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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Startup Genome and the Global Entrepreneurship Network Launch the Global Startup Ecosystem Report 2018

Released at the Global Entrepreneurship Congress (GEC) in Istanbul, GSER 2018 features strategic startup, investment and policy insights from over 10,000 founders in 60 ecosysytems – including New Zealand.

With insights ranging from the fast-growing dominance of ICT verticals to the filling of critical gaps in Success Factors both funding and startups, the Global Startup Ecosystems Report (GSER) 2018 continues to present thought-leadership and knowledge building driven by the world’s largest primary ecosystem research, Voice of the Entrepreneur. This is where we find out what it takes to build dynamic startup ecosystems with both local and global resonance and which cities around the world are doing it best.

Produced in partnership between Startup Genome and the Global Entrepreneurship Network (GEN) this year’s Global Startup Ecosystems Report launches at the Global Entrepreneurship Congress in Istanbul – signaling a strong commitment to advancing a greater understanding of startup ecosystems and the global network of capital and connections that drive them.

“We’ve now entered the Third Wave of innovation – where our global startup community is disrupting industries by combining technology with deep industry expertise. This is creating a potentially game-changing opportunity for smaller, less mature startup ecosystems that can now build out competitive advantage at a global level by focusing on their DNA and legacy strengths,” shares Startup Genome CEO and co-founder JF Gauthier.

A fitting occasion for the launch of this collaborative report, the Global Entrepreneurship Congress gathers thousands of entrepreneurs, investors, researchers, policymakers and other startup champions from more than 170 countries to identify new ways of helping founders start and scale new ventures around the world.

“Research in the field is vital to shaping the interventions necessary to empower entrepreneurs around the world,” said Jonathan Ortmans, president of the Global Entrepreneurship Network. “As thousands of startup champions gather this week to explore innovative approaches, efforts such as the Global Startup Ecosystem Report help us become better informed about what is needed.”

Incorporating data from Crunchbase and Orb Intelligence, as well as the voices of over 10,000 founders from 24 countries worldwide and counting – including some of New Zealand’s top startups like Flick Electric, Fuel 50 and Nyriad – GSER 2018 presents an incisive look at over 60 ecosystems. Through an analysis of startup output and legacy traits, it identifies the industries where each ecosystem has the most potential to build the vibrant economy for which it is uniquely positioned.

This year, GSER the report takes a close look at key sub-sectors such as Advanced Manufacturing & Robotics, Agtech, A.I., Big Data & Analytics, Life Sciences and Cybersecurity, as well as new technologies in education, health, advertising and finance. The sub-sectors in focus point towards imminent entrepreneurial revolutions. Thanks to SpaceX we may already have a car in space – but will we have greater diversity and value distribution on the ground and in our startup ecosystems? These are among key qualitative issues that GSER 2018 also looks at.

In the New Zealand ecosystem in particular, GSER provides a detailed look at the following subsectors: agtech and new food, health and life sciences and govtech.

Angel Association NZ has been delighted to partner with over a dozen ecosystem participants, including NZ Trade and Enterprise, Callaghan Innovation, the Ministry of Business Innovation and Employment, the tech and founder incubators, NZX and others to bring a wealth of insight to the New Zealand findings.

Commenting on the value of the report, outgoing AANZ Chair Marcel van den Assum said that not only did the report raise New Zealand’s profile with the 60+ other ecosystems also taking part but it provided insights into where we are best placed to focus our resources to enhance the impact of New Zealand startups and technology.

Download the full report here: www.startupgenome.com/report2018.

 

ABOUT US

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 30 members representing over 700 individual angels associated with New Zealand’s key angel networks and funds.

Startup Genome
Startup Genome works to increase the success rate of startups and improve the performance of startup ecosystems globally. Fueled by the Voice of the Entrepreneur – the world’s largest primary research conducted with more than 10,000 startups annually – Startup Genome advises leaders of innovation ministries, agencies and organizations supporting startups. It brings data-driven, actionable insights, clarity and focus needed to produce more scale-ups, jobs and economic growth worldwide. Visit www.startupgenome.com for more and stay up to date on Twitter or Medium.

The Global Entrepreneurship Network

The Global Entrepreneurship Network operates a platform of programs in 170 countries aimed at making it easier for anyone, anywhere to start and scale a business. By fostering deeper cross border collaboration and initiatives between entrepreneurs, investors, researchers, policymakers and entrepreneurial support organizations, GEN works to fuel healthier start and scale ecosystems that create more jobs, educate individuals, accelerate innovation and strengthen economic growth. For more, visit www.genglobal.org and Follow GEN on Twitter.

ENDS

For interviews and further enquiries, please contact us:

Dinika Govender
Communications, Startup Genome
[email protected]

Jessica Wray Bradner

Communications, GEN
[email protected]

Suse Reynolds,

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

Marcel van den Assum,

AANZ chair and 2015 Arch Angel
mob: 021 963 459 or email: [email protected]  

 

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Two New Angel Awards Announced

MIG Angels’ Dean Tilyard and PowerbyProxi recognised

In recognition of Angel Association New Zealand’s 10th Anniversary Summit two new awards have been announced to augment the Arch Angel Award which was first awarded in 2009 to Sir Stephen Tindall and yesterday awarded to Debra Hall.

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 inaugural Puawaitanga Award has been presented to PowerbyProxi’s founder Fady Mishriki and investor-director, Movac partner David Beard. Movac were the first angel investors in the company after Fady and his business partner, Greg Cross founded the business in 2007 with the Icehouse becoming the first external shareholder joined in the following years by UniServices. Auckland-based IceAngels investors also contributed capital in later rounds alongside other investors including Evander Management. PowerbyProxi was recently acquired by Apple for an undisclosed sum.

In making the award, Angel Association Chair, Marcel van den Assum said Fady and Dave are shining examples of what great alignment can achieve.

“A consistent message in angel investment is the importance of founder and investor alignment. Both parties need to be committed to the same end-point.  This has clearly been the case with PowerbyProxi. From the outset, eight and a half years ago, both Fady and David were in sync on the end game; to generate stunning returns, financially for the investors and just as importantly for the New Zealand economy,” he said.

PowerbyProxi employs over 50 people and holds over 300 wireless charging related patents.

The first recipient of the Kotahitanga Award is MIG Angels founder, Dean Tilyard.

Dean founded MIG (Manawatu Investment Group) Angels in 2007. Since then the group has raised in excess of $20m for 19 technology based and largely agtech companies. Dean led the fund raising for two MIG Angels side-car funds, and oversees the investment committee to co-invest with MIG members. Dean was instrumental in the establishment of the Sprout Accelerator, which has 16 agtech alumni. Companies taking part in Sprout have gone on to triple their sales and raised $2m in funding. Dean was Treasurer of the Angel Association from its inception in 2008 until 2016.

“Dean is the kind of leader and influencer who has a tremendous impact on all those who work around him by leading powerfully and unobtrusively.”

“Dean has spent countless unpaid hours with founders and budding angels mentoring, encouraging and inspiring them all. He has also championed early stage investment to others on the periphery of angel investment; those whose support is vital to the successful growth of New Zealand’s startup ecosystem,” said Marcel.

