’t stay in touch with newer, faster ways of meeting their needs. And it creates jobs, futures. Major corporations are net job losers; they cut costs, find efficiencies. All the research shows startups and SMEs are the net job creators of modern economies.

But angels also have to make money in the end or it’s a losing proposition and will fade away.

JohnMay_IceAngels

What should we be doing more of in New Zealand to improve our angel ecosystem?

Find as many ways as possible to educate the media, the government, the wider community that supporting high-growth companies matters; make people aware of the benefits to the entire economy of making this work, of encouraging more entrepreneurs, of making smarter entrepreneurs and of helping to make more and smarter angels.

We need to encourage more angels to increase the amount of capital available, because the more capital there is available the more likely people are to diversify and thus the more capital there is for different sectors to develop new products, and we need more angels to bring different skills into the mix. There is so much going on in social media and some of the new technology, for example, that you almost have to find a way to search out the recently cashed-out, under 40-year olds because they can make a material difference to understanding the current consumer market for those sorts of companies. It’s also hard to be an investor and help an entrepreneur and do due diligence on them if you don’t understand what they are doing.

We tend to talk to ourselves far too much.

by Lesley Springall

To meet and hear from international angels and leaders in New Zealand’s angel investment community and make your New Zealand connection secure your seat at one the southern hemisphere’s largest international exclusive investor events Asian Business Angels Forum, being held in Queenstown, New Zealand, October 14-15 2015.

ABAF2015, NZ

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Supporting CEOs in your Portfolio Companies #ACAAngelSummit

Angels Connect NZ Series – Bill Murphy from Enterprise Angels reports from USA Angel Capital Association Conference 2015

Recognising the crucial role angel investors play in a company’s development after the first round of funds have been committed, the ‘Supporting Portfolio CEOs‘ workshop took a deep dive into leveraging board member skills to guide a company through value accretion to exit.

The first point made was how important it is for angels to acquire the skills and knowledge required to properly manage the important issues following investment. It is also clear that it takes a real commitment to be effective.

Ideally an investor-director should be putting in a couple of days a week, with their primary function being ‘chief encouragement officer’.

As most founders don’t have experience running a business the angel director should be constantly asking questions that support the growth of the founder, the team and the company. Complaining and blaming don’t help.

Key questions to be asked and answered on a regular basis include;

  • What’s the cashflow position?
  • What cash is it going to take to get us to the next fundable round of investment?
  • Have we defined our market tightly and distinctly so that we can “own” that market? and
  • How can I help develop strategy?

Calling and talking to the CEO on a random basis (in addition to regular board meetings) was also suggested. These conversations are far more effective than written communications. Discussing progress ‘on the fly’, one on one, is a really effective means of teasing out issues.

Every investor-director should regularly review material which provides an introduction to governance of an angel backed company. Understanding how the functions of an early-stage board differ from boards of established companies is vital. Attending a course or reading up on this is hugely helpful.

Sitting down with the founder and the team at the outset to make sure expectations about the exit and path to exit are agreed and aligned is highly recommended. This should be done even before the first cheque is written.

The ideal size for an early stage, high growth company is five. Three members will be independent of management. It is paramount that management and the board have complete clarity about expectations regarding reports and reporting – how often, how long, covering what etc. Panelists and attendees at the workshop agreed it’s far better to warn entrepreneurs you are going to be a ‘pain in the ass’ at the outset and made the point that there will be less pain for everyone if regular timely reporting is carried out.

Another useful tip was immediately after investment it’s worth taking time to map out with the entrepreneur and the board the first 6 month’s implementation plan with a laser focus. Many founders are overly opportunistic, running after every opportunity or adopting every customer request for product iteration. This is unlikely to add value to the enterprise.

Other useful suggestions included;

  • Doing a SWOT analysis on a regular basis.
  • Setting annual milestones which are informed by the CEO talking to potential acquirers about what the company needs to look like to be bought.
  • Helping the CEO identify non-dilutive sources of capital.

Finally, the audience was reminded that accessing the angel group at regular angel group meetings where investor-directors and founders can talk about what stage the venture is at, is a really effective way to achieve better results. These meetings serve a dual purpose – they keep members informed so they are likely to be positively disposed to the next funding round and they increasing the chances of success by leveraging the intellectual resources of the entire angel group, pulling contacts and experience.

It was encouraging to hear that many of the activities the AANZ is undertaking reflect international best practice outlined in the workshop. The governance course for new angel directors being developed by the AANZ with some help from New Zealand’s Institute of Directors (email [email protected] for more information) and the increasing number of member meetings (outside regular pitch evenings) all bode well for NZ angels and entrepreneurs. A shared focus, regular reporting and leveraging shared networks are key components of multimillion-dollar exits.

Bill Murphy

For more crowd-sourced intel from #ACAAngelSummit 2015 as it happened clik.vc/nzangelaca15

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For more highlights from attendees who attended the conference clik.vc/Angels_connectNZ

To meet and hear from international angels and leaders in New Zealand’s angel investment community secure your seat at one the southern hemisphere’s largest international exclusive investor events Asian Business Angels Forum, being held in Queenstown, New Zealand, October 14-16 2015.ABAF2015, NZ

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Angel messages from America

Angel Association members from all over New Zealand have been crossing paths in Air New Zealand Koru lounges on their way to the US this week for the annual ACA Summit in San Diego.

An important event on the calendar of kiwi investors, the ACA Summit is an opportunity to tell great New Zealand stories, connect with international angels, funds, VC’s and meet potential market-entry and acquisition partners from all over the world.

New Zealand’s Angel messengers, carrying kiwi success stories overseas include Marcel van den Assum, Chair and Suse Reynolds, Executive Director of AANZ and Michelle Cole from Angel HQ along with; Bill Murphy and James Beale from Enterprise Angels; Rudi Bublitz from Flying Kiwi Angels; Brent Ogilvy from Pacific Channel; Darryl Lundy, David Russel, Robbie Paul, Cecillia Tarrent from IceAngels; Chris Twiss from NZVIF and Karen Chang from NZTE/LAX to name just a few.

Learning and networking as they go, the Kiwi contingents key collective mission is two fold.

First, entice ‘overseas friends of New Zealands angels’ (affectionately known as OFONZ’s) to ABAF in Queenstown from Wednesday 14 October to Friday 16 October to meet their investee’s in person, experience the energy of New Zealand’s angel community and learn about the benefits of doing business with and in New Zealand. 

Second mission, sharing the skinny! To ensure as many of the learning and insights our Angel-team glean are shared with the early-stage community at large we are expecting to receive posts and tweets from many of the team during the conference.

As they listen to keynote serial-entrepreneur and Lean Startup founder Steve Blank tell you how he changed the course of the startup industry through customer development – we’ll get the highlights as they happen and share reflections.

As serial entrepreneur and profilic angel Gil Penchina, the most active syndicator on AngelList talks about his experience and shares his mental models, we’ll get the benefit of their attendance.

Look out for tweets #ACA15NZ. This hash tag will tell a story about angels from NZ at ACA – who they are, what they think, who they think is worth listening to, words of wisdom they hear, insights they gain, things they find out that those back home should know about the US and the rest of the world… and people they’ve met who are coming to the ABAF2015 in NZ!

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Lead Partners

NZTE NZVIF PWC

Expert Partner

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AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”