We very much hope you can make it to this year’s Angel Summit in Christchurch.
We very much hope you can make it to this year’s Angel Summit in Christchurch.
Some inspiring validation that NZ is generating world class startups with Founders’ Fund investment in Narrative.
American entrepreneur Peter Thiel and his collective of Silicone Valley venture capitalists are investing in Narrative, a New Zealand tech startup that creates apps for streamlining the workflow for professional photographers.
San Francisco-based Founders Fund Pathfinder have contributed to Narrative’s $700,000 seed funding along with Flux Accelerator, which is part of Icehouse Ventures.
Narrative was founded by photographer James Broadbent and software engineer Steffan Levet in 2017, launching less than a year ago with their own “bootstraps” and six months later, a small investment from friends and family.
Great to see Netflix senior management join the board of Dropit
Netflix’s former marketing director Joel Mier has given a ringing endorsement to Tauranga software company DropIt, joining the board of the Kiwi company which he agrees could be worth $1 billion in three years’ time.
DropIt provides an app that helped companies run 83,000 so-called “drop auctions” or reverse auctions to sell their products online in the year to March.
Its revenues are still in the single-digit millions, but chief executive Peter Howell said the firm with 24 staff experienced “8000 per cent” revenue growth last year and expected to run 600,000 auctions this year as it grew in the United States.
The AANZ runs a highly regarded governance course and this article sums up the key points covered really neatly.
Startups that are backed by professional financial investors almost always have a Board of Directors that consists of some set of founders, investors and sometimes independent directors.
While the management of a startup company deals with the day-to-day decision-making within the company (strategy, budgets, goals, tasks, compensation) ultimately the Board of Directors has the legal governing responsibilities for these things. This is often called “corporate governance” — in case you’ve never heard that term.
It is worth pointing out that there are actually three levels of governance in venture-backed startups. What most founders think about is the daily management of their businesses and they realize that they periodically need to check in with their board of directors to get buy in for key decisions.
NZ has taken part in the last three years of Startup Genome’s annual survey of startup ecosystems and is doing well in the activation phase.
SAN FRANCISCO, Calif. — The 2019 Global Startup Ecosystem Report (GSER) has been launched at The Next Web Conference. The GSER is the world’s most comprehensive and widely-read research on startups based on data from thousands of startup founders and research on millions of companies.
The 2019 GSER provides insights and guidance to public and private leaders in dozens of countries and cities — from Bahrain to New Zealand— about how to cultivate vibrant startup ecosystems. The report outlines key success factors for startups, constituting the new science for entrepreneurial ecosystem development.
Ministry of Business, Innovation and Employment engaged Startup Genome to benchmark New Zealand against more than 50 ecosystems globally
New Zealand’s #GSER2019 highlights:
If you’ve read the earlier article about how NZ ranks, you might be interested to see where Australia’s key ecosystems land.
Waning political focus on innovation and a lack of funding for early-stage startups have seen Australian cities slip in the Startup Genome global rankings.
The Startup Genome Ecosystem Report 2019 has seen Sydney drop six places compared to the last report in 2017, from 17th place to 23rd. Melbourne didn’t make it onto the top-30 table at all.
Melbourne was, however, named as a ‘challenger’, or an ecosystem with the potential to make the top 30 within the next five years.
The findings were, however, contrary to those of the StartupBlink Startup Ecosystem Rankings 2019 report, which named Australia as the fifth-most startup-friendly country in the world.
The Startup Genome report bases startup ecosystems in terms of their value — output, exits and success — as well as on things like funding, connectedness, knowledge and talent base.
Great to see AANZ member MIG Angels’, Dean Tilyard, playing such a key role in the next stage of growth for Invert Robotics.
Robots that cling to hazardous chemical containment tanks might sound like the stuff of science fiction, but Christchurch, New Zealand-based Invert Robotics — a spinout from the University of Canterbury’s School of Engineering — has been selling them for close to a decade. The company’s camera-equipped climbing machines can squeeze into spaces too tight or hazardous for human workers and perform daily inspections of equipment in a range of industries, including food and beverage, dairy, aviation, pharmaceutical, and oil and gas.