–Ends–

For more information, please contact:

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

Marcel van den Assum, AANZ chair and 2015 Arch Angel
mob: 021 963 459 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 30 members representing over 700 individual angels associated with New Zealand’s key angel networks and funds. Recent NZVIF data revealed angels have invested more than $NZ484m in over 928 deals and 296 companies in the last 10 years. AANZ works closely with NZTE and Callaghan Innovation and a number of private sector partners including NZX, First NZ Capital, PWC, Avid Legal, AJ Park, KiwiNet, Uniservices and Spark Ventures. For more, please visit: www.angelassociation.co.nz

 

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Debra Hall named New Zealand Arch Angel 2017

One of New Zealand’s most ardent angel investors, Debra Hall, has been awarded the Angel Association of New Zealand’s (AANZ) prestigious Arch Angel Award at the 10th Anniversary NZ Angel Summit on Waiheke Island.

The Arch Angel Award is the highest honour in New Zealand’s angel investment community, and recognises individuals who reflect the qualities of the best angel investors and who are champions for the endeavour.

The award recognises the significant amount of time and money angels contribute to startups and early-stage companies – and specifically to their founders and teams – to help them reach their potential while also recognising angels who make a significant difference to New Zealand’s startup ecosystem

Debra has made many investments in early-stage companies and been an investor director for a number of these ventures. She has held governance roles with Auckland-based IceAngels, the Angel Association itself and is currently an Advisory Board member for the first Chinese founded angel investment group, Zino Ventures. In 2015 Debra received IceAngels “William H Payne, Active Angel Award”.

AANZ Chair and 2015 Arch Angel recipient, Marcel van den Assum, says Debra imbues all the qualities of a top-notch angel.

“She is not only an active investor, contributing money and the deep expertise she has from scaling and selling her own market research company, but Debra also genuinely cares about the founders she backs, providing personal and practical advice which is a vital part of the more holistic role angel investors play,” he said.

Marcel, who worked with Debra during her time on the AANZ Council, said her contribution to the angel investment in New Zealand is marked.

“The passion and energy she brings is extraordinary, whether it’s developing and delivering a specialised course for aspiring directors of angel-backed companies, or on the boards of companies she’s backed, advising entrepreneurs, making deals happen by bringing people together or cajoling and gathering data on our community, Debra has made a very real impact and lifted the professionalism, profile and reputation of angel investment in New Zealand.”

Andy Hamilton, recipient of the 2011 award, has known Debra since she began angel investing in 2007 and said she had been a dedicated and invaluable member of IceAngels, renowned not just for her deal making capability but also for the lively dinners she and her husband Peter have hosted over the years for dozens of international visitors.

Interviewed in Startup Young Company Finance Report’s October 2016 edition, Debra noted that she and Peter had heard about IceAngels through a connection who knew Andy Hamilton and subsequently received an introduction to the group.

“In those days, from the outside, it looked to me like a secret society,” Debra said. She subsequently discovered that wasn’t the case – “all angels are very welcoming of new members and in fact eager to get new angels on board,” she said.

“Peter and I invest together and we only invest in companies we both agree on. We’ve taken small and big investments across a diverse range of companies – from technical manufacturing, to biotech, to software businesses.”

It was in this article that Debra set out why she is so passionate about the role good governance plays in the success of angel-backed companies.

“Governance is often seen as an inconvenience or intrusion by founders, however an effective board is actually critical to their success. With many of these companies, we’re dealing with a team that has never run a business before, so experienced directors are not just bringing classic governance to the table, they’re bringing their contacts, business experience and willingness to take on risks – often for minimal remuneration,” Debra pointed out.

Debra received her award at the 10th Anniversary NZ Angel Summit, held at Cable Bay Winery on Waiheke Island and attended by 150 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.

South African born, Debra was that country’s first female metallurgical engineer. After immigrating to New Zealand, her career changed tack when she took on a job for a market research company that allowed her to work from home. She found a passion for the sector, leading her to establish the market research company Research Solutions in 1992. It grew into one of the country’s leading market research consultancies, and was sold to global market research giant, Synovate in 2007. She chaired the New Zealand Marketing Association for a number of years.

Former Arch Angel winners also 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; veteran angel investor Dr Ray Thomson; prolific AngelHQ member, Trevor Dickinson and current AANZ Chair, Marcel van den Assum.

–Ends–

For more information, please contact:

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

 

Marcel van den Assum, AANZ chair and 2015 Arch Angel
mob: 021 963 459 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 30 members representing over 700 individual angels associated with New Zealand’s key angel networks and funds. Recent NZVIF data revealed angels have invested more than $NZ484m in over 928 deals and 296 companies in the last 10 years. AANZ works closely with NZTE and Callaghan Innovation and a number of private sector partners including NZX, First NZ Capital, PWC, Avid Legal, AJ Park, KiwiNet, Uniservices and Spark Ventures. For more, please visit: www.angelassociation.co.nz

 

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Angel Investment Tracking Well – First Half Year Results

With the Angel Association to hold its 10th Anniversary Summit at the end of the week, first half year results show angels are investing at rates on a par with previous years and that the upwards trajectory of interest in the sector continues.

Reporting on the activity of its members tracked by the NZ Venture Investment Fund, Angel Association Chair Marcel van den Assum said $20.2m dollars was invested in 29 deals in the first six months of the year. Reflecting previous years, the split between new deals and follow-on funding was one third/two thirds.

Mr van den Assum went on to note that typically there is a substantial uplift in activity in the second half of the year.

“The level of deal flow being generated by accelerators such as Wellington’s Lightning Lab, the Manawatu’s Sprout and Auckland’s Flux together with the establishment of new networks this year such as Zino Ventures, Angel Investors Marlborough and Hawkes Bay Angels bodes well for another record year of investment,” said Mr van den Assum.

“When record keeping began in 2006, only 30 deals were done and $21m was invested. Annual investment has now exceeded $50m per annum for the last four years and grown by an average of $5m a year to reach nearly $70m in 2016,” he added.

“A decade into this endeavour it’s pleasing to see three angel-backed ventures deliver returns this year,” said Mr van den Assum.

PowerbyProxi was sold to Apple, Publons to US-based Clarivate and IMeasureU to UK-based Oxford Metrics.

This year’s 10th anniversary angel summit is being held back where it all started in 2007, on Waiheke Island. The focus will be on what is required to build on the success of the last decade which has seen almost $500m invested into nearly 1000 deals. Ten years ago there were just 4 angel networks with about 100 members. Today there are a dozen networks operating from Dunedin to Auckland with over 700 angels contributing capital, connections and expertise to about 100 ventures a year. All this activity has delivered hundreds of jobs and tens of millions of revenue for the country and is now beginning to generate the returns required to ensure the endeavour is sustainable.

