Smart IP strategy… simple or not?

Day two of the Angel Association Summit 2014, in Auckland, October 15-17 features a presentation from Agricultural technology entrepreneur Greg Mirams who has worked with many angels across the New Zealand, and received investment from Enterprise Angels in his two interrelated companies.

Greg will share personal experiences and views on the role of intellectual property in angel deals. With a particular focus on life science ventures, an important sector of New Zealand’s growing start-up eco-system, this session promises to provide valuable insights to Angels.

Those who participate in the discussion following the presentation will deal with questions key to the success of life science ventures including how to use IP to create investment and acquisition tension.

Greg and Angel delegates will also address the issue of Angels simplifying their approach to IP and protection strategies, including answering the question: how important is it that the company owns the IP? And, can an exclusive license suffice?

This important session will deliver Angel investors with a better appreciation of how to leverage intellectual property and the complexities and role of this asset at every stage from valuation to exit.

Delegates will also have a better understanding of the right questions to ask their IP lawyers and advisors including strategies around deal terms that vest the IP with the investor in the event of the venture’s failure.

For Angels who understand it is important to build a clear picture for themselves of forming IP strategies for use in deals they will make in the future this is a not-to-be-missed opportunity.

Find out more about the Angel Association Summit 14.

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How do NEW Angel investors know how to really help entrepreneurs?

View from the other side:

Delegates to this year’s Angel Association Summit, Auckland, 16-17 October, will have the opportunity to formulate some answers to this question. The comprehensive Summit programme, full of crucial information for Angels to apply in their investment activities, gives Angels a rare opportunity to “walk in the founder’s shoes”.

During the session on day two they will gain some understanding of “the other side of the deal” from three of New Zealand’s brightest founders. Marie-Claire Andrews from ShowGizmo, Paul Cameron from Booktrack, and most recent investee Rachel Lacy from Drikolor will tell their investment story. They will explain what they loved and loathed about the process and the changes it’s meant for them and their businesses.

In part two of the session John Huston, special guest and keynote speaker at the Summit will lead a discussion around founder-friendly vs investor-friendly term sheets, the role of angel investors in explaining deal terms, setting expectations, aligning for exit and follow-on funding.

The session, conceived by Robbie Paul, Startup Funding Manager from Ice Angels and Suse Reynolds, Executive Director, Angel Association of New Zealand gives an opportunity to understand from the entrepreneurs perspective, what executing for success might look like.

An important addition to the Angel Association Summit’s two day networking, intel and insights experience. This is the first in a series of initiatives with the aim to improve founder/investor relationships and communication.

A critical element of the Angel Association of New Zealand’s work is to increase the quality and quantity of early-stage deals the majority of which require close collaboration including shared understanding and language in order to set the right milestones, deal with missed and unexpected opportunities.

Find out more about the Angel Association Summit 14.

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Meeting gives backers wings to help with development

Tags: Angel Summit

Delegates at the Angel Summit would be wiser about investing in new ventures.

An angel investor is also looking to help entrepreneurs and hopefully see the local economy do better as a result.

What did the Dunedin summit set out to do?

The purpose was to increase the professionalism of angel investing in New Zealand. We tackled the issues of due diligence, valuations and term sheets. We heard from international expert Basil Peters on the importance of and rationale for looking for early exits. The summit was all about making us better angel investors and learning and networking with others with a similar mind to help entrepreneurs and New Zealand economic development.

What criteria do angel investors generally use to invest in New Zealand and internationally?

They look for unique ideas or projects that are internationally scalable and are led by a good team.

How would you define an angel investor?

How much do small New Zealand businesses rely on angel investors?

Private equity investors and banks only fund larger profitable companies. Angels fund earlier stage companies that generally are not yet profitable.

What are some recent triumphs of angel investors in New Zealand?

There are angel-backed companies going through big valuation increases – PowerbyProxi and Lanzatech – and a number looking to list – Triplejump and Rex Bionics. But the success story has been Pacific Edge, which was spun out from Otago University 12 years ago and is now capitalised on the NZX at more than $400 million.

