Two capital-ivating days in San Francisco – by Katherine Sandford

The best business trip I’ve been on in over five years has left me grappling with how to compile my screeds of notes into a one-pager (well, maybe two or even three) that makes some sense! Oh my goodness – talk about gold! So much insight, so many gems!

Hosted by the Edmund Hillary Fellowship in conjunction with the Angel Association of New Zealand, I was part of a delegation to San Francisco of NZ companies looking to expand into the US market and/or raise capital there. Our group of ten included founders and investor directors of five very diverse companies, so the networking from that part alone was a great start. We were escorted around the city and the Valley by a couple of outstanding fellows, yes real ones – EHF Fellows, Josh Hannah and David Yuan. Over the course of two days we engaged with a number more Fellows or friends of Fellows – we even had lunch and a chat with EHF Founder and CEO Yoseph Alele, who happened to be visiting from Wellington. Dinner with Silicon Valley Bank was a bonus, but it was the real and honest experience and insights that we heard from Kiwi Founders, including Victoria Ransom, and a broad spectrum of VCs, that really have made an impact – and I’m still pinching myself as I re-read my scrawled notes that I was actually there!

First stop, Matrix Partners where we met Kiwi Founder of Predict HQ, Campbell Brown, who’d relocated his family from NZ to the US in order to test the hypothesis that he was onto something big, and that he could secure US venture capital. He checked out Seattle as a potentially easy landing spot, but ultimately the amount of capital in San Francisco made it a no-brainer.

Campbell is a guy who loves a challenge – he’s a go getter who claims to like a lot going on in his life all at once – yeah right, like moving countries, and growing a business with no local resources and raising money and adding a baby to the family – all at the same time!

Setting himself up in a co-working space, not really knowing anyone, Campbell networked like crazy with founders. He figured that those who had successfully raised capital would be the best connections to make warm introductions to potentially friendly VCs.

And for Predict HQ, Campbell’s hunch was right. On the back of securing Uber among other large enterprises as customers, the company secured US$10M in a Series A round late in 2018. Campbell said it was a warm introduction that landed him a meeting and ultimate VC investment.

From what he’s learned, Campbell says that US VCs are looking for the following attributes in their search for their next investment:

  • A known entity, or at least an introduction from another founder
  • Net new revenue
  • Ability to expand the business – the best investors are looking for $100M potential and the ability to IPO from there
  • Victoria Ransom puts this slightly differently as the need to have a huge nascent
    market, and that you need to think global from day one with your go-to-market
  • A solid team and culture
  • US location, preferably San Francisco

So how did this founder-centric shortlist stack up as we met with VCs over the next couple of days? This quote fairly well sums it all up. “We are looking for a kick-ass team, building a kick-ass product in a large-ass market”. And in our final meeting at General Catalyst, Trevor Oelschig’s list of the big pitch mistakes is further confirmation.

The Series A No-No’s (aka the BIG pitch mistakes)

  • Not being able to articulate your go to market motion
  • Not being able to talk about your competitors
  • Inability to attract the right talent at the right time
  • Inability to articulate your path
  • Not knowing your numbers cold
  • Not having spoken to enough customers

And there was even more evidence to show that Campbell’s list is well, pretty much on the money!

A Known Entity
Ultimately it comes down to personal relationships and who knows who. Word of mouth, trust and the network are your friends. Good content will result in VCs following you and reaching out to you, unsolicited. When they’re doing research, investors love seeing logos out there as it shows traction and piques their interest. For GV (formerly Google Ventures), introductions to companies depend on their networks – many Googlers route companies in. Other VCs advised that we should be visiting San Francisco regularly for “pre-meetings” without any investment pressure, to build credibility and relevance – and importantly to build trust over time.

Net New Revenue
The ease with which you raise capital is directly related to the progress you’re making – not with product, but in the market with real customers. Companies need proof that they have (1) product market fit, (2) raving fans, aka referenceable customers, not a team that loves the product they built or are planning to build, and (3) a growing pipeline of real opportunities.

Ability to Expand the Business
Companies need to show repeatability to demonstrate that there is a big business to be built. It really matters what sort of traction you have and whether that’s increasing. One VC even went as far as to say that he finds it difficult to imagine a market that doesn’t exist yet – so we need to be sure that we are clear on the existing problem that we are solving for a proven and potentially massive number of customers. I loved Victoria’s comment about being able to be a salesperson and “make your company seem as big as you can, without crossing the line”.