–Ends–

For more information, please contact:

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

Marcel van den Assum, AANZ chair and 2015 Arch Angel
mob: 021 963 459 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 30 members representing over 700 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 NZX, First NZ Capital, PWC, Avid Legal, AJ Park, KiwiNet, Uniservices and Spark Ventures. For more, please visit: www.angelassociation.co.nz

 

New Zealand Venture Investment Fund
The New Zealand Venture Investment Fund invests with venture capital funds and alongside angel investors to support New Zealand technology companies with start-up and growth capital. The NZVIF was established by the New Zealand government in 2002 to build a vibrant early stage investment market in New Zealand. Recent NZVIF data revealed angels have invested more than $NZ484m in over 928 deals and 296 companies in the last 10 years. NZVIF has $245m of funds under management which are invested through two vehicles: the $195m Venture Capital Fund of funds and the $50m Seed Co-investment Fund. All investments are made either through privately managed venture capital funds, or alongside experienced angel investors. For more please visit: www.nzvif.co.nz.

 

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Idealog’s Guide to Tauranga: Follow the money

Businesses in Tauranga looking to scale up should count themselves lucky: the Bay of Plenty is one of the only regional centres in New Zealand with funding available for nearly every stage of business growth. There are three organisations on hand ready to help: early-stage investment provider Enterprise Angels, tech investor and incubator WNT Ventures and later-stage private equity provider Oriens Capital.

For companies in the early stages of investment, WNT Ventures is technology incubator that’s been put together to nurture innovative ideas nationwide. It’s currently on a five-year pilot trial receiving government support through Callaghan Innovation.

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Wherewolf sets course for US after raising $550K

Adventure tourism software developer Wherewolf is gearing up for a push into the US after securing $550,000 of angel investment.

The Queenstown-based firm plans to open an office in the States on the back of the over-subscribed funding from the Flying Kiwi Angels.

Co-founder Ben Calder, who has just returned from a month-long trip to America to look at office locations and talk to potential partners, said the investment will allow the company to increase functionality as well as increase sales in the northern hemisphere.

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Kiwi tech company raises millions for expansion

Kiwi technology company Feijipiao is expanding across New Zealand and eyeing other markets after closing a multi-million dollar angel investment round.

The company, founded in 2016 by Peter Li, is a Chinese language online travel business, offering flight bookings across multiple airlines in Chinese.

The website offers competitive fares and multiple payment solutions, in either Chinese yuan or New Zealand dollars, through automated search, booking, and ticketing processes.

The investment was headed by The Icehouse and Chinese-led angel fund Eden Ventures – its first investment.

Led by Chinese venture capitalists and entrepreneurs, Eden Ventures focuses on high performing start-ups, with specific interest in serving Chinese in New Zealand or enabling New Zealand founders to launch into the Chinese market.

The funding values Feijipiao at between $5 million and $10m, and would be used to hire staff, open its first New Zealand office in Auckland and fund further growth, as well as prepare the business for expansion into Australia and other markets.

The company was already bringing in revenue of about $900,000 per month, with Li saying he expected this to hit $1m in the coming few months.

Icehouse fund manager Jason Wang said both groups had invested based on Feijipiao’s growth in the five months since it launched, as well as the potential they saw for it.

“In three months, feijipiao.co.nz have transacted millions of dollars without a physical office, it’s all in the cloud.

“The results speak for themselves – this is a group of the right people doing the right thing in the right market.”

The company’s success had been helped by millennials influencing the purchasing behaviours of their parents, who tended to use more traditional travel agents Li said.

The investment would enable the company to continue its expansion as well as providing strategic value for the firm.

“Our team has built a strong foundation in New Zealand to prepare ourselves for expansion into global markets with established Chinese communities, and international students from China.

“By partnering with Eden Ventures and The Icehouse, we can tap into their expertise of forming long-term growth strategies for global expansion, and supporting technology driven companies.”

First published on nzherald.co.nz on 15 Sept 2017

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Hawkes Bay Angel Summit deemed a success for national and international attendees

The Angel Association of New Zealand’s annual Angel Summit in Hawke’s Bay last week was “brilliant” in every way, says executive director Suse Reynolds.
“The weather was gorgeous, the food was gorgeous and the people were wonderful,” she said.
She said it was a very productive two days for the 120 delegates, with some of the key issues being collaboration, the importance of New Zealand Inc and balancing investment with return – the conflicting need for return on investment with wider economic/social goals.
She said the Black Barn venue helped foster good relations between attendees.
“Business is all about people and it is important to build the foundations of trust.”
Angels flew in from throughout New Zealand and overseas.
“The New Zealand Angel Summit has a reputation for being the world’s best angel conference destination. Last year when we had it in Queenstown we had 50 international visitors from a dozen different countries. We didn’t quite manage it this time around because last year’s was the Asian business angels forum and this year we were back to our New Zealand Angel Summit, but we still had Australian’s Chinese, Americans, Canadians and one Skyped-in from Zurich.”
Summit activities included an address from Economic Development Minister Steven Joyce, a visit to Rockit Apples’ packing shed and a dozen investment-related presentations.
One of New Zealand’s most prolific angel investors, Trevor Dickinson, was awarded the prestigious Arch Angel Award in Hawke’s Bay, which recognises individuals who have “steadfastly championed the cause of angel investment and investors”.
He has made more than 50 investments in early-stage and startup companies – the vast majority of which are angel-backed firms from throughout the country. He is on the board of Wellington-based angel investor network Angel HQ, and received the organisation’s first lifetime membership based on the value of his investments made through the group.
Angel HQ manager Dave Allison said his contribution to the angel investment community was marked.
“The energy and enthusiasm he brings is extraordinary, whether it’s on the boards of companies, or advising entrepreneurs, or making deals happen by bringing people together,” he said.
The English-born former geologist worked in the UK oil and gas industry before mortgaging his house to develop state-of-the-art measurement-while-drilling technology.
GeoLink success allowed him to retire to New Zealand where he was a founding investor in startups including Lightning Lab, Wipster, HydroWorks, Nyriad, Cloud Cannon, 8i, Flick Electric and Times-7.
Former Arch Angel winners also include The Warehouse founder and long-time angel investor Sir Stephen Tindall and Andy Hamilton, chief executive of Auckland-based incubator and business educator The Icehouse.
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Theresa Gattung Venture Capital fund

ArcAngels and Angel Association New Zealand today welcomed the launch of Theresa Gattung’s new Venture Capital fund which aims to raise capital from women, for women entrepreneurs.

“Boosting the pool of capital for entrepreneurs is vital for New Zealand’s ecosystem of start ups to grow,” said Cecilia Tarrant, Chair of ArcAngels, a New Zealand based angel organisation focused on funding women entrepreneurs.

“As an organisation, focused on women-founders, we are delighted to hear Theresa Gattung, one of New Zealand’s preeminent business leaders has launched an initiative to fund women entrepreneurs, supported by women. Having a Venture Capital fund will help expand the capital and mentorship female entrepreneurs need to develop their businesses,” Tarrant said.