To lay the groundwork for its next phase of growth, Invert Robotics today announced that it has raised $8.8 million in a round of venture funding led by Finistere Ventures, with contributions from Yamaha Motor Ventures & Laboratory Silicon Valley (YMVSV) and existing investors Allan Moss, Inception Asset Management, and the New Zealand Venture Investment Fund. The fresh capital brings its total raised to roughly $15.9 million, according to Crunchbase, and managing director Neil Fletcher said it will be used to fuel the startup’s expansion to the U.S. and to further develop its hardware platform.
An interview with one of Ambit’s founders, Josh Comrie, sheds light on what it takes to grow an AI startup.
An interview with one of Ambit’s founders, Josh Comrie, sheds light on what it takes to grow an AI startup. Startup founders often report that the most stressful part of their role is not the long hours and sleepness nights, or dealing with a seemingly endless raft of technical, staffing or business development difficulties, but rather the process of preparing for, finding, pitching and negotiating the often vital lifeblood of early stage businesses – angel or VC funding.
So when we spoke to seasoned investor – now tech startup founder – Josh Comrie, about his experience closing an oversubscribed $1.75M capital raise from investors such as K1W1, Lewis Holdings and NZVIF, we were intrigued to hear his take on the process.
Comrie’s current “day job” sees him fronting AI conversation platform Ambit as founder and CEO, but he has been an active investor in early stage companies for nearly two decades and is a founding member and director at prominent angel investment group Flying Kiwi Angels.
from Avid Legal’s Murray Whyte
The new AANZ Term Sheet clarifies how the issue price per share is usually calculated. Even some experienced investors, companies, and entrepreneurs have struggled with the concept under the NZVIF templates, so it is worth clarifying this in more detail here.
The issue price per share for a capital raising round is usually derived from an agreed company valuation on a “pre-money” basis. That is, the company’s valuation immediately before the investors pay their investment amount to the company.
The issue price per share is then calculated by dividing this pre-money valuation by the number of existing shares in the company (again, before the investment is made), on a “fully diluted basis”.
A “fully diluted basis” ordinarily means treating all unexercised options, convertible loans, and other securities, whether currently issued or otherwise reserved by the Company, as if they have been converted into shares.
Most typically, “fully diluted basis” will include treating all convertible securities as if they’ve been converted. However, the template also provides some flexibility to negotiate away from the general understanding of this term depending on the context of the investment.
Two examples have been provided below that illustrate how this can play out in practice. Both are based off the following hypothetical investment round:
Example: Fully diluted basis
Most of the time “fully diluted basis” will include shares in any Employee Share Scheme / ESOP. This would mean the issue price would be calculated as follows:
i.e. (if rounded to 5 d.p.):
Therefore, the investors will be issued 1,100,000 shares for their $1m investment, and the relative percentage ownership of the company post-investment would be:
For the sake of completeness, if the 300,000 shares reserved for the Employee Share Scheme / ESOP were subsequently fully issued, then:
As you can see, the dilutive effect of the Employee Share Scheme / ESOP is shared amongst existing shareholders on a pre-investment basis when the Employee Share Scheme / ESOP pool is included in the meaning of “fully diluted basis”.
Example: Fully diluted basis excluding Employee Share Scheme / ESOP
Agreeing to move away from the general understating of “fully diluted basis” will result in a marginally higher issue price and a lower number of shares being issued to investors, despite using the same pre-money valuation.
Under my hypothetical investment, by fully excluding the Employee Share Scheme / ESOP the issue price becomes $1 per share, with the investors being issued 1,000,000 shares for their investment. This results in a relative percentage ownership of the company post-investment of:
o Existing Shareholders: 3,000,000 shares (75%)
o New Investors: 1,000,000 shares (25%)
If the 300,000 shares reserved for the Employee Share Scheme / ESOP were subsequently fully issued, then:
o Existing Shareholders: 3,000,000 shares (69.77%)
o New Investors: 1,000,000 shares (23.26%)
o Share Scheme Employees: 300,000 shares (6.98%)
By excluding the Employee Share Scheme / ESOP from the meaning of “fully diluted basis” the dilutive effect is shared amongst both existing shareholders and investors.
There are, of course, many other ways to negotiate in this area. The examples above just an illustration of two ways to go about it. If in doubt, seek advice from someone experienced in growth company capital raising.
