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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Meet the Kiwi whiz kids running a $200 million education empire

WHILE other Gen Ys are still finding their feet, these Kiwi whiz kids are running a global company worth more than $205 million.

Jamie Beaton, 21 and Sharndré Kushor, 22, have just closed a $39.5 million capital raising for the global online education business they started on Facebook and Skype. And they’re looking to expand their reach even further.

It all started when a teenaged Mr Beaton, whois academically gifted, realised that there was not enough support out there for kids who wanted to get into the world’s top universities.

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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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Rocket Lab signs satellite company Spire as customer

New Zealand space company Rocket Lab has signed a deal with a United States satellite company.

Rocket Lab will send Spire satellites into orbit on up to 12 missions from late 2016 throughout 2017.

Spire uses small satellites to provide “high-fidelity” weather and ship tracking information.

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Creating our own Silicon Valley

There are so many components in successfully scaling great tech ventures. NZVIF’s Franceska Banga identifies a number of them in this article where she compares Silicon Valley with NZ. Essentially we all have a role to play!

Silicon Valley. Rightly or wrongly it’s the totem pole by which countries judge their transition to a more technology-based economy. But while many want to create the next Silicon Valley, replicating its confluence of factors is not easily done.

There are some features which helped create and continue to make Silicon Valley unique. It helps, for a start, having nearby two top universities – Stanford and Berkeley – with Stanford’s famed electrical engineering department especially important. So, too, does having huge pools of investment capital nearby.

But what might surprise many about this bastion of private enterprise is that it grew out of a long-term partnership with private enterprise supported by decades of US Government contracts and subsidies.

Its 60-plus years of growth has seen three technological waves.

Post World War II, federal Government money to develop new defence and aeronautical technology established the valley’s foundation and the first wave.

Darpa (Defence Advanced Research Projects Agency), created in 1958, is credited with playing a significant role in the development of the earliest version of the internet.

From that base came the second superconductor and PC wave of the 1970s and ’80s, followed by the internet, social and mobile media technological wave since the mid- 1990s.

The venture capital funds, which today underpin so much valley innovation, also enjoyed decades of Government support.

The Small Business Investment Act of 1958 established federal funding for US venture capital firms. In its first decade, the programme invested US$3 billion into young firms – over three times the amount invested by private venture capital funds.

The programme still exists and in 2013 it provided US$2.2 billion of funding investment. Many of the valley’s most dynamic tech companies – Apple, Compaq and Intel – have been backed by Government funds.

While our tech sector shouldn’t try to mimic Palo Alto – our market is very different – there are many reasons to believe we can build a credible and sustainable tech sector that is economically significant over the long-term. Over the past 15 years there has been significant progress in building New Zealand’s technology landscape.

The annual TIN100 survey shows that over the past eight years, revenues from New Zealand’s top 100 technology companies have jumped from $4.7 billion in 2006 to $7.6 billion in 2014.

While NZ has some catching up to do if we want to create a technology sector of significant economic scale, we are well on the way.

The TIN100 result backs up what we are seeing daily in the business news pages, with a stream of new technology companies becoming household names – alongside Fisher & Paykel Healthcare, Datacom and Trade Me are the likes of Xero, Orion Health, Wynyard Group, Rakon and Pacific Edge.

The innovation pipeline of the next generation of technology companies also looks very healthy.

New Zealand’s tech sector is being built through the application of innovation and technology across multiple sectors led by the software industry. There are many other sectors where unique technology solutions are being developed.

Healthcare integration, helicopters, paint, parking, apples, animal health, surgical dressings and cystic fibrosis are examples where local innovation is leading the world.

There is no single factor driving this innovation. The role of successful private sector leaders and entrepreneurs is crucial. But so, too, is the support from the Government, from establishing Callaghan Innovation, developing business incubators, encouraging more R&D, commercialising more university research and strengthening our capital markets.

We know it takes a long time to develop a sustainable venture capital sector – the Valley’s VC sector took 40 years to develop. And while our VC market is likely to remain boutique, servicing local start-ups as they grow, their role is critical in filling the $2 million-$10 million funding gap – beyond crowdfunding and angel investors, before traditional capital markets.