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Simon Brown: Entrepreneurs and investors descend on Hawke’s Bay

For two days last week the Black Barn Winery in Havelock North was the focus of the world’s venture capital and angel investor communities.
Entrepreneurs and investors from New Zealand, Canada, North America, China and Europe spent last Thursday and Friday at the 2016 NZ Angel Summit discussing investment strategies, sharing their expertise and creating opportunities for innovative Kiwi start-ups in need of early stage finance.
These were some of the most successful investors in their field. People like North American business and equity finance consultant Ross Finlay, who has come to New Zealand with the support of Callaghan Innovation to help local businesses understand what Angel Investors expect from them, to show them how to establish relevant relationships and introduce them to North American and NZ Angel networks.
Ross has secured 35 Angel investment deals in recent years and has assisted in the development and review of countless business plans for start-up companies.
He has extensive networks within the world of international finance and he knows how to leverage them for the greater economic good.
Hawkes Bay’s stunning environment was a bonus for local and international financial high flyers like Ross but they weren’t here primarily for the scenery. These were all seasoned and experienced business people who have made their money in a range of sectors.
Naturally, they’re looking for a return on their investment but they’re also motivated by a desire to help others with the same drive and ambition they have and, crucially, to do their bit to grow the New Zealand economy.
Government ministers and officials, colleagues from Callaghan Innovation and the nationally located business incubators also attended the summit.
They came away with re-enforced enthusiasm and confirmation of the optimism and dynamic evolution in this fast growing sector of our economy.
Last financial year was a record breaker in terms of deals made with Kiwi start-ups and dollars invested.
Deals worth a total of $61.2 million provided 92 creative and passionate New Zealand entrepreneurs with the kick start they needed to get their great idea off the ground. In addition to this investment, Callaghan Innovation supported 152 start-ups through incubators.
That’s an unprecedented deal flow and a strong indication that NZTE’s Investment Showcase events and Callaghan Innovation’s incubation funding and accelerator programmes are bearing fruit.
New Angel regional networks are forming. Syndicated Angel funds are proliferating and long standing networks are experiencing a surge of interest. Wellington’s Angel HQ, for example, has gained 30 new members in just the last six months.
Increasingly businesses are successfully exiting the start-up phase of their journey but still face challenges in accessing growth capital and appropriate commercialisation expertise. International capital exists but the New Zealand eco-system is looking at how it can work better together to facilitate the access to it.
We’re doing great but we can do better. Investment in research and development in New Zealand still lags behind OECD countries. Areas like SaaS, FinTech, AgriTech and other areas of the digital sectors are doing well but there are also great ideas brewing in MedTech, BioTech and food and beverage production.
A few of those could well be the disruptive industries we need to take New Zealand and the world into a healthier and wealthier future.
– Simon Brown is general manager accelerator services of Callaghan Innovation

First published – NZ Herald 6 November 2016

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‘The jockey’ key for angel investing

Investing in high growth companies is like a long horse race and understanding the jockey you’re betting on is key for angel investors, says veteran Canadian angel investor Ross Finlay.

Finlay, co-founder and director of the First Angel Network Association in Atlantic Canada, is one of the international speakers at the annual Angel Summit in New Zealand underway in Napier.

He said before angels commit their money they have to pick the right jockey and the earlier stage the company is, the more that matters.

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Trevor Dickinson named New Zealand Arch Angel 2016

One of New Zealand’s most prolific angel investors, Trevor Dickinson, has been awarded the Angel Association of New Zealand’s (AANZ) prestigious Arch Angel Award at the 2016 NZ Angel Summit in Hawke’s Bay.

The Arch Angel Award is the highest honour in New Zealand’s angel investment community, and recognises individuals who have steadfastly championed the cause of angel investment and investors.

The award highlights the work of angel investors who give a significant amount of their time and money to help startups and early-stage companies – as well as their founders and teams – to reach their potential.

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MEDIA RELEASE: Canterbury Angels flying with new partnership

The New Zealand Venture Investment Fund is partnering with the newly formed Canterbury Angels to invest into start-up companies. The Christchurch-based angel investor group was formed in 2015 and now has 35 members, most of whom are experienced investors or have been involved in establishing businesses previously.  Its leadership includes chair Ben Reid, who chaired the Canterbury Software Cluster, Shane Wakelin, Joan McSweeney, Ria Chapman, Mark Cathro, Raphael Nolden, Ian Douthwaite, and SLI Systems co-founder Geoff Brash. Canterbury Angels chair Ben Reid said the partnership will bring more investment into innovative companies in the Canterbury region and around New Zealand. The new investment partnership with NZVIF means that when Canterbury Angels invests into a new company, NZVIF will match investments dollar-for-dollar giving both investors and entrepreneurs confidence that the investment round will be successfully completed. Our focus will be on new companies emerging in Christchurch and nearby.  But our members will also invest in syndicated opportunities throughout New Zealand to ensure we have a broad portfolio of companies. “Based on our experience to date, we expect to see a healthy deal flow.  There are a lot of innovative ideas in Christchurch that are seeking capital.  We have two universities which produce high quality research.  We work closely with other parts of the innovation ecosystem in Christchurch, such as EPIC, Lightning Lab, Greenhouse and the newly-opened Vodafone Xone.  As new startups emerge from the ecosystem, this partnership will help to provide some of the early stage capital to meet their needs. “Our expectation is that the partnership will run for around four to five years, investing into around 10 to 15 young companies during the first 12 to 18 months. With NZVIF committing on a matching 1:1 basis with Canterbury Angels investors, it doubles the capital available to a company than would be the case if we did not have the partnership.” This is the sixteenth partnership NZVIF has entered into through its Seed Co-Investment Fund and the second in Christchurch, having previously partnered with Powerhouse Ventures.  To date, NZVIF and its angel partners have co-invested around $142 million into over 150 companies. NZVIF investment director Bridget Unsworth said that the new partnership is needed to keep up the momentum in the angel investment sector. “The past year has seen continued healthy investment activity across New Zealand with over $60 million invested by angel funds and groups.  Christchurch sees around 10 percent of angel investment activity.  With Canterbury Angels now actively investing alongside other early stage investors, it provides another source of capital for entrepreneurs in Canterbury. “There is a healthy level of syndication of investments between different angel groups meaning they are likely to invest in opportunities throughout New Zealand.  This allows groups like Canterbury Angels to diversify their portfolios beyond just the local opportunities.  Early stage investing is a high risk investment class and so diversification is important. “Current investment activity is healthy and there is a good pipeline of young technology companies needing investment capital to develop.  Since NZVIF began collecting the data in 2006, angel groups have invested over $400 million into young technology companies.” BACKGROUND INFORMATION Canterbury Angels Canterbury Angels is a new angel network and was established in 2015.  It aims to be a broad-based network drawing in investors from throughout Canterbury.  It currently has 35 members and has made four investments in its first year. NZVIF’s Seed Co-investment Fund NZVIF is involved with angel investors through its Seed Co-investment Fund (known as SCIF).  SCIF was established in 2005 to catalyse the growth of angel investment and has now invested into over 150 companies.  Its portfolio includes Christchurch companies like Hydroworks, Crop Logic and Invert Robotics.

Media contacts NZVIF: David Lewis, m: 021 976 119, [email protected]

Canterbury Angels: Gabby Addington, [email protected]

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MEDIA RELEASE: Angels solid during first half

Angel fund investment was solid with $22.9 million invested during the first six months of the year, according to the latest Young Company Finance Index. The result was $3.3 million (or 17 percent) higher than the same period in 2015, although below the strong first half year periods seen in 2013 and 2014.