Biomatters was one of Ice Angels first investments so it’s terrific to see this outcome validating the asset class.
New Zealand tech business Biomatters, a leading provider of DNA data analysis solutions worldwide, says it will be acquired by US company GraphPad.
None of the parties involved would comment on financials, but Biomatters – a darling of the business and tech press – has grown quickly to become a substantial operation.
“We have 65 staff – 47 here in NZ, 8 in the United States, and 10 in our office in Denmark,” chief executive Brett Ammundsen told the Herald this morning.
“We have around 4000 customers worldwide, ranging from individual researchers who download the software from our website, to top 10 pharmaceutical companies. Our active user-base is over 50,000 scientists.”
Biomatters has had a leg up from taxpayers at various points.
In 2010, it was one of three companies that shared $1 million growth funding through the University of Auckland Business School Entrepreneurs’ Challenge.
Crown agency NZVIF (the NZ Venture Investment Fund) invested in Biomatters, and it was also backed by business incubator IceAngels.
It’s great to see angel-backed, Ask Nicely, secure their next round of growth capital.
They’ve come a long way since their days as two men in a Ponsonby garden shed, just four years ago.
Auckland-founded startup AskNicely has raised US$10 million ($15m) in its first major funding raising.
The Series A round was led by Nexus Venture Partners – a venture capital outfit that operates across the US and India. Existing investors Blackbird Ventures (the Australian investment company which is backed social media tool Canva) and Sir Stephen Tindall’s K1W1 also chipped in more money.
AskNicely makes software for real-time customer satisfaction surveys and gauging a company’s “net promoter score” or NPS, a trendy metric derived from taking the number of positive mentions it gets from customers, then taking away the number of negative mentions for a net score ranging somewhere from -100 to 100.
Here is some fascinating insight on the activity levels of Australian venture investors who also lament their struggle to get robust data.
A new set of data from venture capital firm Artesian has revealed the most active VCs in the Australian startup scene, both by the number of investments and by the amount invested.
The data was collated by Artesian’s data analytics arm Decoded, with partner Jeremy Colless telling StartupSmart the figures were sourced from Decoded’s personal data, along with public announcements and press releases.
Publishing the data itself is also a way of gathering fresh figures “because as soon as we publish it everyone rings us and complains it’s wrong” Colless laughs.
“We then tell them to send us updated data so we can fix up the numbers,” he says.
Colless says the need for Artesian to do that is an indictment on the “terrible” state of data availability for Australian startups, though he notes his figures aren’t guaranteed to be correct due to some firms keeping their investment figures close to their chests.
Angel Association NZ has taken over stewardship of industry templates from the NZ Venture Investment Fund for angel and early stage investment transactions. We have recently released 5 new equity investment templates, which you can find here, that update and replace those originally developed over a decade ago. These documents include:
A year or so back the AANZ convened a working group of representatives from half a dozen law firms led by AANZ sponsor Avid Legal to update outdated industry templates. We are particularly grateful for input and support from Simmonds Stewart, Chapman Trip and Simpson Grierson. Below is a summary of the key updates and the rationale for these changes.
Like all templates, these new documents are only a starting point. The aim is not to impose a fixed set of terms on parties which may result in an agreement that is out of alignment with the context and intention of their investment.
With this in mind, explanatory footnotes have been included in the new term sheet. These footnotes are not exhaustive, but aim to provide enough information for new users to:
As always, if in doubt, it is recommended that you seek independent advice from someone with experience in early stage company capital raising.
More efficient structure for follow-on investment rounds
A key structural change has been the move away from a combined “Subscription and Shareholders’ Agreement” to a separate:
Most early stage companies (and particularly tech companies) will go through a series of capital raising rounds as their capital needs grow over time. Separating the documents allows the shareholders’ agreement to stand alone from the initial subscription terms so it is more easily (re)used and/or updated/amended, saving parties time and legal costs over multiple capital raising rounds.
Updates for recent market trends and law changes
Those familiar with the old templates will notice a number of shifts in the AANZ templates to align with recent market trends. At a high level, the AANZ templates display a softening of investor rights. Again, it is important to emphasise that these positions are just suggested starting points. Where parties land on various deal terms depends on the context of the investment, and the relative negotiating power of the parties. It’s very important to be aware of these factors when agreeing terms.
