Angels support “Growing the Pie” report

Angel Association New Zealand (AANZ) whole heartedly supports the findings in Callaghan Innovation’s “Growing the Pie” report released today.

Overseas investment in high growth kiwi start-ups is a critical component of their success and our success as country that grows innovative, globally competitive businesses according to AANZ.

“We need to be aware that it’s not just the capital that is important to ventures looking for fuel for their growth but it’s the connections and experience that comes with that capital that our ambitious start-ups need to be able to scale successfully,” said John O’Hara.

Addressing other points in favour of overseas trade sales and investment John O’Hara noted allegations of so called “selling too early” miss the point. Early trade sales are an important part of our maturing and growing ecosystem and these ventures are part of the pipeline needed to generate unicorns.

“We need these deals to grow our founder experience and expertise. It’s a powerful and legitimate strategy for smaller businesses to grow their market presence via investment and sometimes sale of the business to larger multinationals. These businesses and their founders are part of the pipeline we need to grow the future Xero’s and RocketLabs. The expertise Rod Drury gained in growing and selling AfterMail was absolutely deployed in the creation of Xero,” said John O’Hara.

The recycling of capital and experience feeds more growth and innovation.

“It’s been my experience that not only do exited founders go on to start another business or invest in other founders but most investors in those exited businesses reinvest in other start-ups. We know that 80% of any returns generated when angels are part of a trade sale are channelled back into more start-up investments,” concluded John O’Hara.

To read the report click here.

Please follow and like us:

Why you SHOULD be an angel investor… it’s all about portfolio management

Australian early stage angel investors often treat start-up investing like horse racing. They punt with money they’re willing to lose, but this approach has led to a lack of discipline and very poor returns.

They place a few bets based on a good jockey (founder), their form (prior success), the stable (team and advisers), horse (business), equipment (technology), running line (strategy) and weather conditions (market), but start-ups should not be treated as an adrenaline-shot gamble where the majority of investors lose their money and a few “lucky” punters make a killing.

Read more

Please follow and like us:

Angel investment rises 26% to reach record level

Startups in New Zealand received an unprecedented level of funding last year, with $86 million flowing into early-stage businesses across the country. That’s according to Startup Investment NZ, published by PwC New Zealand, the Angel Association of New Zealand (AANZ) and the New Zealand Venture Investment Fund (NZVIF).

“It’s exciting to see such a large number of deals coming through to support early-stage companies. We’re seeing investment levels that are almost three times what we saw just five years ago” said Anand Reddy, Partner at PwC New Zealand.

John O’Hara, AANZ Chair, endorsed this sentiment noting that membership of angel networks continues to grow with a new network established in Marlborough last year and a budding network getting started in the Hawkes Bay.

Established networks like Ice Angels in Auckland, AngelHQ in Wellington and Enterprise Angels in Tauranga are also experiencing growing memberships.

Driving the growth in investment dollars is an increasing number of larger deals in 2017, compared to the year before. The number of deals in 2017 held steady at 111 – one lower than the 12 months previous – the total amount invested has risen by $18 million, a 26% increase.

Offering some insight on the larger number of dollars being invested in a similar number of deals, John O’Hara suggested it reflected a maturing ecosystem.

“A number of the ventures angels have backed are now looking for larger capital injections to fuel their growth. With a thin VC industry, it’s not surprising we are seeing larger deal sizes.

John also offered a word of caution to investors and founders.

“The market’s a little frothy right now. We’re seeing some strong valuations. Entrepreneurs have to be sure they’re not setting the bar too high with their forecast results. If they fail to meet these, it’ll make it make it harder for them to get the next round of funding.

“And investors will be similarly impacted. Flat and down rounds do not impact well on portfolio return prospects.”

Click here to find out more about how the startup sector is evolving, and where it’s heading next.

Click here to dive into the data about this asset class.

Please follow and like us:

The network effect: NZ angel networks drive funding

Of the $86 million invested into young companies in 2017, over half ($49 million) came from angel investment networks, rather than individual funds or institutional investment.

“The strength of our angel investment networks in New Zealand is growing every day, which helps to explain why they’re responsible for a growing share of overall funding” says AANZ Chair John O’Hara.

“They’re responsible for over double the funding that’s coming through the next most-popular channel of angel funds.”

Raising funds from angel networks can take a little longer than other sources of early stage funding (such as mico-VCs and high networth individuals) given that sometimes over a dozen individual investors are collaborating to complete DD and gather the investment. Angel networks also tend to be run with a large component of voluntary input so founders and lead investors need to be committed project managers.