We may never rival the US but we need to ensure our VC sector reaches a critical mass to meet the needs of New Zealand’s growing tech sector.

Since its establishment as a Government-owned and funded company, NZVIF has partnered with 10 venture capital funds. Alongside its fund partners, NZVIF has invested into some of New Zealand’s most promising growth companies – including Orion Health, Xero and PowerbyProxi.

For every dollar invested by the Government through NZVIF, there must be at least 1:1 matching investment from private investors. The public/private sector investment leverage runs significantly above that. To date, a total of $1.1 billion has been raised for NZVIF VC-funded companies of which NZVIF’s contribution is $100 million.

Overall the VC fund has returned 5.6 per cent per annum. Post-GFC, VC fund investments are showing returns of 26 per cent per annum.

New Zealand has made significant progress over the past two decades and the results can be seen in the array of emerging technology companies with good growth prospects. If every year we have two to three VC funds investing across 10 companies in the $2 million-$10 million funding gap, the impact could be significant.

Building a vibrant early stage investment ecosystem is not an insignificant goal. Look at the countries which have succeeded – the US, Israel, Finland and Singapore. In all, government support behind private sector endeavour has been instrumental.

Franceska Banga is chief executive of the NZ Venture Investment Fund

First published NZHerald 26 March 2015

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Hawkes Bay economy gets major blast from new food facility

The power of angel investment. Enterprise Angel backed Rockit Apples creating jobs in the Hawkes Bay. And a cry for angels in that region too!

The global success of Rockit™ apples has led to a $17 million investment into land development and a state-of-the-art food packaging facility in Havelock North.

Minister for Economic Development, Hon. Steven Joyce officially opened the multi-million dollar food facility today (Wednesday).

Havelock North Fruit Company managing director Phil Alison said world-wide consumer demand, which is up 700 percent from 2013, has proved a fruit such as an apple can be marketed as “a premium snack food and compete against sugar-coated confectionary.”

Read more on www.scoop.co.nz

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Bullish claims excite angel investors

This story profiles the role experienced angel investor, Susan Iorns has had in the journey and growth of one of the first Lightning Lab graduates, Expander.

Making a compelling pitch to investors isn’t easy, but Ollie Langridge’s bold claims attracted considerable interest from investors before he even had a product, let alone started marketing it.

The former TV commercial director first addressed potential investors a couple of years ago at Wellington’s startup accelerator Lightning Lab’s demo day. He told them he and business partner Paula Nightingale had an idea that could potentially prevent infant deaths, like those caused by the Chinese melamine scandal.

This bold claim related to the technology they would eventually develop, based on QR codes (abbreviated from Quick Response Code, a two dimensional matrix-like barcode) which could mark products with unique codes like a fingerprint.

Consumers can easily scan this code with their smartphones to check a product is authentic and safe – an option that is in increasing demand given the increase in food safety incidents and resulting tragedies such as the infant deaths in China caused by contaminated milk powder.

Langridge’s claims were enough to whet the appetite of a number of early stage angel investors present at the demo day, including Wellington-based Susan Iorns, who together with other members of Wellington’s angel group, Angel HQ, and the NZ Venture Investment Fund, invested $500,000 to develop Langridge’s Green Codes cloud-based technology under the company name Expander.

Iorns was so impressed she even became chair of the fledgling company. “I look for a couple of things when I’m considering investing in a company – whether the company is likely to create high-skilled jobs in New Zealand and whether it is likely to succeed abroad,” Iorns said.

“Expander’s technology was both scalable and I didn’t see any geographic boundaries. Ollie’s pitch was also a great and worthy call to action.”

A subsequent, oversubscribed capital-raising round last year secured even more funding to help accelerate Expander’s market overseas, says chief executive Erwin Versleijen, who joined the company early last year.

Versleijen formerly worked in mergers and acquisitions with PwC and commercialised products for Minolta, Samsung and BMC Software. He says he saw Expander’s potential from his first introduction.

“It’s a startup in the right space, so it’s likely to be a leader in its field,” Versleijen said.

The anti-counterfeit and brand protection market is expected to grow from US$3.4 billion today and the traceability technology market is expected to be US$14 billion by 2020.