Some noteworthy changes include:
o it is unfair to the rest of the shareholders, particularly the other founders, if the founder leaves very early on in the life of a company; and
o it may allow the company to use the equity (acquired from the departing founder) to recruit/incentivise the person who picks up the departing founder’s responsibilities.
The portion of founder equity at risk is often negotiated, and the AANZ term sheet provides general guidance based on recent market practice. However, context is everything and vesting arrangements may be inappropriate if the founders have contributed significant cash, if there are appropriate vesting arrangements already in place, or if the company is at the more mature end of the spectrum.
We intend to review the templates on an annual basis, and have a dedicated email address (t[email protected]) for any comments to be submitted to the templates committee for consideration in such reviews.
We believe investors, companies, entrepreneurs and advisers will find the new equity templates user friendly, and a worthy addition to the NZ capital raising landscape.
Ice Angels have invested over $100m into high growth startups and Robbie has some great advice for founders and investors.
It has been an exciting 16 years for the investment arm of The Icehouse. More than $100m has been invested into 165 startups since 2003.
We’ve invested in technology to re-grow human skin for burn victims, bugs that extract gold from e-waste, software for managing “swarms” of robots, “intelligent” asthma inhalers, an online platform that helps users learn to play music, and much more.
We have had startups compete and win globally and others stumble and fail. Around 130 are still on their journey.
To mark our $100m milestone, we want to share some of the insights we’ve learned from the founders and investors of some of New Zealand’s boldest and brightest startups.
It’s inspiring to see successful wealth management institutions support investment in early stage high growth ventures as they see the value for their investors.
Simplicity KiwiSaver has committed to investing $100 million over the next five years into New Zealand companies seeking expansion capital.
It will invest the money into funds managed by Icehouse Ventures, a new company to be launched in May, designed to accelerate the growth and development of Kiwi companies with global aspirations.
Icehouse Ventures will be co-owned between The Icehouse start-up accelerator, Sir Stephen Tindall’s investment company K1W1, Simplicity and investment banking firm FNZC.
Level 2 in Auckland has been the birth place of some really exciting ventures, including Mint, Lanzatech and Rocket Lab.
Business is Boring is a weekly podcast series presented by The Spinoff in association with Callaghan Innovation. Host Simon Pound speaks with innovators and commentators focused on the future of New Zealand, with the interview available as both audio and a transcribed excerpt. This week he talks to Imche Fouri, general manager of innovation for LevelTwo, and Dr Will Barker, CEO of Mint Innovation
Tucked away in Parnell is an innovation centre that’s helped propel some of the biggest names in local tech forward, although you might not have heard of the place or even some of the names. It’s a truism of the local scene that some companies are easy for the media to cover, and some – like many facets of science and technology – are a little more complicated and don’t get the airtime.
This article contains a very neat summary of the angel community’s views on capital gains tax (CGT), including from former AANZ Chair, Marcel van den Assum.
The Tax Working Group’s proposal for a capital gains tax (CGT) got a serve on social media this afternoon from Rocket Lab founder Peter Beck. But other entrepreneurs say it could be a good mechanism to shift capital from “non-productive” property to startups.
There are some great insights in this article on how to build an angel portfolio with $150-200K.
I debated writing this. Partly because I didn’t want to jinx my portfolio. Partly because my gains are all on paper anyway. And partly because when I did my angel investing, it was at the beginning of my investing career when I really didn’t know what I was doing. Hah.
Nonetheless, I do think I’ve had some great learnings that are worth sharing with entrepreneurs and would be angel investors.
About Multicore World
The 8th Multicore World, the most important high-tech conference in the Southern Hemisphere – held yearly in Wellington, and offer a 10% discount available until 1 February.
Known by the speakers as “the Davos of Tech”, Multicore World 2019 will be 12, 13, 14 February and feature global leaders in a limited audience event that provides the knowledge and strategies to future-proof your technological innovation.
Don’t just imagine the future: discuss it together with who is designing and building it!
Speakers from Intel, Arm, Facebook, Oracle, Broadcom as well as from the major US National Labs (Oak Ridge, Los Alamos, Argonne, PNNL) and from Japan, Singapore, Netherlands, UK, and more converge every year at Multicore World to discuss at peer-level about next-gen computing and its applications to all fields.