John notes that not only do networks tend to bring a larger pool of connections and expertise than single source funding options, they bring deeper reserves of connections for follow on funding.

“Angels are inveterate travellers and networkers and have connections in markets across the world which can be tapped for sales channels, in-market insights as well as follow on funding recommendations,” said John.

“Nothing beats getting on a plane with a line-up of carefully targeted meetings. New Zealand founders and investor directors need to spend more time in-market and be preparing for the founder to be based there,” John added.

He concluded by noting that lining up an in-market Board member was also an important component of scaling into offshore markets.

Click here to find out more about how the startup sector is evolving, and where it’s heading next.

Click here to dive into the data about this asset class.

Please follow and like us:

Investor Activity in NZ Tech Sector Continues to Intensify

Auckland, May 9, 2017 – Investment in New Zealand’s technology companies continues to rise, with record amounts of funding coming from offshore investors, according to the second annual Investor’s Guide to the New Zealand Technology Sector published jointly by the Ministry of Business, Innovation and Employment (MBIE) and the Technology Investment Network (TIN).

Read more

Please follow and like us:

Orion hires US sales star as CEO shows no sign of switching roles

Health software exporter Orion Health is banking on the appointment of a new sales head to put a spring back in its step.
That follows a profit warning and a 25 per cent slide in its share price last week.
Teri Thomas was a vice president at United States rival Epic Systems until she stepped down a year ago.

Read more

Please follow and like us:

More money, more problems – Kiwi craft beer growing pains

What happens when your hobby and passion become your business? And what happens when business booms?

The incredible growth of craft beer in the past decade has created a difficult dilemma for many of the nation’s craft brewers, who suddenly find themselves running multimillion-dollar operations.

The craft beer boom has transformed the industry.

Statistics released today show total beer consumption is growing again for the first time in years.

The high alcohol category – which tends to reflect the craft beer end of the market – has doubled in the past five years and rose 17 per cent last year.

But some breweries have been growing much faster.

Take a look at the Deloitte Fast 50 index – which tracks New Zealand’s fastest growing companies.

Panhead – which has been snapped up by Lion for $25 million – was fourth on that list in 2016 with revenue growth of 925 per cent.

Tuatara, which was purchased early this month by DB for an undisclosed sum, made the list for three years in a row from 2009 to 2011.

In 2015 Garage Project topped the list with 664 per cent growth and fellow Wellington brewer ParrotDog saw 263 per cent growth that year.

It’s reminiscent of the tech boom – although beer brewing is one of the oldest of industries.

It also has much more onerous capital requirements. And relatively low margins.

“It is very difficult,” says Tuatara founder and brewer Carl Vasta. “Especially if you are doing it yourself. You run out of stainless steel tanks pretty quickly.”

“When you are producing a high quality beer that requires expensive ingredients, it’s not just the hardware, if you’ve got to buy a million worth of hops for next season and you have to pay for that today.”

Vasta made headlines this month with the sale to DB, a move that will have disappointed some purist independent craft beer fanatics.

“We looked at a few options,” says Vasta, who will stay on with Tuatara and is excited about putting his focus back on the beer making.

Those included crowd-funding, more private equity (Tuatara already had some investment from PE fund Rangatira) and even a stock market listing.

“We talked about it with the private equity company when they came in. That we could grow the business and then look at listing.”

But after doing some research, he decided the costs of listing were too daunting.

“We’d still have been running the company too … so if we were looking for help in running the company then listing didn’t really help.”

The corporate side of the business, let alone private equity, exit strategies and the rest doesn’t sit naturally with many brewers.

It is an industry that has been built largely on passionate beer lovers scaling up their home brew operations.

Matt Stevens at ParrotDog – which completed New Zealand’s most successful crowdfunding round last year – was a chartered accountant in his previous life.

But despite some experience on the financial side, he says he has never really considered what the exit strategy might be.

“We get asked all the time and none of us really have any idea what the end game looks like,” he says. “We’re just passionate about being in the moment. We get to turn up to work with our mates every day and make beer … which is one of the funnest industries to be in.”

Growth was initially debt funded by the founding shareholders, but they were keen to leverage their popularity and needed a new, bigger brewery.

“A large buyout was not really something we were interested in, stock exchange was too big … so it [crowdfunding] was kind of between.”

ParrotDog raised the maximum legal amount for a crowdfunding initiative, $2 million, in just 48 hours last August.