New Zealand Venture Investment Fund investment director Bridget Unsworth said the $22.9 million was invested across 46 deals, of which 78 percent ($17.9m) was follow-on investment and 22 percent ($5m) was new investment.

“This split was similar to the first half of 2015 and shows that investors were primarily supporting existing investments rather than funding new companies, following a period of much larger investing into new deals in the second half of 2015.”

Forty-six percent ($10.3 million) was invested into software and service companies, continuing that sector’s strong performance.  The next most active sector for investment was pharmaceuticals and biotechnology with 20 percent ($5.6 million) of investment.

Local early stage companies continue to attract overseas investors’ attraction. In addition to the $22.9 million of local investment, the angel-backed companies attracted a further $8.5 million from international strategic investors.

Angel Association chair Marcel van den Assum said it was great to see continued strong commitment from angel investors.

“We all know that angel investment stands or falls on the quality and volume of deal flow. There is no shortage of either at the moment with good opportunities also emerging from accelerators. This is very positive but it does create ‘pipeline’-pressure. Great deals will only be sustained with deeper pools of non-angel growth capital as angel-backed companies develop and need new capital to continue to deliver on their potential.

“Follow-on rounds continue to dominate, reflecting an appetite to realise business potential and generate returns.  Pleasingly, we are now seeing angel groups distinguishing between follow-on for companies meeting milestones and targets, rather than follow-on to keep investments alive.

“Emerging angel networks in Canterbury and Taranaki will gain confidence from this level of activity and their addition to the sector will support the increasing demand for capital and capability.

“It is pleasing to see the growing trend towards biotech investment, which should be an area of real strength for New.”

After a very busy period at the end of 2015, the 12 months to 30 June 2016 saw $64.5 million invested into young companies, continuing the strong trend over the past few years.  Cumulatively, $438 million has now been invested into young companies by angel funds and networks since the Young Company Finance Index began measuring activity in 2006.

Three angel-backed companies launched crowdfunding rounds and raised $1.87 million (all from Equitise).

 

 

 

 

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ABAF 2016 Trip Reports

Every year the Angel Assn supports some of our lead investors to attend key international events. We see this as an investment in the growth of “great angels” as these people learn about best practice approaches to angel investment and even more importantly make the sorts of connections that are vital to the success of their angel-backed ventures. Lead investors Brian Steele, Simon Swallow and Dana McKenzie recently attended this year’s Asian Business Angels Forum in Seoul. You can read their report and check out the connections they made here

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Fintech Innovation Challenge is open for entries

If you’re a fintech startup with the potential to transform the financial services industry, then Payments NZ wants to help you.

They want to help you raise your profile in the industry. They’re running a Fintech Innovation Challenge as part of their conference, The Point 2016, in November and the challenge is now open for entries.

It is widely known that fintech is redefining the financial services sector, with startups  gaining momentum and disrupting the traditional value chain. So in the new world of challenger brands and disruption, in order to progress and keep challenging the norm, fintech needs support.

The Fintech Innovation Challenge, sponsored by Paymark, is designed to foster innovation and support Kiwi startups. The challenge gives emerging fintechs the opportunity to present their concepts in front of the entire conference delegation, of around 250 payments and financial services professionals.

Five finalists will compete in a round of quick-fire presentations to win a cash prize of $5,000 as well as mentoring support and associated networking opportunities.

The finalists and runners-up will also have the opportunity to exhibit on the fintech stand at the conference, enabling one-on-one time with key influencers, decision-makers, and potential business partners.

The finalists and runners-up can also attend conference sessions to access global insights and the latest market intelligence from local and international speakers.

How to enter

The Fintech Innovation Challenge is open to new or recently established innovative, technology-enabled startups and entry is free.

So if you’re an innovative fintech startup working in any area of financial services or supporting sector such as cyber-security, digital identity and data analytics, don’t miss the opportunity to expand your network and gain visibility – get your entry in today.

Applications close at 5pm on Monday 12 September 2016.

You will find the application form on the Payments NZ conference website along with further details about the competition.

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USA ACA trip reports

In May, a “Kiwi Contingent” of about a dozen angels attended the US Angel Capital Association conference in Philadelphia. Five lead investors were awarded an AANZ “scholarship” to support their attendance at the conference. Susan Iorns from AngelHQ, Blake Richardson from Flying Kiwis, George Gong from Ice Angels, Christopher Boyle from MIG Angels and Tina Jennen from Enterprise Angels have all completed reports on the conference. Some of their key insights included; no one ever thinks they changed the management of an angel backed company too soon, company boards must regularly discuss the exit, look for founders who are obsessed with making the business work, the CEO should not lead the exit, there are so many people to learn from at the ACA conference and angel investment is in the best place it’s ever been. You can access all the scholarship recipient’s reports and read more here.

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Follow These Tips To Get The Best Acquisition Price For Your Startup

As angel investors we always seek ways to improve our investment odds. Through the years I’ve uncovered one sure bet: Invest in companies that bring value to strategic buyers so that the price of the acquisition increases.

To do this, it’s first important to understand what a strategic buyer is. A great person to ask is Craig Mullett, an active Angel Capital Association member and investor with the Angel Investor Forum in Connecticut, and co-founder of AngelHub in his native South Africa. Mullett isn’t your average angel. He’s also founder of Branison Group LLC, which provides buy-side merger and acquisition advisory services to business owners, corporate executives and private equity groups. Mullett says, “The vast majority of startup buyers out there are strategic. They want to buy your company because it can help accelerate their growth and build their own value quickly.”

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The Icehouse welcomes new leaders with diverse expertise to its governance

The Icehouse announced the appointment of new directors to its board, in addition to welcoming new trustees to its owner, the International Centre for Entrepreneurship Trust which is a charitable foundation. Greg Tomlinson, Jonathan Reid and Kerry McIntosh are the three new directors to join The Icehouse board, with Simon Bennett, Craig Carr and Franceska Banga joining as trustees of the Foundation.

Their appointments come at a time when The Icehouse is undertaking a review and refresh of its goal to 2020 of enabling a 10% lift in the country’s GDP while the Foundation starts to broaden its charitable reach within New Zealand.

With backgrounds ranging from construction to agribusiness, investment banking to mussel farming, and technology to recruitment; Chairman of The Icehouse Board, Chris Quin, says these entrepreneurs and experts bring a diversity of approach and thinking to The Icehouse which will be critical for its ongoing performance and contribution to New Zealand.

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Ask the expert: where to go for funding

OPINION. Q: I need to raise funds to upgrade the IT infrastructure for my small business. What’s available and how do I access it?

A: That depends on a range of factors such as your current finance structure (are you in debt, highly leveraged, debt-free?), what stage your business is at and how much you need.

But, before you explore external capital raising options, ensure you’ve covered off any internal sources such as savings you can access or surplus assets in the business that could be liquidated to raise funds.

Once you’ve done that, you then need to calculate how much more funding you’ll need by preparing cash flow forecasts.