A Solid Team and Culture
GV uses analytical input into their process, but Graham Spencer, Managing Partner, was hesitant to answer whether GV uses any sort of analytics tool to assess entrepreneurs! An experienced team, who have had prior exits and many years in the target industry reduces VC risk when assessing an opportunity. Transparency is important – and founders must be able to present real candour about the challenges they are going to face – confidence in knowing that there will be obstacles that are going to need support to work through. The ability to recruit and retain people is key, so it’s important to have a unique set of values and attributes that attracts people to your company.
Founders must be likeable – the humble kiwi attitude serves well. And making that first impression is everything – you don’t need to fly to meet in person but make those first few moments on the phone count.

US location, preferably San Francisco
Ramzi Ramsey at Softbank said it well – “US early stage VCs are lazy, and distance is a problem”. He went on to say that the investor’s greatest resource is time and if they are wanting to add value then the more cost/time it takes, that just leads to it being more effective to do it locally.

And there was more support among the VCs we met for a San Francisco location, with them saying things like – Every geography has lost mindshare to San Francisco, so being local is best. Ultimately the US is a giant market and to win there means you need to be there. The more specialized the market, the more important it is to be US-based. On the other hand, if you are building a consumer product for India, then perhaps the US is not so important. Generally, a C-corp in the US is the preference as it’s lower risk. If the company’s NZ-based, but prepared to flip to the US, relocating the founder/CEO and the sale team and leaving the R&D team in NZ, then that would be acceptable.

Some parting thoughts mixed with a bit of advice
So I’ll just say that I think the insight gained in our first tour engagement is pretty much spot-on when assessing what San Francisco VCs are looking for in their investments – known entities, with a solid team and culture, traction in a market with a massive opportunity, and preferably with the founder located or relocating to San Francisco. There are always exceptions, but I reckon that it’s likely much tougher going for those in the minority.

Kiwi founders need very big ambitions and to think global from the outset, then be open to making the move. They need a board that supports that, so be sure early investors are aligned with those ambitions. The brave ones who have gone before have proven and are still proving that San Francisco is where (most of) the action, and (most of) the capital, is.

VCs are generally looking for reasons to say “no” and 99% of interactions get that outcome. To stand out, in addition to getting to product market fit and building a meaningful customer base preferably in the US, founders need to be networked in, known in advance and publishing regular content. “Content is a honey-pot for VCs” – one said we’d be shocked at how much they read.

As a founder, be prepared to tell your personal story, in person, not in slides – “the authenticity of the moment you decided [to start your business] is very important. This is VC Candy”.

When at the point of taking on a VC, or any investor for that matter, ensure they have the same stomach for risk. In the words of Ling Wong, EHF Fellow and General Partner at Sealane, regarding risk appetite, “Past behavior is a great indicator of future behavior in that case. When things go bad, as they invariably will, then you want them to work through that with you.” So, be thorough in your VC due diligence before accepting capital into the company and know what sort of relationship you’re getting into.

Relationships are everything. Common sense really, but it is important to cultivate them, building interconnected and robust networks. These take time and effort to develop, but this is one of the most important things for a founder to be able to do. So, find ten founders that are one step ahead of where your company is at and engage with them. Their knowledge, insights and connections will help you to take that next leap – chances are each of them can introduce you to a whole bunch of VCs.

And finally, at yes, the end of page three – if anyone reading this has the opportunity to participate in a future delegation of this nature, I cannot recommend it highly enough. I’m guessing I won’t be allowed on the next one – but I’d certainly go again, given the chance. Thanks EHF and AANZ for a truly capital-ivating tour.

Words by Katherine Sandford
November 2019

Scott Gilmour named New Zealand Arch Angel 2019

Scott Gilmour has been awarded Angel Association New Zealand’s (AANZ) Arch Angel Award today at the 12th New Zealand Angel Summit in Christchurch.

Scott is an experienced high-tech company founder and director and an active Ice Angels member and former board member. In 2002 he founded the first I Have A Dream project outside the USA to help kiwi children.

The Arch Angel Award is the highest honour in New Zealand’s angel investment community, given to those who best exemplify the quintessential angel and who are champions for the endeavour making a significant difference to New Zealand’s start-up ecosystem. As well as their personal capital, Arch Angel recipients share their time, insights, deeply relevant skills and their networks with high growth start-up companies.

The recipient is chosen by the previous years’ winners.