It is one of three breweries to go down this path, including Yeastie Boys and Renaissance.

The success of the crowdfunding round “was a flattering affirmation”, Stevens says.

But it did mean that ParrotDog suddenly gained 792 new shareholders. It now runs its own share register, including a platform to facilitate share transactions.

ParrotDog went to the public with a nominal valuation of just under$10 million. That was based on an earnings multiple they felt was in the middle of the range for comparable businesses.

But that valuation might have been squeezed down by the market if it had been a full public offer, he says.

As it turned out, the strong demand meant they achieved a post-crowdfunding valuation of more than $11 million, even though shareholders were offered no prospect of dividends in the immediate future.

Vasta’s not sure how much weight investors were putting on that valuation anyway.

“I like to think they all understood what they were buying but if you had the institutions scrutinising you, you just need that much more data about the business which is just more work than we wanted to go through … less time making beer.”

That beer-first philosophy is very much shared by Garage Project’s Jos Ruffell.

Despite huge demand for its beers, which regularly sell out, Ruffell says he has resisted the temptation to dramatically expand production.

“We’ve had times where we’ve expanded and we’ve known that the expansion is not enough to sate the demand,” he says. “When you are doubling and quadrupling in size, to say ‘we need to go tenfold’ is a pretty scary proposition.”

Chasing volume has never been a focus, he says. Instead, Garage Project produces a huge variety of experimental beers.

It started out with just a 50 litre brewing system and produced 24 different beers in 24 weeks.

Those beers were a hit and proved there was a business model, says Ruffell.

So they did an angel investment round which included friends, family and some mentors who had been advising them.

Garage Project has since produced hundreds of beer varieties and has been able to fund further expansion with operating earnings, including a big move, just underway, to start producing at a new brewery in the Hawke’s Bay.

Even that expansion is about creating the opportunity to do more experimental things, Ruffell says.

“Then if our customers respond to that, it creates a virtuous cycle and allows us to grow,” he says. “We have beers that have become very popular and the traditional wisdom would be for us to devote 60 or 70 per cent of our capacity to them. But we’re not willing to do that, we want to keep doing the things that people love about us.”

But the fiercely independent approach doesn’t necessarily mean a lack of ambition for the business.

Ruffell cites family business Whittaker’s (whose chocolate Garage Project uses for some of its specialty beers) as a role model for the kind of business he’d like to create.

Eventually, a stock market listing could potentially be an exciting path to take, but that is a long way off, he says.

“If we got to a point where our fans and drinkers could come along for the ride, that would be really rewarding.”

For now, though, New Zealand has just one publically listed brewer – Moa.

Chief executive Geoff Ross is a share market veteran, having successfully listed and sold vodka company 42 Below last decade.

“Years ago, both Lion and DB were listed here in NZ … now we’re the only opportunity for local investors,” he says.

He can see why market listing is daunting to many brewers.

“There are pros and cons. There is access to capital. But the cons are a huge amount of compliance and a market which doesn’t like variability and change. When you are in a growth business it’s never a straight line.”

Ross says he’d like to see the New Zealand stock market more open to growth companies.

But he’s not sure the problem lies with the market itself. The challenge is with the broking and advisory community, he says.

“The KiwiSaver and a lot of the bigger funds just don’t look at early stage or high growth businesses. I think it should be a component, even just 5 per cent. I think it should be more than that.”

Ross says being listed works for Moa because it has big aspirations. It is seeking to challenge the distribution stranglehold Lion and DB have on the market.

“So we don’t have a plan to exit now. We have a horizon which is much greater than that.”

He can foresee a time when Moa will look to acquire smaller, more specialist beer brands to leverage its distribution network. He already has a distribution partnership with ParrotDog.

He remains upbeat about the outlook for the craft beer sector even though he can see risks of “gold rush fever” setting in.

“There will be a bit of a shakeout. There’s a lot of brands but there is a lot of growth … the next two to three years will see some consolidation for sure.”

There will eventually be two tiers of brands, he says.

“There will be those that have made a conscious step to capitalise and get capacity and scale up … and those who have chosen a more organic path.”

And you could argue that depending on your aspirations, either route is a good one to take.

Clarification

Garage Project will be the foundation brewer in the new bStudio brewery in Napier. It is not building the brewey itself.

First published – NZ Herald 26 Feb 2016

Please follow and like us:

NZ mission to the moon ready for blast off

New Zealand is ready to join the space race, with Kiwi start-up Rocket Lab on the brink of launching a rocket to the moon.