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NZ Startup secures Investment ex Japan

Expectations of consumer electronics development are nowhere higher than in Japan. Tokyo-based Start Today owns ZOZOTOWN, the largest online retailer of apparel and accessories, and WEAR, the largest fashion coordination app. So no wonder that Start Today has made a strategic investment in StretchSense, a leading enabler of wearable technology. StretchSense makes soft stretchy sensors and generators for wearables. The products are ultra-soft and precise, making them ideal for sporting, AR/VR, animation, and healthcare applications.

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Still focused after all those years

In 15 years The Icehouse Business Growth Hub has morphed from one owner manager programme and an incubator to a full suite of services for businesses, including an investment arm. CEO Andy Hamilton reflects on a satisfying journey.

After a career spanning law, marketing and corporate investment, one winter’s day in June 2001 Andy Hamilton found himself standing in leased premises in Parnell’s landmark Textile Centre, with two months to organise a programme for owner managers. The BNZ would help source the 20 business owners, but meantime the programme had to be sorted, premises fitted out and start-ups found for the incubator. Working out of Auckland University, Andy was grateful for the support of the University’s Business School, and Geoff Whitcher and David Irving in particular.

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How the queen of Silicon Valley is helping Google go after Amazon’s most profitable business

The first thing to understand about Diane Greene, the woman Google acqui-hired in November to transform its fragmented cloud business, is that she has the mind of an engineer.

Cool technology, elegantly designed and built, lights her up. Even her jokes tend to be geek oriented.

(A lifelong competitive sailor, she was a mechanical engineer who built boats and windsurfers before she became an iconic Silicon Valley computer scientist.)

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Bay private equity fund targets regions

A new region-focused private equity fund, Oriens Capital, has been launched in the Bay of Plenty and expects to hit its first closing target of $30 million within the next month. It is understood to be the first regional fund of its type in New Zealand.

The Tauranga-headquartered fund has been in gestation for a couple of years and is aimed at filling a gap in regional funding sources. The Bay already has WNTVentures, focuses on incubating extremely early stage tech companies, and the country’s biggest angel investor group, Enterprise Angels.

“There is a gap in the market,” said James Beale, who is chief executive of the new fund’s management entity.

Peter Tinholt will serve as chief operating officer of Oriens Capital, which has also lined up a strong, well-connected board (See story below).

“We will be targeting profitable mid-market companies that have growth opportunities. The biggest problem for all these businesses right now is that there is no formal source of capital, so we are going to fill a really niche space.”

The fund is aiming to complete up to eight investments in companies with an enterprise value of from $10 million to $50million during its initial five-year life, with individual stakes of $3 million to $10 million. Oriens Capital plans a second fundraising round to bring the total up to $60million.

The new fund has a distinctive structure in that investors in the Limited Partnership will also receive a stake in the ownership of the General Partnership, providing full alignment of interests and reduced costs, Mr Beale said.

Mr Tinholt said the fund had been getting good support, with commitments from Quayside Holdings, TECT, iwi and high-net-worth investors.

Scott Hamilton, chief executive of Quayside Holdings, the investment arm of the BOP Regional Council, said Quayside was approached by many private equity funds.
“Oriens Capital opens up the opportunity to achieve the same return profile through having something focused closer to our own backyard. Genuine growth in businesses is genuine capital growth and that’s what we want to see. It grows jobs, salaries and exports.”

Carl Jones, chief executive of WNT Ventures, said Oriens Capital was a fantastic addition to the region.

“You’ve got the full flow-through from the early and seed stage we do and Enterprise Angels and now on to the mid-market,” he said.

“That’s something that hasn’t been here before.”

Enterprise Angels executive director Bill Murphy said the new fund would provide access in the region to funding for all the critical stages of a company’s growth.

“It’s a tremendous outcome for us as a region and very positive for the business community.”

Tauranga MP Simon Bridges said the new fund would be valuable for business and the wider community.

“It’s also a sign of the growing maturity of our area where we are starting to see new financial tools that weren’t around before.”

Bay of Plenty MP Todd Muller said the fund’s promoters had been smart in seeing the opportunity in the mid-market, and the regional pipeline.

“The fund is a great addition to the regional economy of New Zealand and I have every sense it will be successful.”

Colin McKinnon, executive director of the New Zealand Venture Capital Association, said the fund’s focus was unique.

“NZVCA welcomes the opportunity for new investors to get involved in private equity. And it’s interesting there’s been enough interest in a regional fund to lead to its establishment.”

The challenge was going to be around ensuring diversity of the portfolio and deal flow, he said

“But it’s very positive for the asset class.”

Bay of Plenty’s New Funding Ecosystem:

* WNTVentures – incubation

* Enterprise Angels – early stage

* Oriens Capital – growth capital

Experienced executive team at helm of Oriens Capital
Oriens Capital will come into operation with a very experienced executive team and the support of a well-connected board that is expected to help drive deal flow.

Chief executive James Beale has 20 years of experience, including 14 years at Craigs Investment Partners, where his roles included chairing the investment committee.

Most recently, he has been running his own firm, meeting a need in the region to assist private companies in raising capital.

Chief operating officer Peter Tinholt was a management shareholder in successful exporter Taura Natural Ingredients and left after the company was acquired late last year.

Oriens Capital has also identified a chief financial officer who has extensive experience in private equity. All three key executives will also be investing as LPs.

The founding board of the GP will be chaired by John McDonald, a director of Pohutukawa Private Equity, and a former executive of Fletcher Challenge.

Other directors include Neil Craig, founder and chairman of Craigs Capital Partners – who has been a key supporter of the new fund – and Michael Smith, a director of Port of Tauranga and Quayside.

Once the fund is established, Mr Smith and Mr Craig will be replaced by representatives of the three largest LPs, and Mr Craig will move to the LP board.

Other LP director designates include Colin Groves, a former director of M&A for global packing giant Tetra Laval, Richard Hughes, a director of WNTVentures, as well as Mr McDonald and another GP to be determined.

The investment committee will consist of the executive team, plus Colin Groves, Neil Craig and Richard Hughes.

Also designated are Bob Major, who has significant executive experience with Fonterra, and Dallas Fisher, a shareholder/director of NDA Group.

One other committee member will also be appointed. The focus of the new fund will be very much on regional cornerstone investors focusing on regional New Zealand capital growth opportunities, with specific flow-on benefits from within the BOP-Waikato triangle.

“One of the really important features of the new fund is the network of people appointed and the LPs,” said Mr Beale.

First published on nzherald.co.nz on 15 June 2016

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WNT Ventures partner with Angel HQ

WNT Ventures Management Ltd are delighted to announce an investment has been secured from leading members of Wellington based Angel Investment group, Angel HQ. Angel HQ have a strong portfolio of companies and is the second SCIF Accredited partner that has invested into WNT Ventures Fund 1.

The strength of this group, their investment knowledge and their Wellington location broadens both our networks and access points for IP driven technology to gain early investment capital and experienced advisers. With our hands-on investment approach and the capital intensive nature of early stage investment, our technology incubator structure is an obvious and positive fit for these Investors.

Manager of Angel HQ Dave Allison states “Our club has always demonstrated wide interest and has invested broadly across industries and life stages over the last 6 years. Investing in WNT Ventures was a great way for our members to support a number of teams and a range of IP in one very well packaged opportunity.”