Scott Gilmour has over 35 years experience in the high tech industry, including 12 years with Intel in the United States and New Zealand. He co-founded a successful enterprise software company in the United States in 1989, ABC Technologies Inc., which was sold to SAS in 2002. He served for seven years on the NZ Trade and Enterprise Beachheads Board. And has served as a director and investor in a number of New Zealand tech companies, including Jade, Nextspace, ResourceWare, ViFX and Winscribe.

In 2002 Scott founded and funded the first “I Have a Dream” project outside the United States to “inspire dreams and enable futures” for kiwi children who are living in material hardship.

As a super active angel investor, Scott has invested in over 60 ventures. He is a founding member of Auckland-based Ice Angels, having joined the network at its inception in 2003 and served on the board for four years between 2006 and 2010.

Current Angel Association Chair and fellow Ice Angel, John O’Hara, says Scott has been a lynch pin of New Zealand’s first formal angel network.

“As a founding member of Ice Angels, I doubt there are many, if any, other Ice Angels members who have been such passionate and committed champions of angel investment. Scott has personally introduced and “closed” more new Ice Angel members than any other I can think of,” he said.

Scott received his award at the 12th New Zealand Angel Summit, held at Pemberton in Christchurch and attended by 160 delegates. The annual event provides a hub for angels to learn and network, and is recognised as one of the world’s top angel events. This year’s summit is exploring what it is about scaling an angel-backed venture from New Zealand which gives it a unique comparative advantage when it comes to creating exponential value.

Former Arch Angel winners include The Warehouse founder and long-time angel investor Stephen Tindall; Andy Hamilton, chief executive of The Icehouse and member of IceAngels; US super angel Bill Payne; Movac venture capital firm founder, Phil McCaw; veteran angel investor Dr Ray Thomson; prolific AngelHQ member, Trevor Dickinson, former AANZ Chair, Marcel van den Assum, ardent angel investor, Debra Hall and champion for kiwi start-ups, Dave Moskovitz.



For more information, please contact:

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

John O’Hara, AANZ chair
mob: 021 040 3198 or email: [email protected]

The Angel Association of New Zealand (AANZ)

The Angel Association is an organisation that aims to increase the quantity, quality and success of angel investments in New Zealand and in doing so create a greater pool of capital for innovative start-up companies. It was established in 2008 to bring together New Zealand angels and early-stage funds. AANZ currently has 40 members representing over 800 individual angels associated with New Zealand’s key angel networks and funds. AANZ works closely with NZTE and Callaghan Innovation and a number of private sector partners including Jarden, PWC, Avid Legal, Baldwins, KiwiNet, Uniservices, Amazon Web Services, BNZ and BECA. For more, please visit:


Angel Awards Announced Suse Reynolds, Katherine Sandford and Tim Allan recognised

At its 10th Anniversary Summit in 2017, the Angel Association New Zealand announced two new awards to augment the Arch Angel Award which was first awarded in 2009 to Sir Stephen Tindall and was today awarded to Scott Gilmour.

The Puawaitanga Award recognises the founder and investor-director who best exemplify what can be achieved when committed people draw on their collective skills and experience. This award celebrates an angel-backed venture achieving world class success. This venture has excellent governance, a compelling business proposition and a well-defined strategy for exponential returns.

Puawaitanga – ‘best return on integrated goals’.

The Kotahitanga Award recognises those people in the angel community who have made an outstanding contribution to the industry. It acknowledges those who have selflessly given personal time and energy for a sustained period and contributed to the professionalism, profile and reputation of angel investment in New Zealand.

Kotahitanga – ‘unity and a shared sense of working together’.

The Puawaitanga Award has been presented to UBCO Bikes CEO Tim Allan and investor-director chair, Katherine Sandford. UBCO has developed all terrain, electric utility motor bikes. Since the concept was launched at the 2014 National Field Days, the company has gone on to refine the bike and is now selling it in Australia, New Zealand and the USA.  Impressively, UBCO has also since won a number of awards including a Deloitte Fast 50 Rising Star award, Good Design and Best Design awards, been recognised as a TIN100 Spark Early Stage Company and last year won an AmCham exporter of the year award. Katherine Sandford has Chaired the UBCO Board for the last two years and is a true champion for the company helping it raise several million dollars in growth capital. Katherine has been a member of Tauranga’s Enterprise Angel network for the last four years, has served on the Enterprise Angels’ board and last year won the network’s investor director award.

In making the award, Angel Association Chair, John O’Hara said Tim and Katherine are exemplars of what investor/founder alignment and mutual support can achieve.