After signing a partnership with United States outfit Moon Express in 2015 on a deal to send three rockets to the moon, Peter Beck – who founded Rocket Lab in 2006, said the last major technical questions had now been answered.

Beck said the ambitious project was almost ready to go and test launches were slated for the coming months from the Mahia Peninsula, on the east coast of the North Island between Napier and Gisborne.

“We recently qualified the first stage of the vehicle – this was the last major technical milestone ahead of the first test flight. We’re currently completing various final checks and working through international launch licensing,” Beck told the Herald from the US, where he is on a routine working visit meeting customers and other industry professionals.

“Rocket Lab has three test launches planned in the coming months followed by several commercial missions – Moon Express is not the first commercial mission. We’ll be making further announcements about this once the test flight phase is complete.

“Dates of the commercial launches will be announced following the completion of the test flight programme.”

Moon Express, a Silicone Valley-backed company which has completed a $28 million funding drive, wants to mine valuable resources on the moon, where it is believed there could be trillions of dollars-worth of precious metals and gases.

The San Francisco outfit is also chasing the extremely lucrative Google Lunar XPRIZE – a competition to land a privately funded spacecraft on the moon, travel 500 metres and transmit high-definition video and images back to Earth.

The competition involves 16 teams from all over the world battling for a $40 million prize purse.

“Moon Express have achieved several significant milestones in the last year. Notably, they have gained permission to be the first private company to travel beyond Earth’s orbit – this enables them, and others, to focus on space exploration – particularly of the moon, asteroids and Mars,” he said.

“Our team is heavily focused on the test flight programme – we have a comprehensive qualification process that each vehicle goes through ahead of a launch. Once that is complete, we’ll look to moving the first vehicle down to Mahia for the test flight.

“It’s certainly an exciting time for not only Rocket Lab but also the growing New Zealand space industry.”

FLY ME TO THE MOON:

• The moon is 384,403km from Earth.
• Rocket Lab’s Electron rocket has a range of 500,000km.
• Electron costs $6.8m.
• The components of Electron’s engine are all 3D printed.
• The world-first, battery-powered rocket engine is named the “Rutherford” engine – named after iconic Kiwi physicist Ernest Rutherford.

First published NZ Herald – 19th January 2017

Please follow and like us:

Minister Chagger issues a call to action on women entrepreneurship in Canada and announces $50 million to help businesswomen access capital

Women entrepreneurs from across Canada gather to talk about growing their businesses and accessing new markets
November 9, 2016 – Toronto, Ontario – Innovation, Science and Economic Development Canada
Today, the Honourable Bardish Chagger, Minister of Small Business and Tourism, is hosting the Canadian Women’s Entrepreneurship Conference in Toronto. The Minister invited businesswomen from across the country to come together to share ideas on how more Canadian women business owners can be globally successful. Addressing a crowd of over 200 inspiring women entrepreneurs and the organizations that support them, the Minister issued a call to action to increase the number of women starting and running their own businesses.

Read more

Please follow and like us:

Labour targets ICT as second largest economic contributor

A Labour-led government would target the ICT sector to be New Zealand’s second largest contributor to the economy by 2025, believing it is a job-rich source of growth for a nation of small businesses.
While the precise definition of what constitutes ICT is up for debate, the party believes it currently sits somewhere between the third and fourth largest sector, behind tourism and the dairy and wine industries.
The party’s finance spokesman, Grant Robertson, unveiled the target when launching the results of the party’s two year ‘Future of Work Commission’ at its annual conference in Auckland over the weekend, unveiling a raft of proposals to improve intellectual property protection for small and medium-sized tech businesses, infuse schools and communities with digital learning opportunities, and a shake-up for innovation, science, and university research funding.

Read more

Please follow and like us:

Upcoming BIS Workshop

Lowndes is pleased to invite you to the fifth workshop in the 2016 Business Intelligence series, Growth Companies: Capturing the Synergies between Entrepreneurs and Smart Capital, an evening to meet and hear from four highly regarded specialists in this field, and network with a range of senior business people.

This evening event offers you a unique opportunity to share ideas with a panel of International and New Zealand experts and your peers. Lowndes has hosted this well regarded event for 5 years and welcomes your participation in the discussion and pre event networking.

