More Cross Border Investment #ACAAngelSummit15

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brent Ogilvie

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

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

 

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Angel evangelist making the New Zealand connection

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

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

It hasn’t disappointed.

But to what end, exactly?

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

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

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

So you wanted to come here to build connections?

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

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

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

 

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

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

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

Why is that so important?

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

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

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

Doesn’t it depend on the angel they get?

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

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

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

Should angel investors always have representative on the board?

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

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

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

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

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

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

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

What’s the most common thing angels do wrong?

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

Why do you love this area so much?

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

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

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

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

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

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

We tend to talk to ourselves far too much.

by Lesley Springall

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

ABAF2015, NZ

Supporting CEOs in your Portfolio Companies #ACAAngelSummit

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

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

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

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

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

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

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

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

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

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

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

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

Other useful suggestions included;

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

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

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

Bill Murphy

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

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

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

Angel messages from America

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

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

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

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

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

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

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

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

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

ABAF 2015, Queenstown, New Zealand Connection

Discover your New Zealand connection.

Angel investors do business together – we do business together when we invest in deals, when we are looking for follow on funding rounds and when we are looking for in-market opportunities. We do business together when we are looking for acquirers and we do business together when we are celebrating exits. We are a collaborative group of professionals who acknowledge and appreciate each individuals unique experience and expertise.

The Asian Business Angels Forum being held in Queenstown at stunning Mount Soho Winery is in keeping with the nature of our community.

It is the Angel Association of New Zealand’s desire to keep this event an angel-centric, intimate gathering, this terrific venue has limited capacity so we advise that you register quickly to avoid missing out.

This summit will focus on providing delegates with practical insights on how to build and execute successful, capital-acquisition strategies from the first round through to exit.

You will hear from seasoned practitioners about the importance of a capital strategy in angel venture success, about board stewardship and alignment, how to successfully court acquirers internationally and how to manage market disrupting intellectual property for commercial success across the globe.

With delegates coming from across the Asia Pacific, Europe and North America we are going to dig into how to do more cross border deals and work on live examples of deals which have the potential to be exactly this while having the opportunity to enjoy the natural beauty of our chosen location – Queenstown.

The stunning scenery, natural beauty and the vibrancy of the region make Queenstown the perfect destination to relax and enjoy sophistication and world-class facilities.

 

Here’s a list of superb accommodations to make your stay a memorable one:

 

millbrook_imageMillbrook Resort is a luxury resort only a 20 minute drive from Queenstown. The five star accommodation resort includes three restaurants, a bar/cafe, award winning spa, a 27-hole golf course, health and fitness centre with outdoor hot pool, heated swimming pool, mountain bikes and much more. Millbrook is two minutes drive from the nearby historic gold mining village of Arrowtown. The perfect getaway scenario to energize and relax surrounded by mountain air and open space.

 

crowneplazaCrowne Plaza is centrally located and a walking distance to everything you need in Queenstown. The hotel offers fine hospitality and a magnificent scenery. This modern hotel provides luxury at its best to make your stay enjoyable and dynamic: an on-site gym, meeting rooms and 24-hour room service. Or relax and invigorate at the in-house spa and wellness centre with a variety of facial and body treatments.

 

heritageHeritage Queenstown is located just outside the town centre. The hotel offers  alpine-style accommodation with stunning views over Lake Wakatipu and Queenstown. Heritage Queenstown buildings are the typical mountain style accommodation made from centuries-old-schist stone and cedar. The world-class services and facilities feature a heated indoor/outdoor swimming pool, sauna, gym and an elegant restaurant. Great choice for guests interested in experiencing comfort and sophistication.

 

Screen Shot 2015-06-15 at 11.20.44 amVilla del Lago offers quality self-catering apartments on the shores of Lake Wakatipu, just 2 minutes drive from Queenstown. With stunning views to the Remarkables Mountains and across the lake, the property has its own pebbled beach. Villa del Lago features ski, bicycle and sports storage and is close to all the attractions Queenstown has to offer, from vineyards to ski fields to bungy jump and world-class golf. Impeccable surroundings and quietude by the lakeside Frankton walkway and cycle path, and located only a 20 minute walk from the Queenstown centre.

 

Screen Shot 2015-06-15 at 11.23.49 amMillennium Hotel Queenstown is located in central Queenstown and only 2 minutes away from local shopping and entertainment areas and close to all ski fields. It features sauna, spa, gym, massage therapist, sightseeing and activities desk. Millennium’s Observatory restaurant speciality is modern New Zealand cuisine and the Club Bar is ideal to relax after a great day outdoors. Millennium Hotel Queenstown offers luxury and elegance committed to minimize environmental impact.

 

Hotel ExteriorHilton Queenstown Resort & Spa situated on the eastern shore of Lake Wakatipu in the Kawarau village. The Resort & Spa facilities include indoor pool, a fitness centre and the Eforea spa. The rooms offer spectacular views to the lake or mountains and amenities to keep guests focused at work or relaxed in the luxurious bath or in front of the fireplace. At Wakatipu Grill Restaurant guests can sample local seasonal produce while enjoying the scenic views and the Cru Wine Bar & Lounge specializes in local and international wines. Workout in the fitness centre, take a swim in the 25-metre heated lap pool or indulge in a treatment at the Eforea Spa. Pure indulgement for travellers interested in vineyards and fine dining.

 

(Contact Angel Association New Zealand at [email protected]  to get the promotional code for discounted delegate rates at these hotels).

ABAF 2015, Queenstown, NZ – the Social Scene

Get amongst it!

ABAF 2015 and the lively social scene of Queenstown

The Asian Business Angels Forum being held in the extraordinary scenery and atmosphere of Queenstown will add to a valuable experience. This lake and alpine resort region surrounded by magnific mountains and nestled on the shores of crystal clear Lake Wakatipu is inspiring and revitalising.

This summit is a wonderful opportunity to connect with the most refined and active angels from around the globe to learn more about exits, the best practices, investing trends, succeding in the changing early-stage investment environment, and how to attract cross-border invetments.

We do hope you enjoy your time and be indulged by Queenstown’s top restaurants. Some of them are listed below:

 

bbq TSS Earnslaw / Walter Peak – Thursday dinner: The ultimate kiwi experience. Enjoy a lake cruise on board TSS Earnslaw and feel like going back in time. Admire the sumptuous alpine scenery before disembarking on Walter Peak for a gourmet BBQ dinner. Indulge best-quality meats, delicious vegetables, salads and finish with a delightful selection of desserts.

 

Rata

Rata: The award winning restaurant owned by internationally    acclaimed Michelin starred-chef Josh   Emett added to the heritage building and relaxed decor holds all the elements to a top-notch cuisine experience.

 

 

 

 

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Amisfield Winery & Bistro: Located in the quintessential building housing the cellar door and bistro offering exquisite selection of seasonal dishes that compliment the fruit purity quality of the Amisfield wines.

 

 

 

 

 

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Botswana Butchery: The restaurant offers a diverse menu with a speciality on fine cut beef and local organic foods accompanied by the perfect wine from the impressive private 1800 bottle cellar.

 

 

Lead Partners

NZTE NZGCP PWC “NZX” Callaghan Innovation

Expert Partner

AVID “Jarden”

AANZ Summit Sponsors

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