“No one scales value in a high-growth tech company on their own. To get traction both the founder and the investors need to be committed to the same end-point. This is clearly the case with UBCO. Tim and Katherine, together with the rest of the UBCO team, have been working together to generate great progress in terms of revenue generation, customer acquisition and to secure capital to amplify that growth to generate success for investors and just as importantly, for New Zealand as a whole,” he said.

The recipient of the Kotahitanga Award is Angel Association NZ’s Suse Reynolds.

Suse has been supporting angel investors, angel backed founders and the growth of angel investment in New Zealand for over a decade. Suse was a career diplomat before taking the leap to “live the startup dream’’.

As well as providing countless hours of free advice and counselling to angel investors and founders over the years, Suse currently serves on the Board of AngelHQ. Suse has also fronted dozens of workshops on topics such as angel investment, governance and has led the Angel Association’s flight program. Suse has been particularly helpful to establishing a number of regional angel clubs around New Zealand.  Suse is a successful angel investor in her own right and most recently has led a couple of early angel rounds into Press Patron and Narrative Muse.

“Suse exemplifies the values which make angel investment rewarding and successful. Her warmth, generous spirit, ambition, professionalism, depth of knowledge and genuine care for investors and founders alike have imbued New Zealand’s startup ecosystem. We are fortunate to have people like Suse leading our community,” said John O’Hara.



For more information, please contact:

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

John O’Hara, AANZ chair
mob: 021 040 3198 or email: [email protected]


The Angel Association of New Zealand (AANZ)

The Angel Association is an organisation that aims to increase the quantity, quality and success of angel investments in New Zealand and in doing so create a greater pool of capital for innovative start-up companies. It was established in 2008 to bring together New Zealand angels and early-stage funds. AANZ currently has 40 members representing over 800 individual angels associated with New Zealand’s key angel networks and funds. AANZ works closely with NZTE and Callaghan Innovation and a number of private sector partners including Jarden, PWC, Avid Legal, Baldwins, KiwiNet, Uniservices, Amazon Web Services, BNZ and BECA. For more, please visit:

We need to pull together – Stephen Tindall

In the context of climate change, Sir Stephen sets out why he invests in startups.

Sir Stephen Tindall says New Zealand businesses face an enormous task adapting to the climate-change imperatives that are now upon us.

“But it’s not insurmountable provided we all pull together,” Tindall says. “My personal view is that we’re all going to be liable with what we do in terms of our impact on the environment.”

The Warehouse founder, who has invested in many early stage “sustainable” companies through his K1W1 investment vehicle, reckons there are very few New Zealand companies which won’t be impacted.

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Summit 2019 Introducing Ben Kepes

As a teaser for those of you attending The Runway and Angel Summit events in a couple of weeks time, Ben Kepes, an experienced angel investor who is speaking at both, has thrown down the gauntlet with a really neat articulation below of the conversations we look forward to having with you as we hunt down how to be effective, additive contributors to the businesses we are backing. You can read more of Ben’s other musings on the tech and startup scene here on his Diversity Blog.

Firstly a quick disclaimer: I, like most of you reading this, am an investor. As such, despite any hint of magnanimity in our decisions, our primary driver for investing in early-stage companies is to make money. If our aims were entirely philanthropic, we’d be giving to charity. We can wrap it up nicely and try and avoid the fact but angel investment, while having some good outcomes beyond dollars, is primarily a capitalistic drive.

That said, I wanted to take the opportunity to follow Suse’s lead in theming the upcoming Angel Association conference being held in Otautahi to add my two cents around the topic of expectations – those of us as investors, of our fearless entrepreneurs, and of the ecosystem as a whole.

The financial realities of angel investing in enterprises that fundamentally have a far greater chance of burning out than they do of success means that we do need to make a good return on those that are successful – if all we wanted to do was get rid of some excess cash, there are far more effective ways of doing so than being an angel investor.

But sometimes, in the search for good financial returns, we lose sight of the unique position we’re in as investors and the opportunities it brings us. We have the ability to shape a future on a number of levels – we can help have an impact on whether an entrepreneur’s journey is positive or not, we can encourage the development of businesses which benefit society more wisely than simply through wealth creation and, just maybe, we can vote with our wallets and help more planet-friendly businesses to bloom.

In terms of the “founder burnout” topic – we’ve seen much attention from the industry about this aspect of the startup journey. We’ve had some pretty raw admissions of the pain and angst that goes hand in hand with startup life. But, as the (purportedly) mature and experienced people in the relationship, our job is to navigate this road with a reasonable perspective. The fact of the matter is that for both entrepreneurs and investors to meet their objectives there is going to be a heap of hard work and painful moments – there’s no point sugar-coating that fact. But hard moments are different from bad behaviour or absence of empathy and that’s where we have work to do.