More information

Please follow and like us:

Project16 / Creativity in Business on Sept.1

Project ’16 will focus on Creativity in Business – how can NZ’s creative entrepreneurs and their companies most effectively start, grow and scale their products and services. Our intent is to help NZ’s go global export focused companies lift their game exponentially and take full advantage of their business potential. On September 1st, twenty visionary thought leaders from New Zealand and around the Pacific Rim will come together to share their knowledge and experience about how to best build New Zealand’s future creative businesses.

So – what’s different about the Project16?

Our speakers stay for the entire day, so they can hear what’s said and build on it. And, they are around during the of the breaks (AM/PM teas, lunch & the networking reception) to answer questions and chat.

Project16’s Creativity in Business program will address:

  • What world-class best practices can help us develop and deliver our innovative creative products, services and brands more effectively?
  • What contemporary information do we need to know to grow our creative businesses as quickly and successfully as possible?
  • How can New Zealand’s best and brightest entrepreneurs better position to raise capital effectively?

Whatever your industry or interest, the 2016 Project program offers a rare chance to meet great minds who think differently and to learn from their successes and their failures. Together, we can make better sense of the shifting economic zeitgeist and how we can compete more dynamically in our continually evolving digital world. Join us to connect the dots. Come be part of building a more creative and prosperous 21st Century in (and from) New Zealand.

See Project16 speaker profiles here:

http://www.the-project.co.nz/project-16#speakers

Register for Project16 here.

http://www.eventfinda.co.nz/2016/project-16/auckland

Please follow and like us:

R9 Accelerator Demo Day – 2 June

It would be great if NZ angels could get along to the R9 Demo Day to show our support for the large swathe of public servants in our community who are also aspiring to innovate and create ventures which are disruptive and scaleable….

We’re excited to announce that R9 Accelerator is having its second Demo Day on Thursday 2 June from 2:30pm – If you’re interested in attending please email Edd Brooksbank.

You’ll have the opportunity to invest in teams who are pitching their innovative solutions to improve public service for business customers, meet the teams and find out how they could help you. You will also hear what our panel of experts have to say and know why the R9 Accelerator is important to businesses across New Zealand.

Event details

  • Thursday, 2 June 2016, doors open at 2:30pm for a 3pm start
  • The Embassy Theatre, Kent Terrace, Wellington
  • Presentations will finish by 5:30pm with light refreshments and an opportunity to meet the teams from 5:30pm onwards

Any questions, please email Edd Brooksbank.

 

More information on R9 Accelerator

R9 Accelerator is a real life example of making it Better for Business when interacting with government. The teams are each working on an opportunity to make it better for businesses to interact with government.

The R9 Accelerator is led by the Result 9 Better for Business programme and delivered by Creative HQ to power better public services to business customers.

The R9 Accelerator brings together teams of entrepreneurs, developers, private sector specialists and government experts to work on projects to help solve major pain points for New Zealand businesses and reduce their effort in dealing with government.

The process takes just 14 weeks to generate a customer-validated prototype – ready for further investment. It takes a learn-as-you-go, fail fast approach to develop and test new products and services.
One of the teams – CoHelix. Dan, Nicole, and Alex are helping businesses be compliant by improving the fieldstaff services from regulatory agencies. Find out about the other teams and what they’re working on.

Please follow and like us:

Start-ups praise tax law ‘triumph’

The senate has passed new early-stage start-up investment tax measures, hailed by StartupAUS as a ‘triumph’ for Australia’s start-up ecosystem.

The legislation, which will give concessional tax treatment to investors including a 20 per cent non-refundable carry forward tax offset on investments in qualifying companies, passed today with bipartisan support.

The measures also include a 10 year exemption on capital gains tax, provided investments are held for 12 months or more.

Read more

Please follow and like us:

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

Please follow and like us:

Comvita announces Denyer in board position

NZX-listed Bay of Plenty honey and health products company Comvita has announced the appointment of Tauranga lawyer Murray Denyer to the board, effective April 1.

The Cooney Lees Morgan partner is well-known in the region’s investment community and serves with Comvita chairman Neil Craig on the board of early stage funding group Enterprise Angels.

Mr Craig, speaking from Hong Kong where the full Comvita board are currently on a trip to deepen their understanding of the China markets, said Mr Denyer’s qualifications included the fact he was local, his age and his commercially focused legal background.

“Having a legal brain around the board table is a good idea when we’re doing such a lot in the acquisitions space.”

Mr Denyer would be put up for re-election in October at the annual general meeting, when he will take over the role of chair of the Remuneration & HR Committee from Dr David Cullwick.
“Comvita has some quite progressive share schemes and we brought him on six months early so he could get his head around that with David,” said Mr Craig.