Why do some angel investors prefer to invest in groups?

This is high-risk investing and doing it in groups allows capital to be aggregated. Investors can also leverage the expertise of others in their group.

Are there any particular sectors that New Zealand angel investors are interested in?

They tend to invest across the broad spectrum of business but the two most popular sectors are ICT and life sciences.

What drives you as an angel investor?

I want to make a difference to New Zealand’s economic performance. I could easily just invest in the sharemarket and go and live at the beach. But I enjoy the challenge of angel investing and love working with entrepreneurs. Entrepreneurs are a special breed who deserve all the help we can give them. I have invested about $1 million in about 25 companies. But my biggest start-up success has been a large investment with a group of friends in Manuka Health, which I helped found seven years ago. It has done spectacularly well with sales now more than $30 million and ebit over $5 million.

Ray Thomson chairs the Angel Association of New Zealand.

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Angels found, angels wanted

First published in the New Zealand Herald Friday October 11, 2013

Antony Dixon is bubbling with excitement. The chief executive of electronics-technology company Times-7 has just returned from Hong Kong, where the firm was named in the prestigious Red Herring Top 100 Asia awards.

The awards celebrate emerging technology companies from the Asia-Pacific region, so it was a big deal for a small company from New Zealand, says Dixon.

Even bigger, however, was what happened between the pitches and the handshakes. Dixon used the awards as an opportunity to visit his Asian contacts; confirming two new distributors in Hong Kong and Singapore and netting a new client in Japan in the process. “It was all really worthwhile, we got international recognition for our technology and we signed up a couple of new partners,” says an obviously delighted Dixon.

All this is a far cry from a year ago.

Times-7’s business is supplying equipment for the radio-frequency identification (RFID) or “smart tag” market.

Back then Dixon had been knocking on doors for almost a year trying to raise enough capital to develop and market the company’s new robust, slim-line antennas. His invitation to pitch at the 2012 Angel Summit – the annual gathering of the country’s angel investors (individuals who have a bit of spare cash to invest in tomorrow’s Kiwi companies) – was his last attempt to raise the $600,000 he badly needed.

“Before the summit we still didn’t have enough money on the table to make the [investment] round worthwhile. So we had to really put our best foot forward – which we did.”

Times-7 was one of 13 budding Kiwi companies asked to pitch at last year’s summit and one of six profiled by The Business last November.

It was one of the successful ones. Others were equally or even more successful; a couple, far less so. One is still trying to close the capital raising round it embarked on more than 18 months ago, making the Summit showcase a small part of what is now a long and arduous journey.

Even those who were successful, however, still have capital raising firmly on their agendas. That’s a fact of life for early-stage companies that doesn’t surprise Angel Association chairman and investor Ray Thomson.

“One of the problems with early-stage companies in New Zealand is they tend to run on the smell of an oily rag,” he says. “They don’t have enough capital to get themselves to market fast enough. It’s one of the major problems we have around commercialising Kiwi technology.”

Thomson says he encourages companies to raise as much as they can, whenever they can. Too many raise too little, slowing their potential progress and leaving them at risk of being overtaken by competitors or new developments.

Finding enough capital, however, is a problem Thomson shares with the companies. A key function of the association and its annual Summit is to encourage new angels to join the ranks and share their money, and the risks, with other angels in order to grow the total pool of money available to early-stage companies.

“That’s why we have the Summit in a different part of the country each year, to encourage more local interest.”

Last year’s Summit in Wellington, co-hosted by the local angel group Angel HQ, helped swell the capital’s angel numbers by 50 per cent, from 31 to 45. The association’s push to grow numbers also seems to be working across the country, with the official number of angels now at 420 compared with 368 this time last year.