So I’d like to suggest as we spend our time in our roles as angels, that we think about what we and our investee companies can do differently. What is it that we can bring to the world that changes the conversation? What does exponential value creation mean beyond simply financial value?

In practice, what does a more empathetic approach towards angel investing look like? I’d suggest that it means we’re sometimes happy to achieve a good, short-term outcome that meets the needs of founders, employees and investors, society, the planet or any of the other myriad layers of stakeholders that exist in this world. How about we think about limiting the downstream hard times that come from aiming for the moon shot? It’s potentially about not going for the one in ten exits that need to generate 20x returns, but rather a greater number of more modest outcomes. It’s about being honest with ourselves, our leadership teams and our ecosystem about what is realistic. And it’s about finding a uniquely Kiwi way of doing angel investing.

Enjoy the journey!

International investors doing good in NZ

Kiwi angels are benefiting from the connections the Edmund Hillary Foundation global impact visa recipients are providing to offshore investment.

Since the early days of ideation, the Edmund Hillary Fellowship (EHF) has been committed to the idea that in order to best support the development and growth of an impact-driven entrepreneurship ecosystem in New Zealand, we need to include investors in the community. EHF is unique when compared to similar global impact fellowship programmes, in that around 15% of our Fellows are active investors.

In the past 2.5 years since EHF was launched, $5.3M has been directly invested by EHF Fellows into New Zealand innovation, and they have additionally assisted in delivering investments of $16.5M into NZ entities (In comparison, NZ Venture Investment Fund reported in June 2019 that $110M total was invested by themselves and other angel clubs in pre-seed and angel size deals over a similar time period)

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How to create more NZ unicorns

Callaghan Innovation’s Bruce Jarvis shares some great ideas generated at Southern SaaS.

Sir Paul Callaghan talked about 100 inspired entrepreneurs turning the country around. The ‘how’ of that is harder to pin down.

With a line-up of smart folk in Auckland for Callaghan Innovation’s Southern SaaS event recently, we conscripted an impromptu ‘business brains trust’ to figure out how we can create more billion-dollar unicorns.

Identifying the obstacles and accelerants that can determine success for New Zealand companies is a challenge that has occupied thousands of business leaders, political think tanks and roundtables for decades.

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How to create more NZ Unicorns

Callaghan Innovation group manager of digital Bruce Jarvis

Sir Paul Callaghan talked about 100 inspired entrepreneurs turning the country around. The ‘how’ of that is harder to pin down.

With a line-up of smart folk in Auckland for Callaghan Innovation’s Southern SaaS event recently, we conscripted an impromptu ‘business brains trust’ to figure out how we can create more billion-dollar unicorns.

Identifying the obstacles and accelerants that can determine success for New Zealand companies is a challenge that has occupied thousands of business leaders, political think tanks and roundtables for decades.

Our group of business founders, investors, leaders and mentors was given a couple of hours on a Tuesday. The rule for this meeting of minds was that after sharing their ideas and observations the group had to find points of consensus. A few ideas quickly rose above the rest.

Elite startup academy
There was a strong consensus that New Zealand needs to do more to support and develop the talent it already has – something Sir Paul Callaghan also suggested.

There were two ideas for supporting our existing talent that resonated strongly with the group. The first was an elite academy that focused, funded and coached New Zealand’s top-performing mid-stage startups, providing wraparound support in the same way it’s provided for the country’s elite athletes.

Distinct from incubators that nurture startup companies showing early signs of promise and needing help to commercialise, the elite academy would pick companies with runs on the board and aim to supercharge their success. Entry criteria might include the top 100 companies with up to $10 million in revenue and the fastest quarter-on-quarter growth rate.

The second idea was to give local talent greater access to smart, qualified international advisers, either through a programme that saw global venture capital firms sending their entrepreneurs in residence to do New Zealand tours of duty or by looking for opportunities to plug into the existing Endeavor.orgnetwork of vetted business innovators and advisers.

Improving our attitude to sales
One of the most striking points of consensus was on an unusual roadblock that New Zealand needs to address: a bad attitude toward sales.

The expatriates, visiting experts and Kiwi-based talent all agreed there is a contradictory divide inside most New Zealand businesses – sales is viewed as a ‘dirty word’ and a task that sits solely with the sales team, rather than an integral function of business and a focus for founders and management.