Mr Denyer began his career with the Ministry Foreign Affairs & Trade in 1993, then went into private practice and was eventually headhunted to join Zespri in Tauranga in 2003. He spent almost six years with Zespri, ending up as general counsel and board secretary.

In 2009 he came on board at Cooney Lees Morgan and was elected to the partnership in 2010. Mr Denyer also served on the board of Priority One for eight years.

Mr Denyer, who is also currently in Hong Kong, said he was really excited about his new role.

“It’s a local company that I’ve followed for a long time and it’s very much part of our local Bay economy. I’ve always been very passionate about export businesses and this is one. There’s a lot of things I’ve done over my career that give me the right skill-set to put my shoulder to the wheel and make some contributions there.”

First published on nzherald.co.nz on 5th April 2016

Please follow and like us:

In search of the next global agritech superstar

Angels should be looking forward to seeing what sort of ‘angel food’ Sprout, the recently announced agritech accelerator generates.

Business talent scouts are looking for a startup with the potential to be New Zealand’s next global agritech superstar.
Sprout, a national agritech business accelerator, is searching the country for eight budding entrepreneurs with embryonic agritech businesses for a new development programme.
Please follow and like us:

Boat launcher can help keep marriages afloat: inventor

Remote-controlled device avoids the hot water of loading and unloading vessels

Spend any time sitting at a boat ramp observing the bustle of boaties launching and retrieving their vessels and inevitably, excruciatingly, it won’t be long before something goes awry.

These boat scratching moments are the bane of any owner’s day, but they’re also the motivation behind a Kiwi innovation – the Balex Automatic Boat Loader.

A self-powered, remote controlled device for loading and unloading boats onto trailers, the ABL2500, made by Balex Marine in Tauranga, eliminates the need for manual winches, wet feet and, crucially, requires just one person to get a boat into and out of the water.

The first batch of finished units is due to ship to customers in spring. However, the story of how Balex got to this point began 10 years earlier in the garage of Tauranga realtor Lex Bacon.

Bacon, following a suggestion from his wife that inventing an automatic method of launching and retrieving boats would save many a marriage, spent years building early versions in his shed.

n 2013, mutual interests brought Bacon together with businessman Paul Symes who had just spent eight years in the Philippines building a CAD-based engineering company which he’d sold before returning to New Zealand.

A keen boatie and sailor, he brought his family to the Bay of Plenty and met Bacon and his fledgling automatic boat loader.

Sensing an opportunity to fold his hobbies and his penchant for investment into a single business, Balex Marine was founded in late 2013.

What followed was an intensive period of research and development in the hope of creating a product that Symes believes has the potential to become as commonplace as automatic garage doors.

“I spent the latter part of 2013 doing my own due diligence,” Symes says.

This involved employing product development consultancy Locus Research to conduct market research.

“By late December 2013 we’d brought all of those findings together and ultimately decided to develop, in 20 weeks, an advanced prototype as part of a market validation programme,” says Symes, who put up $300,000 to fund this first phase.

The finished prototype was showcased to the 2014 Auckland Boat Show’s 34,000 visitors.

With an advanced prototype and plenty of market validation under their belts, the company now needed capital.

Government-backed Callaghan Innovation provided about $100,000 to continue the R&D programme and after a successful pitch the Bay of Plenty-based early stage investment group the Enterprise Angels invested $700,000 to get the first boat loaders out the door.

During the Enterprise Angels’ due diligence process another key figure, Paul Yarrall, joined the team. The relationship clicked and in January 2015 Yarrall joined Balex’s board as sales director.

Even as the launch draws nearer, the company is busy preparing for a second, larger round of capital raising. This money will enable the company to set in motion its ambitious plans for a worldwide launch, beginning with Australia, then North America and Europe.

Produced in conjunction with the Angel Association of New Zealand.

Balex Marine
Remote controlled device for loading and unloading boats.
Developed an advanced prototype in 20 weeks.
Received $800,000 in funding and investment.
Planned to launch this spring.

As first published on NZHerald

Please follow and like us:

Award for Business School academic behind UK’s £750m annual angel investment phenomenon

A wonderful award made recently to Professor Richard Harrison, Chair in Entrepreneurship and Innovation at University of Edinburgh recognising the role he played promote angel investment in the UK.
The academics credited with introducing the ‘business angel’ phenomenon to the UK, and stimulating more than £750m of entrepreneurial investment each year, have been recognised with an award for their outstanding contribution to business research during the past 25 years.