Visit Multicore.World for full information about speakers, abstracts, schedule, tickets and venue.
Members of AANZ will benefit of a 10% discount using this link – valid only until Friday 1st February (unless sold out). Register NOW, there are only 90 tickets for sale!
Tech Incubator and AANZ member, Astrolab recently announced a group of Wellington business people will invest up to $5m in high tech startups being supported by Astrolab.
Four Wellington-based businesspeople have teamed up with specialist business incubator Astrolab to create a $5m fund which will drive a financial runway of up to $20m for startup tech companies across New Zealand.
Astrolab CEO Brett Oliver says having access to this level of capital is hard to come by in New Zealand when turning complex-technologies into export businesses.
“Astrolab’s funding pool will be used to catapult technology startups we establish and grow, enabling us to concentrate on achieving our mission-critical milestones quickly by dealing directly with our fund in the first instance,” says Mr Oliver.
The $20m financial runway over the next two years relies on $5m from Astrolab’s LP fund, underpinned by the newly formed Wellington-based investment group, and Callaghan Innovation’s Tech Incubation program which delivers targeted funding to complex technologies.
The Angel Association welcomes the establishment of a $100m government fund to back ventures looking to ameliorate climate change.
Climate Change Minister James Shaw has launched an investment fund to help finance “low emissions” businesses.
The fund will take the form of a company established by Treasury – New Zealand Green Investment Finance Ltd – so will operate independently of the Government and look to make a profit.
This makes it slightly different to the $3 billion Provincial Growth Fund.
The Government has committed to injecting $100 million into NZ Green Investment Finance Ltd to get it going.
Shaw expects the return the company will eventually make will mean it can repay the Government and see it stand on its own commercial footing.
“More and more investment dollars are looking for clean, sustainable ventures to invest in,” he says.
“Establishing this fund positions New Zealand to attract its share of that investment capital.”
AANZ Council member, Pacific Channel’s Brent Ogilvie provides some insights on Engender’s success
Engender was co-founded in 2011 by the University of Auckland and Pacific Channel after we approached the university seeking sex-sorting solutions for the dairy artificial insemination industry. Professor Cather Simpson (Physics and Chemical Sciences) believed her lab could develop a solution using photonics and microfluidics.
This is a terrific article setting out key metrics to ask about when assessing an angel deal from David Jackson, a Committee Member of Sydney Angels Inc. Some great tips on how to be an effective angel investor are also embedded.
“Let’s say you have a brilliant idea for a startup.
You know your Hats-for-Cats app is going to take the world by storm. And while you may be half-starved, you have a whiteboard and a T-shirt with your logo on it, and the energy, guts, and grim determination to make it happen.
But the funds scraped together from friends, family, and savings for market research and a demo are now completely exhausted. The credit cards are completely maxed out. You’ve realised it may be time to find an angel investor who can lay enough runway for a developer and the go-live phase. The good news is: angels want to give you money. That’s our job.”
Kiwi software firm SwipedOn has been sold to UK company SmartSpace Software for $11 million.
The British company provides workspace management software and has wanted to expand that offering through an acquisition since July.
Tauranga-based SwipedOn’s software helps visitors sign in when visiting an organisation. Its backers included Ice Angels, Enterprise Angels, New Zealand Venture Investment Fund and K1W1.
A terrific outcome for founders and angels alike and a proof point of the power of angel investment supporting kiwi tech companies to succeed.
2018 has been a record year for Snowball Effect. We have raised more capital than any previous year and continue to grow steadily. Some of the metrics below are disclosed to the FMA as part of our compulsory reporting as a regulated online investment platform. We believe that the private capital markets in NZ can benefit from being as transparent as possible. We’ve recently been collaborating with researchers from the University of Auckland and University of Minnesota to uncover insights into investor behaviour and the growth in online capital raising around the world. Below are some of the highlights from the past year:
We have now raised $41.8 million in capital across 54 offers. The private capital part of the business continues to grow with $12.7 million raised privately in 23 offers. The average size of offers that we work with has been increasing and 13 offers have been over $1 million in size. We have completed 22 offers that attracted more than 100 investors.