More commercially minded founders with an understanding of sales and marketing were high on the group’s wish list, along with a rethink of the way businesses approach sales into global markets.

“There’s still an idea in New Zealand that, when it comes time to sell things, you give your sales guy a presentation and some supporting material and just send him out. It’s a really strange way to do business and, generally speaking, it’s not successful.”

Outdated business education
Better training and education about sales were recommended as a solution but business education was also seen by the group as an area where New Zealand is lagging, with a curriculum that needs to catch up to the realities of business and innovation.

Getting new course materials into programmes or introducing curriculum changes through NCEA is too slow and arduous according to several of the brains trust with knowledge of the process.

At a tertiary level, with the exception of a couple of specialised offerings, the group saw New Zealand programmes as being slow to shift from a focus on traditional models of business and sales – leaving graduates ready to work in businesses but, arguably, ill-equipped to build one of their own.

Shallow VC market
Surprising no one, there was universal agreement over New Zealand’s “very shallow VC market” and the obstacles presented by a dearth of available capital. A few possible solutions were offered, including more ambitious, coordinated public-private investment partnerships, a fixed 5% of foreign direct investment into risk funds in New Zealand and a regulatory environment that is generally less geared toward property investment. New Zealand startups also need to get better at going out and seeking capital.

Being small has advantages
Awkward time zones, distance to markets and New Zealand’s size all rated passing mentions as both negatives and positives but there was agreement on the advantages offered by such a small market. New Zealand’s “no degrees of separation” makes it easy to get in touch with people and reach out for advice and support from other founders and companies with experience of the same challenges.

People in New Zealand are extremely generous with their time and sharing their knowledge and expertise, it was agreed.

The country’s size also makes it an easy test market, “where people are two calls away from decision makers.” Size, ready access to decision makers and a high standard of living all make it a strong contender as a tech testbed. “I like that New Zealand is an incubation nation where you can test the market without sinking a ship on a global stage.”

With major players such as Pushpay and Vesta already running teams of engineers and developers in New Zealand, while expanding their businesses into the US, the group agreed there is more scope for our companies to attract high-quality talent, and even an opportunity for the country to invest in becoming an exemplar for remote working.

Other big ideas from the brains trust:

• celebrate high-integrity failures and lose the stigma for entrepreneurs who fail;
• be less conservative: less conservative with investment, less conservative about adopting New Zealand-made products and services over international incumbents; and
• think bigger, work harder, aim higher.

Setting out to produce any meaningful answers in a single afternoon was incredibly ambitious but it worked. This was fitting really because the group had one other common conclusion about what New Zealand needs if it’s going to yield unicorns: ambition.

Bruce Jarvis is Callaghan Innovation’s digital group manager.

AANZ members part of HNRY raise

Congratulations to Lightning Lab grad and fintech venture, HNRY for being oversubscribed on their recent raise.

Hnry, New Zealand’s fastest growing tax agent, has closed their latest investment round at $2.15 million, over-subscribing due to keen investor interest.

James Fuller, CEO and co-founder of Hnry, says the company initially aimed to raise $1.5 million, however strong investment interest from a mix of existing shareholders and new interest from Australian venture startup fund Equity Venture Partners (EVP) meant they extended the round and closed at $2.15 million. Investors include members of Ice Angels, AngelHQ as well as private investors.

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Get more women on the cap table

In this fascinating article a small group of women in tech in the US talk about their angel investment aspirations.

Next on The Seed Series we talk with two founding team members from #Angels — Jana Messerschmidt and Katie Stanton. We talk about balancing angel investing with day jobs, the gap table and other interesting topics. The following has been edited for brevity and clarity.

Gené: Welcome to the #Angels founding team’s Katie Stanton and Jana Messerschmitt. All six founding angels met at Twitter. What was the momentum for creating #Angels?

Jana: After the Twitter IPO, one night over cocktails, we shared different tidbits around angel investing. We realized pretty quickly that we were very fortunate to come out of Twitter to see lots of entrepreneurs, and companies that were about to be formed. We decided it would actually be really fun to form this group or collective. Founders get to tap into the operating experience of all six of us. We all ran different parts of organizations and teams at Twitter across a wide variety of areas. We would also be able to take our deal flow and multiply it times six. Working at Twitter together, we built up a tremendous amount of trust. And so we wanted to be able to extend that into angel investing.

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NZVIF Media Release August 2019

Investors in New Zealand’s early stage capital markets are being invited to comment on policy settings for the new Venture Capital Fund.