WNT Ventures existing shareholders and Investors warmly welcome this Wellington based Angel Investment Group and the added depth of connections, skills and industry expertise Angel HQ brings to our shareholding.

HTTP://ANGELHQ.CO.NZ

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Entrepreneur wants Kiwis to join him

New Zealanders have great ideas, but the commercialisation of them was “near zero”, says Israeli entrepreneur Isaac Bentwich, whose latest venture, CropX, is based on technology from Landcare Research.

“It reminded me of where Israel was 30 years ago,” he said.

Bentwich is the founder and chief executive of CropX, an agritech company formerly known as Verigate, which licensed research from the New Zealand crown research institute. Its first funding round was with New Zealand angel investors including the New Zealand Venture Investment Fund and last year it raised US$9 million in a series A funding round and then a further US$1 million last month.

Investors include Google chairman Eric Schmidt’s venture firm Innovation Endeavours and US-based Finistere Partners which includes a Kiwi, Arama Kukutai, as a partner.

CropX aims to help farmers produce more food with less water and other resources. It makes soil sensors and irrigation controllers for use on commercial farms and an app to help farmers interpret the data they gather.
Bentwich says more global entrepreneurs need to be attracted to the country to help build the innovation eco-system.

Bentwich is a medical doctor by training and serial entrepreneur whose efforts with his previous three companies led to a Nasdaq initial public offering and two acquisitions worth about US$50 million. He discovered the CropX technology while living in Nelson a few years ago and has since migrated the company to Tel Aviv.

“It’s really a co-production of New Zealand technology, Israeli technology, and the US market.”

Speaking to the first-ever New Zealand innovation mission to Israel, Bentwich said, when he was in New Zealand, he was blown away by two things – the quality and quantity of innovation.

Israel is known as the start-up nation with more start-ups per capita than any other country and the second highest level of investment per capita in start-ups behind the US.

Bentwich was initially refused residency in New Zealand because he didn’t meet the immigration criteria and only got approval through special intervention by senior officials.

“You had to have a PhD in biochemistry or biotech. I only employed hundreds of people with these PhDs but that didn’t matter,” he said.

Bentwich said his advice to government officials during his two and a half years in New Zealand was that local entrepreneurs needed access to global serial entrepreneurs who could help them learn the necessary skills to build a successful business.

“Training the local ones is key and then the money will follow. The capital which is critical to a company is secondary to the entrepreneurs,” he said.

With his first company, Bentwich got overseas funding from US venture capitalists in Silicon Valley – their first investment in Israel – and they helped him learn the ropes.

New Zealand’s government recently introduced a new Global Impact Visa aimed at attracting global entrepreneurs to live and start up businesses in New Zealand. The tender process for a private sector partner to run the four-year pilot programme goes out next month.

Bentwich said there’s a lot of potential alignment between New Zealand and Israel which both had small populations, and were “islands” with small populations far away from their markets, having to rely on their resourcefulness. “New Zealand is in a sea of water and Israel in a sea of hostility”, he said.

He’s a fan of the two countries setting up joint funding initiatives to commercialise technology, which would “bring together the mellow Kiwi nature with the caffeinated Israeli one and great things will happen”.

– Disclosure: Fiona Rotherham travelled to Israel with support from the Trans-Tasman Business Circle.

First published on nzherald.co.nz 1 June 2016

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Volpara raises A$10m by listing on ASX

Volpara Health Technologies, an investee of Bay of Plenty startup group Enterprise Angels’ EA Fund 1, successfully listed on the ASX last week.

EA Fund 1 invested $100,000 in Volpara, then named Matakina Technology, in October 2014.

The fund now holds a total of 239,856 ordinary shares, which have a listing value of A$119,928 ($133,000), an uptick in value of 33 per cent from its initial investment, said Enterprise Angels executive director Bill Murphy.

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Angels head to TechweekAKL

New Zealand’s angel investors, a community which actively supports the development of new technologies, will be out in force at TechweekAKL.

Angel Association of New Zealand member’s are involved in two key events, positioned right in the centre of the week-long celebration of all things new and innovative.

[email protected]: 18th May, from 6pm, The Grid – book your seat here.
Tech Innovation Showcase: 18th May, 3.30–5.50pm, Astrolab – apply for an invitation here.

[email protected]

An important event revealing personal accounts of angel-entrepreneur relationships. It is a must-attend evening for founders, and would-be angels.

In relaxed and informal format investors from Flying Kiwi Angels, AngelHQ, Ice Angels and Enterprise Angels will share their personal stories, including their individual entrepreneurial experiences, investment thesis, what they expect from entrepreneurs and how they help grow successful companies – alongside investing their money.

As well as bringing together angels, entrepreneurs and angel groups [email protected] event also brings together key organisations in our New Zealand innovation ecosystem. The event is being held at The Grid, organised by Venture Centre, and is only made possible with the sponsorship of AANZ, alongside New Zealand Software Association and AngelEquity.

To book your ticket and make the most of the opportunity to share a drink, nibbles and some rare ‘get to know you time’ up close and personal with Angel investors click here

The Tech Innovation Showcase

An opportunity for current angel group members to register for a private event focusing on some of the IP rich organisations emerging from government-funded Tech Incubators, Astrolab, Powerhouse Ventures and WNT Ventures. Set up by Callaghan Innovation the incubators are mandated to draw complex IP from Crown Research Institutes and NZ University R&D departments for commercialisation. The event is being held at Astrolab for an invitation click here.

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From the highs and lows of Silicon Valley

KIWI entrepreneurs don’t fail well, says Havelock North businessman Hal Josephson.

“We need to change the mind-set around failure,” he said.

“Unfortunately people here start businesses with friend and family money and may have mortgaged their house, so when you fail you want a crawl under a rock. There are huge ramifications for those types of failures.”

He said where there was a network of investors there was the luxury of “OPM” – other people’s money.

“I was in the United States last year doing interviews with entrepreneurs and investors around failure. The general notion in California is failure is a badge of courage – you have prepared yourself for the future. You are a higher-percentage opportunity because you won’t make those mistakes again.

“Risky investors expect 70 to 80 per cent of their investments to fail. So it is not so bad – you can come back for more money if you feel like you have something and you have a good rapport.
“For my money, if somebody has failed three times I’ll go for fourth. In the United States there is even a conference call FailCon. I wanted to be invited for the 3GO story because that hasn’t really been told.”

It was one of few failures in the 20-year entrepreneurial part of his career.

Hal Josephson talks easily of his 20-year entrepreneurial career on the ground floor of the tech revolution because he is planning to write a book, distilling learnings.

It’s a career of historic failure and success, before the terms “startup” and “angel investor” were coined.

It’s a career that started in the 1970s when the New Jersey teen at Ohio’s Antioch College bought himself a Sony video camera.

“People had never seen themselves on television – it was like a mirror out of time.

“I decided there was an opportunity around it – I didn’t know exactly what it was – and so I started out recording people’s events, ranging from weddings to people doing workshops or giving speeches and they wanted to see themselves and how they came across.”