Growing investor base
Our investor audience now includes 17,700 people, of whom 7,300 have actively indicated interest in investing in a particular offer. We’ve found that each indication of interest averages out to about $1,000 in investment in the final offer per indication of interest. One of the most important metrics for a two-sided marketplace business is “transacted users”. In our case, 3,100 people have made a completed investment on the platform.
We are now working frequently with large family offices, institutional, and sophisticated investors. 810 people have invested more than $10,000 through the platform and 67 people have invested more than $100K through the platform. There are now 1,400 wholesale investors on Snowball Effect who are eligible to receive private offers. $27.7 million in transaction volume has come from people investing more than $10K.
A key difference between Snowball Effect and other players in the online investing space is that we want investors to take the private company asset class seriously as part of their overall investment portfolio. To that end, we’re pleased to see that 33% of our investors have now invested in more than one offer and 14% have invested in three or more offers. 30 people have invested in 10 or more offers (which research from the Kaufman Foundation shows is the base level of diversification needed to approach the underlying asset class returns for angel and venture capital investing). The most active investor on Snowball Effect has now invested in 27 offers.
Our ancillary services have continued to grow with 14 companies now tracking their legal share ownership records in the Snowball Effect share registry. These companies represent 2,059 shareholding records. We also now have 163 director profiles from investors that are available as independent directors for companies that raise capital through Snowball Effect.
For more information from Snowball click here.
As Madonna so famously sung, we are living in a material world. If she were to update that song, she might tweak it slightly and mention the fact that we are also living in a gig economy. And Goodnest, a platform that matches up jobs that need doing with suppliers willing to do them, is harnessing that shift and attempting to make it even easier for both sides of the equation with a range of new features, a launch into new regions and a new capital raise to fund more growth.
Goodnest was one of the first domestic jobs marketplaces to pop up in this country, launching around four and a half years ago. And things have changed considerably since then, says co-founder James MacAvoy, who, along with his brother, also founded the DVD rental company Fatso that was bought by Sky.
New Zealand’s largest petrol company is entering the retail electricity market, spending $46 million for a controlling stake in Flick Electric.
Z Energy, which also supplies the Caltex branded stations across New Zealand, said it was acquiring a 70.1 per cent stake in Flick, which offers access for household customers to wholesale electricity prices.
Mike Bennetts, Z’s chief executive, said the purchase was “another step towards the long-term sustainability of Z, and the role we play in a lower carbon transport future”.
A Palmerston North-based start-up company, Koru Diagnostics, has had impressive success with its first funding round.
Koru, which is developing cost-effective laboratory and rapid farmside tests, was substantially oversubscribed when it closed its seed funding round recently with close to a million dollars.
CEO, Rhys McKinlay, is very happy with the outcome. “We raised over $900k, mostly from angel investors, which will give us a commercialisation runway through until late 2019. These funds will be directed towards product development and commercial scale-up, protecting our IP and securing new commercial partnerships,” he says.
New Zealand’s Aquafortus Technologies has won the TechXchange Rising Star award for best new technology at Singapore’s International Water Week, this closes out a successful six weeks for the start up, which included an oversubscribed funding round and breaking ground on its first pilot plant in the U.S.
Aquafortus was invited to exhibit under Singapore’s National Water Agency, the Public Utilities Board at Singapore International Water Week. Singapore International Water Week is a global event that brings together world leaders in the wastewater industry, with more than 21,000 participants from 125 different regions.
The tradeshow was a great success for Aquafortus – generating more than a dozen sales leads across eight countries. It also saw new sector applications for Aquafortus’ Zero Liquid Discharge (ZLD) technology, with significant interest from major players in the semiconductor and textile industries, says Daryl Briggs, CEO of Aquafortus.
Venture capital in Australia hit a record $US630 million ($AU849 million) in the 2017-18 financial year, up 12% on the previous 12 months, despite a drop in the number of deals, according to Venture Pulse Q2 2018, a quarterly report by KPMG.
Over the three months to June, $US209.09 million of startup investment was recorded in Australia, up from the $US169.8 million the previous quarter.
However, the number of deals was 27, down from 31, continuing a trend for bigger raises to more mature startups.
“Venture financing continues to rise in Australia, keeping pace with worldwide trends,” says Amanda Price, Head of KPMG Australia High Growth Ventures.