Thomson and his association colleagues are beavering away on other initiatives in an effort to continue the momentum. A women-only angel group called Arc Angels is being launched this month in Auckland and Wellington. The group is the brainchild of Kiwi expat and staunch early-stage company supporter Bridget Liddell, now a senior partner with US investment company 212° Equity. Liddell is earmarked as chairwoman of the new group, and communications consultant Alex Mercer has been signed up as executive director.

Women-only angel investment groups are very successful in the US, says Thomson, especially at finding capital for businesses led by female entrepreneurs.

Golden Seeds, which started as a women-only group focusing primarily on women-run businesses, is now one of the largest and most active angel investment organisations in the States, investing US$58 million in 58 companies since 2005.

Thomson’s aim is to increase New Zealand angel numbers to more than 550 next year and he expects the Arc Angels to provide a significant chunk of that target.

There’s also a push to develop dedicated angel groups in some of the smaller centres, including Whangarei, Hamilton, Oamaru and Invercargill.

The latest Young Company Finance Index, produced by the Government’s NZ Venture Investment Fund, shows that angel investment increased 18 per cent to $36.5 million in the year to June, compared to $30.9 million in the year to June 2012. Cumulatively, $274 million has been invested in early-stage companies by angel investors since data was first recorded in 2006.

But Thomson says the numbers don’t reflect the true health of New Zealand’s angel sector, which is second only to the States, based on the number of angels per head of population.

“Twenty-three New Zealand angels went to the US Angel Summit this year. We were the largest country represented outside America, so there’s a huge amount of interest [in angel investing] here.”

This passion for angel investing is a large part of the reason why New Zealand can attract big international names to its Summit, says Thomson. “[International] angels like coming down here because this is one of the most vibrant angel communities in the world.”

This year the Summit’s line-up includes Canadian technology entrepreneur turned angel guru Basil Peters, a regular speaker on the US angel circuit and a strong advocate of early exits for angel investors. He is speaking for the first time outside North America, says Thomson. Others on the list include well known US angel and Kiwiphile Bill Payne; Singapore-based British angel investor Hugh Mason, who runs the emerging company accelerator JFDI Asia; and Stuart Fox, principal of one of Australia’s larger angel funds.

Driving best practice and angel numbers goes hand in hand, says Thomson. “It’s all about supporting the ecosystem. It’s no use the Government helping to build these little companies, and get the intellectual property out of our research organisations, if there’s no capital around to help them reach their targets.”

So how did our pick of companies from last year’s summit showcase go?

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If you would like to find out more about the 2014 Summit, please see AANZ Summit 2014.

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Rehab firm needs more to take the next step

Elliott Kernohan, chief executive of rehabilitation technology company IM-Able, embarked on a $1.25 million capital raising round at the 2012 Angel Association of New Zealand Summit in Wellington.

Before the summit he’d had $640,000 pledged from Cure Kids Ventures, which is interested in the company’s technology for children with cerebral palsy, so the end was in sight. But no end came.

The company managed to attract only another $200,000. Not enough to close the round, take the money and put it to work, says Kernohan. “we’ve moved away from the angel networks to focus on investors who have experience in the healthcare sector. So the conversations we’ve been having have been a lot more successful.”

Kernohan echoes Polybatics head Tracy Thompson when he says capital raising is difficult in New Zealand for budding healthcare companies. He also suspects IM-Able (pronounced “I’m able”) was a little too far down the track for angel investors, requiring perhaps a little too much money for their comfort. The trouble is, to take these projects any further requires capital, says Kernohan. The grand scheme to translate its technology to the web, to give clinicians the ability to develop large-scale rehabilitation programmes for stroke victims and others who suffer from neurological problems, is also on hold until the round closes.

First published in the New Zealand Herald on Friday October 11 2013

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Looking for an angel at the Summit

Tags: Angel Summit

First published in the New Zealand Herald on Friday November 23, 2012

From clever ‘bio-beads’, to seamless online searches, to virtual worlds for kids, a tempting array of entrepreneurial talent was on offer at this year’s Angel Investor Summit, writes Lesley Springall.