When he graduated from college he saw further opportunity with cable television.

“The Federal Communications Commission mandated that all cable television operators who had more than 3500 subscribers had to offer what was called Local Origination Public Access Television.”

In 1976, his production company was hired by Grass Roots TV 12 in Aspen Colorado, making TV shows and helping people make their own.

“It was one of the first experimental community television networks that was funded by the Government and donations to basically to see what would happened if you empowered a community to have its own video production.”

His documentaries were picked up by PBS including one about Claudine Longet, who preceded OJ Simpson in that she hired a team of expensive lawyers to escape a murder charge after she killed her live-in boyfriend, Olympian ski racer Vladimir “Spider” Sabich in their Aspen Colorado home. The Rolling Stones wrote a song about her but didn’t release it until 2011 for fear of litigation.

At a New York conference Hal met a video producer and was asked to run workshops in Washington DC for the Episcopalian Church.

That led to Episcopalian Television Network asking him to produce a televised concert featuring John Denver.

“We uplinked it and we connected to cable systems that wanted to carry it around the world. We set up downlinks in parishes all over North and South America, so ultimately more than 100,000 people saw it. It was one of the first live television events.

“I literally walked away from that with a nice cheque, thinking, I could start a company around this.

“I pivoted – I didn’t even know the term at the time – my then video production company into a video teleconferencing and events company.

“About 18 months later, after getting some finance and doing some early work with a lot of the vanguard companies doing this, I gave a talk at the Rocky Mountain branch of Meeting Planners International about how they could run a meeting in multiple locations.

“A guy literally came up to me and said, ‘Teleconferencing is sexy, I’m going to take you public’.

“We decided to take our little company, which wasn’t even incorporated, and work with this guy.

“It was a micro deal on the Denver penny stock market in 1982. There were 37.5 million shares issued at 2 cents a share.”

The company netted $650,000, moved its headquarters to Denver “and we started going after real clients”.

In two years the company doubled its revenue and had $500,000 in the bank but its board decided it wasn’t scaling-up fast enough.

“They merged us with a company needing $500,000 and they took us private, buying everybody out.

“We learned a lot about stockholder management and how you had to put out press releases. A first client actually sued us for putting out a press release because we were forced by the board to announce we were working with one of the biggest companies in America. Their legal arm sued us saying, you must have a contract that says you can’t say you are doing that work for us. But actually they never put that clause in our contract.

“Myself and my partner cashed out. She ended up going with another deal that went public on the penny stock market and I was offered 1 million shares to go into my second deal, which they were doing at 10 cents a share for 30 million shares.

“Then I discovered a whole other range of things – my new partners were dishonest. I wound up having to testify against them 16 months later in front of the Securities and Exchange Commission.

“That was another education, picking your partners.”

With his partner in the first penny stock market company they formed “a company to form companies”.

“Her husband had been head of Bosch America and then Droidworks, one of the divisions of Lucasfilm, but he decided that he wanted to be a start-up entrepreneur.”

Success was “mixed” from 1985 to 1989 when he was asked to join a startup by Trip Hawkins, the original director of marketing at Apple. Trip had left Apple to start successful game company Electronic Arts.

He wouldn’t tell Hal what the new company was about unless Hal joined the venture and signed a non-disclosure agreement.

“I decided, he probably has a good idea so I’ll just go with it.”

The 3DO’s company’s objective was to create a new home video gaming system which was manufactured by various partners and licensees.

It was also a new business model – 3DO would collect a royalty on consoles and games.

“We licensed technology to a company that had no idea how to make money out of it and wouldn’t listen to us.

“Most unfortunately we lost over $100 million for our investors and likely $500 million for our big technology-licensing partners, Panasonic and Matsushita.

“It was a great four-and-a-half year ride and I managed to parachute out, unloading my stock, before the company tanked.”

Trip Hawkins asked him to organise an event.

“He wanted to build better connections between Los Angeles and San Francisco – Los Angeles was the entertainment capital and San Francisco was the technology capital and they weren’t talking to each other.

“He basically said, I want to throw an event for the top 700 people in the tech, film, TV games and entertainment business. They were all either major content producers or publishers and the major studios.

“At the time Matsushita owned Universal Studios, so they were our partner, and they wanted to see something like this happening.

“Trip said, what would it cost to throw a party for 700?

“On the spot I said “say $1 million” and he said, okay.

“I produced the inaugural Hollywood Meets Silicon Valley conference event called Lights, Camera, Interaction!”

Motorola’s PR firm approached him to produce a similar-style event with a $3 million budget, to lift the Illinois company’s West Coast profile.

“This event was big. I shut down Blue Man Group’s New York show and brought them to Los Angeles.”

The performance artists scored Intel TV advertisements on the back of the event and are touring New Zealand in May.

Hal was hired by Australia Multimedia Enterprises (AME) to be its Silicon Valley liaison, making 20 trips Downunder from 1996 to 1999 to evaluate companies.

“The Howard Government shut AME down and it was sold off to a venture capital firm Allen & Buckeridge.

“They asked me to come out and on that trip I met the head of international banking for Westpac. He was seconded to the private sector-led economic development programme for the Sydney Olympics.

“It ran on the periphery of the Games to basically create foreign direct investment in New South Wales.”

He became a consultant, which involved trips to New Zealand because it was a major trading partner.

He built a network of friends in Auckland and met his current life partner Trish Gilmore, originally from Dannevirke.

Hal continued doing regional economic development around high-profile events like the Beijing Games and Shanghai World Expo, escorting delegations of US business people keen to access China.

“I would basically spend 10 to 15 days in San Francisco and 10 to 15 days in Beijing
and Shanghai. I did 40 of those trips between 2003 and 2010.”

They moved to Hawke’s Bay and live in Havelock North where Hal continued creating events.

He attended Rod Drury’s Accelerate 2011, inviting along John Wander of Giantstep Angel Network from San Francisco.

The same year Hal organised the Make Social Media Work for You conference and found persuading keynote speakers to New Zealand was not always difficult.

He invited a “social media guru” Californian friend who said: “If you set me up to play Cape Kidnappers I won’t charge you a speakers fee.”

One hundred attended: 12 from Auckland, 36 from Wellington, 44 from Hawke’s Bay and Jon Leland had a great round of golf.

Hal said it was a “good first event” but he took up his “New Zealand job” with the Auckland University of Technology.

He is Program Chair for The Project – thought leadership events focusing on innovation and creativity in technology and business.

In 2014 the theme was Digital Disruption, in 2015 the focus was Taking Innovation Global and this year it is titled Creativity in Business and Beyond, all utilising his network of contacts.

Contacts drive his world.

“You don’t burn bridges – why would you unless there is a really negative reason? The only people I’ve burned bridges with were dishonest, or have tried to do something illegal or unethical.”

He said technology such as Skype could not displace spending time with people.
“The past 20 years of my life has been projects that grew out of my business relationships and my networks.

“Business is all about relationships. People move from one company to another, but the relationship remains. If you nourish it and it is important to you, it transcends everything, even being in different countries, and you end up doing more and more business.”

First published on nzherald.co.nz 24 April 2016

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