Consumers are demanding more and more information about the origin of products before they buy, he says. “With ever increasing competition for market share, traditional media and sales techniques simply aren’t enough anymore.”

You don’t often see New Zealand shoppers using their smartphones to scan products but it is common in Southeast Asia, with most smartphones owners in China using QR code readers daily, Versleijen says.

When consumers scan Expander’s QR codes on a food or beverage product they are directed to a mobile landing page where they see where the product came from and who made it, nutritional facts and allergy information, and how to get in touch.

Consumers can also register to receive more information like recipes and accept invitations to social media.

For companies, this technology allows them to increase loyalty and brand equity, and get valuable data on where and how consumers are buying their products, Versleijen says.

Expander’s QR technology differs from the competition because its QR codes are randomly generated and not reliant on a legacy system, he says.

“Consumers can scan the codes from any reader on their smartphone. There is no dedicated application to download or training required.”

This year Expander is targeting the global dairy industry.

Exporters of infant milk formula and fresh milk to China need to have unique identifiers, such as a QR code for traceability on each package and a recall process to meet regulatory requirements.

Expander has cracked the QR code, now it’s ready to crack the international market, Versleijen says.

First published in NZHerald 12 March 2015

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SmartShow app to enhance CeBIT

CeBIT, Australasia’s largest technology expo – taking place 05 – 07 May 2015 at Sydney Olympic Park – has contracted New Zealand-based SmartShow to provide its event apps via flagship product ShowGizmo.

“We’ve had event apps in previous years, but mobile technology is constantly evolving and the ShowGizmo app is an international market leader with an impressive feature set,” said Jan-Peter Lauchart, chief operating officer of Deutsche Messe, organisers of CeBIT Australia.

Read more on www.impactpub.com.au

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More wonderful validation for angel-backed ShowGizmo rocking the event app space

A Wellington company’s “virtual goody bag” will be part of the actual goody bag at Australasia’s largest technology expo in May this year.

With more than 20,000 visitors from 30 countries expected to attend CeBIT in Sydney, SmartShow is gearing up for the next phase of expansion.

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Giant accolade for miniature apple developers

Another angel backed venture gets international recognition for innovation. Rocket apples are now being sold in over half a dozen international markets. Doing exactly what angel ventures should do! Congrats to Enterprise Angels investors.

The Rockit apple, an export success largely funded by Tauranga Enterprise Angels investors, has scored an international award.

It won the New Zealand-Taiwan Business Excellence Award in Taipei last week.

Phil Alison, managing director of Hawkes Bay-based Havelock North Fruit Company (HNFC), which grows and markets the Rockit, attended the Australian and New Zealand Chamber of Commerce Business Excellence Awards.

Board members Steve Saunders, Murray Denyer and Rob Craig were also present.

“This is a fantastic achievement for us, as we continue to grow our global markets,” said Mr Alison.

The Rockit apple is a miniature apple – slightly bigger than a golf ball, which was created in Hawke’s Bay. It is uniquely marketed in a branded clear plastic tube aimed at the high-end convenience food market.

The awards recognise Australian, New Zealand and Taiwanese companies that have made a significant contribution to the bilateral business relationships among the three countries. The judges noted HNFC’s innovation in positioning Rockit as a premium brand snack food and its outstanding 700 per cent year-on-year growth.

“It is nice to get recognition along the way, as it is hard work establishing a truly global brand,” said Mr Alison.

Mr Saunders, who heads Tauranga-based Plus Group, said the award reinforced the importance of strong international relationships.

“We were particularly proud to celebrate this event with our Taiwanese partners.

“It was also great to see a company which has been backed by Tauranga investors through Enterprise Angels been recognised internationally.”

The fruit is now being sold domestically and in the US, Canada, Italy, Hong Kong, Taiwan and the UK, with more international markets being opened up as new production comes on stream.

HNFC worked with Plant and Food Research and Hawke’s Bay company Prevar, to develop the apple.

The company has 79ha under cultivation with a further 55ha planned.

“We’re growing the apple to bigger production levels,” said Mr Alison.

First published on nzherald.co.nz on 2 December 2014

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