Legislation to establish the new fund was introduced to Parliament last week. The Bill will be supported by a policy statement setting out the definitions and policies for the new fund, which will be managed by the New Zealand Venture Investment Fund (NZVIF).

A consultation document has today been released to early stage investment sector stakeholders to gather feedback on the policy statement.

Stakeholders include domestic and offshore venture capital (VC) investors, potential private sector investors in those funds, industry associations, industry service providers, incubators, accelerators, universities, government agencies, and the intended ultimate recipients of this capital, early stage high growth New Zealand companies.

In May the government announced the new Venture Capital Fund will receive up to $300 million over five years. The aim is to attract private sector investors to the domestic venture capital market in order to help these early stage innovative New Zealand companies to grow.

Once the Bill is passed ‐ which is expected to be later this year ‐ the Guardians of New Zealand Superannuation (Guardians, the Crown entity that manages the $42 billion NZ Super Fund) will appoint NZVIF to manage a fund‐of‐funds, with NZVIF in turn appointing a number of private sector VC fund managers over the following five years. It is anticipated initial capital commitments will commence early in 2020. These fund managers, which will include both domestic and international funds, will select the companies to invest in.

The Policy Statement sets out the high‐level policy directions for the Venture Capital Fund and the proposed policy parameters, such as the requirement for prospective VC fund managers to raise at least matching private capital.

The consultation process, which will be managed by MBIE, will run from 28 August through to 20 September. There will be a range of ways for stakeholders to engage with the process, including attending workshops, written submissions and the opportunity to meet with officials directly to present their views on the Policy Statement.

NZVIF chief executive Richard Dellabarca said the objectives of the Venture Capital Fund are twofold – to increase the Series A/B capital available to early stage high growth New Zealand businesses; and to develop New Zealand’s VC market to function more effectively, both so that more venture capital becomes available, and so that innovative businesses receiving capital become more likely to grow into successful and sustainable businesses.

“The consultation will help Ministers, officials and the Guardians shape the key definitions and policy directions which will be specified in the Policy Statement, and ensure they are clear, consistent, and able to achieve the objectives of the Venture Capital Fund which NZVIF will manage.”

“This consultation is specific to the Policy Statement, and is not intended to pre‐empt or supersede the legislative process on the new Venture Capital Fund Bill.  That Bill’s upcoming select committee process provides another opportunity, in addition to the consultation process, for interested stakeholders to provide input and direction.”

The Policy Statement and outline of the consultation process is available on request from
[email protected]
Media contact:
David Lewis +64‐21‐976 119

Why Kiwi Angels are so lucky

This article profiles a bunch of wonderful tech companies which exemplify why angel investment is so inspiring in NZ.
For a country with a population of under five million people, New Zealand regularly punches above its weight when it comes to producing star tech companies.

Giants like accounting software company Xero, church payments business Pushpay, and aerospace heavyweight Rocket Lab have gone on to global success but trace their roots to innovative Kiwi founders.

New Zealand’s tech success stories are well-known; the top 50 of this year’s NBR Rich List features Xero founder Rod Drury, TradeMe founder Sam Morgan, and US-based trailblazer Victoria Ransom, the Kiwi founder of social marketing company Wildfire.

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Angel-backed Fuel50 rocks on – $21m raise

We are so proud of the traction AANZ Executive Committee member, Jo Mills and her co-founder, Anne Fulton are getting.

Auckland software company Fuel50 has raised US$14 million ($21m) in its latest funding round and revealed its latest expansion plans.

Fuel50, which to date has raised $30m, was initially funded by New Zealand investors Ice Angels, Arc Angels and the New Zealand Venture Fund. Silicon Valley venture capital fund PeakSpan Capital led the latest investment round.

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What should angels look for?

Suse Reynolds, AANZ’s Executive Director talks about what to look for in a great deal, how to ensure alignment and the importance of being generous with honesty.

Every business goes through a life cycle: start-up, growth, maturity and renewal, rebirth or decline. Once you’ve made it past the juicy, creative ideation stage and into the growth and maturity stage, the time for many comes to seek investment. But how do you know what investors are looking for? And what do investors think New Zealand companies excel at, and therefore get excited about? We sat down with executive director of the Angel Association of New Zealand Suse Reynolds to figure out just that.

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AANZ 2019 Summit

2019 Angel Summit in Christchurch – Delivering exponential value … how growing a venture from New Zealand makes it uniquely possible!

US investment in kiwi startup

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.

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More international validation of kiwi startups

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.

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Super relevant points on high growth governance

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.