Tracy Thompson feels as if he has done little else but raise capital for the past four years.

The United States-born chief executive of biotechnology company Polybatics says raising money in New Zealand is like a treadmill you can never turn off.

“It’s constant. I feel like I’m on life support thinking ‘quick nurse, bring me another drip bag’.”

Polybatics was one of 13 carefully selected companies at this year’s Angel Association annual summit. The 13 offered a smorgasbord of investment potential – from formal investment virgins to those who, like Thompson, have done it all before, in a diverse range of sectors and regions.

Each had just eight minutes to flaunt their figures to a host of angels and potential angels – people with a bit of spare cash who might be persuaded to take a punt on the Kiwi companies of tomorrow.

“It’s like a normal angel investor club evening, but on steroids,” says Marcel van den Assum, Angel Association vice-chairman.

He led the charge, introducing the company showcase and appealing to the 200 or so well-off individuals gathered at Te Wharewaka o Poneke on Wellington’s waterfront, by explaining why he became an angel.

Yes, there was the chance of making money, but it was more than that, he said: it was the chance to do something new; something different; something for New Zealand’s future.

Each of the 13 firms pitching had already been put through their paces by an angel group or angel investment firm, so they all had a lead angel to champion their cause. “The majority of investors are followers, so clearly you want to pitch deals where there is already a reputable lead that will act as a catalyst in the equation,” says Van den Assum.

Though important for the firms, the evening was also about attracting new blood into the angel world, says Dave Allison, showcase organiser and business strategist at Wellington regional development agency spin-off Creative HQ. “First and foremost the event is about showcasing angel investment. We wanted people to get a flavour of what angel investment was all about.”

Van den Assum says it’s “critical” to attract more angels to the cause. With more formally accredited angels, the sector has more clout with the Government, more capital to draw on to take investments further down the track and more like-minded folk to share the workload and risks.

“You can discuss deals with somebody; you don’t have to be the lone wolf, putting everything at risk on one deal. You can spread the risk and use others’ expertise,” says Allison.

“This is about creating value; connecting the ecosystem; and being willing to go out and take some chances, accept some failures and celebrate the one in 10 that’s a fantastic success.”

Many of those present were “stunned” by what was on offer, he says. “A lot of people come along and don’t ever become angels; it’s not their thing. But no one is ever disappointed they spent the time looking.”

Here are the companies that stood out (read more about them by following the links):

Others pitching at the 2012 showcase were:

  • Vigil, a wireless patient monitoring technology that provides real-time vital signs monitoring.
  • 77 Pieces, a business employing Weta Digital-type technology that allows online buyers to realistically predict how they will look in the clothing they might buy.
  • InvisiShield, a hush-hush company that plans to revolutionise the work of the humble scarecrow.
  • iGloLEDset, a complicated name for a business that offers a funky Wi-Fi controllable LED lighting system.
  • Showcase, a complete set of sales tools that can be updated at the touch of a button so salespeople never again have to worry about suitcases full of brochures or bar charts.
  • HSL, or Hunter Safety Lab, which has come up with some clever technology to prevent hunters from accidental shootings.
  • ShowGizmo, a smartphone app for event organisers to better connect with their audience.

Though some of the companies presenting were not keen on having their wares talked about too publicly, others like ShowGizmo founder and managing director Frances Manwaring were peeved to be left out. Allison was also lambasted by some company founders who were disappointed at not making the showcase cut. But then, every founder and every investor believes they’ve got the next big thing, he says. At best, however, only 10 per cent of angel-investment companies make big returns for their investors, with many investors counting themselves lucky if, after several years of investment, they get their money back.

The Herald will be keeping an eye on its 2012 Angel Summit showcase picks to see who made their capital raising targets, what they’ve done with the money and which, if any, might be on track to making a few angel dreams come true.

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If you would like to find out more about the 2014 Summit, please see AANZ Summit 2014.

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