University of Edinburgh Business School’s Professor Richard Harrison, and Adam Smith Business School, University of Glasgow’s Professor Colin Mason received the award for Outstanding Impact in Business, at the Economic & Social Research Council (ESRC) Celebrating Impact Awards.

The award recognises the crucial role their research has played in stimulating business angel investment and ensuring government support for this key source of entrepreneurial finance.

Unheard of in the UK before 1990, ‘business angel’ is now a commonly used term to describe wealthy individuals who invest their personal wealth in start-up, or early-stage ventures, in return for an equity stake.

The researchers’ proposals for business angel networks (BANs) was first adopted in 1991 by the UK government in five pilot projects, before going on to play a pivotal role in the Department of Trade and Industry’s best practices guide for the formation of BANs.

Read more on www.business-school.ed.ac.uk

Please follow and like us:

The touch of an angel

Angel investors are often an entrepreneur’s first port of call for capital. But what’s it like dealing with angels? Is it more halos or hassle? NZBusiness sat in on the Angel Investor Summit where entrepreneurs shared their highs and lows.

Scantily-clad forms don’t tend to dominate investment gatherings. So perhaps it wasn’t surprising that there was a palpable feeling of renewed interest when Kiwi entrepreneur Paul Cameron flicked up a slide of a rather beautiful female ‘angel’ at the recent Angel Investor Summit in Auckland.

“We really like angels. They are beautiful people. And this is what I think about when I think about my angels,” Cameron said to howls of laughter from the mainly male, mainly older and mainly well-to-do and (thankfully) fully dressed audience.

Cameron says he likes his angels for a number of reasons outside the cash they bring. Key for him has been the support they’ve given him and his business, Booktrack.

Booktrack’s patented technology lets anyone add a synchronized movie-style soundtrack, including sound effects, to an e-book or other digital content, with the audio paced to the reader’s own reading speed. The idea dates back to 2009, but it wasn’t until 2011 that Cameron sought help and capital. Since then, Booktrack has raised more than $2 million from early stage investors including Sparkbox, The Warehouse founder Stephen Tindall’s K1W1, Kiwi entrepreneur Derek Handley and US tech entrepreneur and investor (and self-proclaimed Kiwiphile) Peter Thiel.

Quoting boxer Mike Tyson, Cameron says “Everyone has a plan until you are punched in the face,” and that’s what it’s like for entrepreneurs; things often don’t go to plan. When that happens you need to know there’s support there; that someone is guarding your back, he says.

Right from the beginning Sparkbox’s Greg Sitters has always been there for him, with almost daily contact at the beginning of his angel journey, he says. “It had been eleven months. It was 9.30 at night and my phone rang. It was Greg and he goes ‘How you going?’, and I reply ‘Good, what’s going on?’ He says ‘Nothing, I just haven’t heard from you so I was just checking in that everything was all right’.

“It was the first time in months we hadn’t actually touched base for more than 24 hours,” Cameron laughs.

But knowing that sort of support is there when you’re trying to build up a business and trying to raise capital is invaluable, he says.

Another thing angels bring to the table is connections and networks, says Cameron. When Kiwi entrepreneur Derek Handley sold his successful mobile marketing company, The Hyperfactory, a friend suggested he get in touch with him. Cameron went to Sitters and asked if he knew Handley. He did, and a meeting was arranged. Soon Handley was an investor and had arranged for Cameron to go to Silicon Valley to meet some members of his own network. These introductions led to Cameron netting Thiel as an investor and the rest, as they say, is history.

Antony Dixon, founder of super slimline radio frequency identification product manufacturer Times-7, says without his Kiwi angels’ encouragement and networks, he’d have never have got on a plane and met, let alone landed, his current Silicon Valley partners.

Similarly Marie-Claire Andrews, co-founder and CEO of smartphone event app ShowGizmo, says connections are vital, especially when you head off overseas. But it’s not just connections for sales or investment that are important, she says: “It can be connections for anything: a place to sleep; a desk.”

Another big plus is just the belief angels bring to an entrepreneur, says Cameron. “When someone says they want to invest in your business, as an entrepreneur you feel 100ft tall; like you can take on the whole world. It gives you amazing self-belief and the motivation to go an extra 200 percent when you’re already giving it 100 percent.

“That’s probably my favourite part of working with the angels; that belief they give us and how they bring that to the whole entrepreneurial ecosystem.”