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How does NZ measure up? Startup Genome

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:

  • Top 10 Global Ecosystem for Agtech & New Food
  • Top 5 Activation Ecosystem for Life Sciences
  • Created $1.4b in Ecosystem Value with $150m in early stage funding over last 2.5 years
  • Regional sub-sector strengths are Life Sciences, and Agtech & New Food

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How does Aus measure up: Startup Genome

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.

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Angel-backed Invert Robotics gets VC funding

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.

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Ambit founders talk about fundraising

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.

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AANZ’S NEW CAPITAL RAISING TEMPLATES – Calculating the ‘Issue Price’ per share

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:

  • $1,000,000 investment;
  • the company’s agreed pre-money valuation is $3,000,000;
  • there are 3,000,000 existing shares (before the investment is made); and
  • the company has reserved 300,000 shares for an Employee Share Scheme / ESOP (and I’ll presume that no shares have actually been issued under any scheme).

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:

  • Existing Shareholders:  3,000,000 shares (73.17%)
  • New Investors:  1,100,000 shares (26.83%)

For the sake of completeness, if the 300,000 shares reserved for the Employee Share Scheme / ESOP were subsequently fully issued, then:

  • Existing Shareholders:  3,000,000 shares (68.18%)
  • New Investors:  1,100,000 shares (25%)
  • Share Scheme Employees:  300,000 shares (6.82%)

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.


Angel-backed Biomatters sold

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.

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AskNicely closes $US10m series A

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.

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Auz VC activity

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.

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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:

  • Term Sheet (equity investments)
  • Subscription Agreement
  • Shareholders Agreement
  • Constitution (for companies with ordinary shares)
  • Constitution (for companies with preference shares)

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.

Explanatory footnotes 

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:

  • understand the optionality and high-level impact of the various terms;
  • undertake further research, or seek independent advice, on the purpose and consequences of those terms; and
  • have greater confidence amending or removing terms that are not appropriate in the context of the investment.

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:

  • Subscription Agreement – focusing on the present-day subscription for shares (investment conditions, payment terms, warranty and disclosure regimes etc.); and
  • Shareholders’ Agreement – governing the enduring relationships between founders, investors and the company.

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:

  • Calculating the issue price per share: The new term sheet clarifies how the issue price per share is usually calculated. Even some experienced investors and companies have struggled with the concept under the old documents. A separate blog post on this topic will follow soon if you wish to delve into the detail further.
  • Board composition:  The AANZ term sheet introduces a more flexible approach to board composition arrangements.  Under the old templates, some founders felt shoe-horned into losing control of the company’s board without giving the issue proper consideration.
  • Tranchingand milestones:  The AANZ templates move away from tranching investments unless the context provides sound reasons for doing so.  If tranching the investment is agreed, then the guidance is that proper consideration should be given to developing appropriate milestones.  The aim is to avoid unintentionally incentivising the company to pursue a milestone where that milestone is no longer in the best interests of the company.  Milestones should be linked to the company’s planned growth path, and align with key commercial objectives.
  • Anti-dilution:  If anti-dilution protections are agreed, then a “broad based weighted average” provision is suggested as the starting point.  This is comparatively more favourable to existing shareholders than the “narrow based” or “full ratchet” provisions that were seen in earlier templates.
  • Founder vesting:  Founder vesting provisions allow the company to take back a portion of a founder’s shares if that founder leaves the company within the vesting period.  The point of founder vesting is that:

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.

  • NZVIF specific provisions:  The NZVIF specific provisions have been pared back to just the core reporting rights and prohibited business restrictions to align with NZVIF’s investment mandate. This allows parties to negotiate terms such as co-sale rights if it is desirable.
  • Simplified preference rights:  If preference shares are agreed, the AANZ template’s starting point is a 1x non-participating liquidation preference right without dividend preferences.
  • Regulatory updates:  The AANZ templates have been updated to reflect amendments to NZ’s Companies Act, and incorporate the requirements under the FMCA regime (including suggested safe harbour and eligible investor certificates to assist with compliance).

We intend to review the templates on an annual basis, and have a dedicated email address ([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’ Robbie Paul great advice

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.

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FNZC, Simplicity and K1W1 support Icehouse Ventures

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.

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Lead Partners

NZTE NZGCP PWC “NZX” Callaghan Innovation

Expert Partner

AVID “Jarden”

AANZ Summit Sponsors

“UniServices” Kiwinet “AWS” “BNZ” “Momentum” “Punakaiki” “MBIE” “GD1” “WellingtonUniVentures” “Movac”