Andrews was also upbeat about her angel experience, even highlighting how important the frequent pitches were to both testing and honing her business strategy and as an important dress rehearsal for getting sales. “Practising pitching is practising selling… and that’s what we have to do every day as entrepreneurs.”

But the downside of all this relationship-building is the time involved for what is often not a lot of capital at the end of the day, she says. “It’s been the time pressure that’s been the hardest for us; the involved time, my time.” Every pitch is different and it differs between angel groups, but angels should streamline their processes more and be far more transparent about what’s happening and how as an entrepreneur you’re doing, so there’s no time wasted just wondering what’s going on, she says.

After three years, ShowGizmo has netted just under a million in external investor capital, compared with US$40 million raised by the company’s biggest competitor in the US, says Andrews. “Our last round was a simple just under $100,000 top-up for a specific reason. Admittedly it only took three months, but it still took about 80 hours of my time.”

Mind the time

John Huston, founder of one of North America’s largest Angel Groups, the Ohio Tech Angel Fund and a key note speaker at the 2014 Angel Summit, says the only constant entrepreneurs have is 168: the number of hours in a week.

“The most successful entrepreneurs are those who use those 168 hours most effectively.

“Angel groups who squander the time of entrepreneurs are not just unkind, they are evil,” he laughs. Investors need to get wise about “harmonising the size of their cheque with how much time they are going to take,” he says. “It just drives these folk crazy when they have to spend as much time with some $10,000 cheque writer as they do with someone who ran a $1 million round.”

The process to actually getting capital is really, really hard, admits Rachel Lacy, founder and director of Drikolor, which plans to revolutionise the paint market by introducing dry pigments that can be mixed by anyone. “It’s dating and we just want to get married.”

To improve the process Cameron says some angel groups need to realise it’s okay to say “no”. There’s nothing worse than having a great meeting, a seemingly great pitch and then never hearing anything again, he says.

“We’re feedback junkies,” agrees Andrews. “We need to know why.”

Comments like, “we did not invest because it’s not right for us at this time,” mean nothing, says Cameron. “Tell us if it’s because we look funny. It’s even best to say it in the meeting so we don’t waste any more time.”

Lacy says now there are more angel groups in New Zealand, they should be a little smarter about matching investors to companies and their founders – as you can’t, and you shouldn’t even try, to separate one from the other. “It would be really good if I didn’t have to endlessly pitch to people who just want to invest in the next Facebook.

“Starting up is hard enough, so you want as much investment alignment as you can. You want a group of angels to invest who understand and are interested in your space; and share a similar business philosophy as that will affect how your company develops. You can’t retrofit culture.”

Know the business

Understanding their space better was a common grumble among the entrepreneurs who shared their experiences. Andrews says it was still early days in the smartphone revolution when she started out, but she was a little shocked and dismayed when one potential investor asked not about the markets she was heading into, her financials or her team, but simply, how they could get her app on their phone.

Cameron says if investors want to be involved in tech companies they should learn more about it and the best way to do that was to actually start using it. “Go buy a smart watch and use it; go for a run and measure your heart beat online; start tweeting; just do it.”

It amazes him when some investors say they want to help him develop his company. “But hey, you have to get your kids to help teach you how to use your phone, so why do you think you know anything about the consumer Internet.”

Investors should ask themselves how relevant their experience really is, he says. “It doesn’t mean they can’t help with the strategy, but they need to recognise their own limitations.”

That said new entrepreneurs do need a lot of education, says Cameron. Even the terms investors use are like a foreign language.

Lacy says it would be useful if investors forced entrepreneurs to do a five-day Institute of Directors course on what your responsibilities as a board director actually are after they invest.

As to boards, it’s really vital you get the right people on your board at the right time, she says, and just because someone invests in your company, it doesn’t mean they should have a board seat.

“We have a fantastic first board with loads of sales and marketing experience, which is brilliant; it was just 18 months too early.”

Today Lacy’s company Drikolor has finally caught up to her board’s experience and she says she wouldn’t hesitate to recommend the angel investment route to other budding entrepreneurs.

“If you get the right mix, it’s phenomenal.” After all, without the angels, their knowhow, their connections and their cash, we wouldn’t be here, she says. “But obviously the reverse is true as well.”

First published on nzbusiness.co.nz 29 January 2015

Please follow and like us:

Lead Partners

NZTE NZVIF PWC

Expert Partner

AVID “FNZC.jpg”

AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”