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.

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Dave Moskovitz named NZ Arch Angel 2018

One of New Zealand’s true champions of kiwi start-ups and angel investment, Dave Moskovitz, was awarded the Angel Association New Zealand’s (AANZ) Arch Angel Award at the 11th Anniversary NZ Angel Summit in Blenheim.

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

The award recognises the significant amount of time and money angels contribute to startups and early-stage companies – and specifically to their founders and teams – to help them reach their potential while also recognising angels who make a significant difference to New Zealand’s start-up ecosystem. The recipient is chosen by the previous years’ winners.

Dave has been investing in early-stage companies for a decade and been an investor director for a number of the ventures he has backed including ShowGizmo, The Appreciation Engine and Jaipuna. Most notably he was at the helm of peer-review publishing platform, Publons as Chair when that venture exited to UK-based Clarivate Analytics last year.

Dave has held governance roles with Wellington-based AngelHQ and was one of the founding fathers of New Zealand Start-up Weekends. He has mentored for 9 accelerator programmes helping dozens of ventures to secure funding and grow their businesses. Dave is an active member of InternetNZ, a member of the council of Open Polytech and was recently appointed to the Ministerial Advisory Group for Digital Economy and Digital Inclusion. He is also New Zealand’s representative to the Global Business Angel Network.

Former Arch Angel winner, Andy Hamilton, says one of the hallmarks of Dave’s work has been the importance he places on the role of empathy in business success.

“Dave takes a very genuine interest in supporting not just the success of the founders he backs, but also their wellbeing,” he said, noting that being a founder can be a very personally challenging role.

2012 winner, Movac’s Phil McCaw, who has worked with Dave over the years in the Wellington start-up and early stage investment scene, said Dave’s contribution to angel investment and start-ups in New Zealand is significant.

“Dave has freely given up countless weekends and evenings to work with people from all kinds of backgrounds who want to create new businesses. Making a difference and leaving the world better than he found it are integral components of Dave’s purpose. In investing in a number of these start-ups, he follows through very tangibly to deliver on that purpose.”

Speaking earlier in the year to Simon Morton on Radio New Zealand, Dave spoke with deep and personal insight about how successful angels and founders recycle skills and capital generating a virtuous cycle of further start-ups and cutting-edge roles in disruptive industries. He also spoke enthusiastically about the role start-up methodology could play improving the delivery of government services.

Dave received his award at the 11th Anniversary NZ Angel Summit, held at Marlborough Vintners in Blenheim and attended by 150 delegates. The annual event provides a hub for angels to learn and network, and is recognised as one of the world’s top angel events.

American born, Dave came to New Zealand over 25 years ago. He attended the University of California, Berkeley where he majored in computer science. He is one of three migrants to win the Arch Angel Award.

Former Arch Angel winners include The Warehouse founder and long-time angel investor Stephen Tindall; Andy Hamilton, chief executive of The Icehouse and member of IceAngels; US super angel Bill Payne; veteran angel investor Dr Ray Thomson; prolific AngelHQ member, Trevor Dickinson, former AANZ Chair, Marcel van den Assum and ardent angel investor, Debra Hall.

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Investors have confidence in startup futures

The October issue of Startup Investment New Zealand Magazine is now available here.

In this edition, we shine a spotlight on Kiwi businesses that have earned a place on the world stage. To be successful, Kiwi startups have always had to think and act global from the outset but there’s now a number of factors helping these startups succeed in offshore markets, and often much earlier in their journey. We’re seeing a developing ecosystem of support including government agencies, networks and people with experience at scaling global businesses, as well as investors who have the confidence to support these innovative companies.

The data is supporting this investor confidence. Five times the number of startup organisations successfully raised over $1 million from local investors in the first half of 2018 verse the same period last year, according to the latest Young Company Finance Index. This year almost half of deals are co invested by two or more Angel clubs and funds. Why is the formula to achieve global success so critical? It means little old New Zealand can produce valuable companies winning on the global stage, which attracts investors and ultimately builds prosperity for us as a country.

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

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

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

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

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

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

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

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

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

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

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

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

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

 

ABOUT US

The Angel Association of New Zealand (AANZ)

The Angel Association is an organisation that aims to increase the quantity, quality and success of angel investments in New Zealand and in doing so create a greater pool of capital for innovative start-up companies. It was established in 2008 to bring together New Zealand angels and early-stage funds. AANZ currently has 30 members representing over 700 individual angels associated with New Zealand’s key angel networks and funds.

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

The Global Entrepreneurship Network

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

ENDS

For interviews and further enquiries, please contact us:

Dinika Govender
Communications, Startup Genome
[email protected]

Jessica Wray Bradner

Communications, GEN
[email protected]

Suse Reynolds,

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

Marcel van den Assum,

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

 

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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.

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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.

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Snowball Effect – Recap of the last 3 years

AANZ member, Snowball Effect has recently released a three year update on the performance of their platform. It contains a wealth of fascinating insight and is really transparent about the money raised and the profile of their investors. It’s a timely provocation to all our members. This sort of data is critical to raising the profile, performance and reputation of early stage investment as an asset class worthy of attention.

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Over its first three years of operation, Snowball Effect has raised $29 million across 35 offers. 25 of these offers were made available publicly and 10 were made available privately. The public offers generated $23.1 million in investment and the private offers generated $6.1 million. The private offers are now the fastest growing part of the Snowball Effect marketplace.

Capital raised

The capital being raised in each offer is significant relative to the rest of the industry in NZ, with eight offers reaching over $1 million raised and the average public offer reaching $923k. This compares to a market average for public offers on other platforms of just $371k. Large public offers like Zeffer and Designer Wardrobe are attracting significant numbers of investors. The average number of investors into a public offer was 142 people and 14 offers have received investment from over 100 investors.

Investment sizes

There have been 3,935 investments made through Snowball Effect. The largest portion of the amount invested came from investments in the $10k to $50k range, with $8.9 million worth of investments from this range. The largest single investment was $1.25 million and 632 investments were over $10k. At the smaller end of the scale, the largest number of investments was in the $1k and $5k range, with 2,162 investments in this range.

Investor behaviour

The platform now has an audience of 15,509 of whom 2,413 have made an investment. So far, 27% have made more than one investment and 7.5% have made four or more investments. 17 people have invested in more than 10 offers and the most active investor has invested in 25 offers.

Investor demographics

The average age is 45, the youngest investor is 18, and the oldest investor is 88. So far, 24% of active investors on the platform are female, which compares to a national average in 2005 of 5% for angel investor networks in 2012 (according to the Angel Association of NZ).

Wholesale investors

There are 896 wholesale investors registered on the platform. Wholesale investors are eligible to receive a wider range of investment offers because of their net-worth, experience with private investments, or financial sophistication. The average investment into a private offer is $35k and there are 48 investors who have invested over $100k.

Additional services

Snowball Effect launched the first public offer using the equity crowdfunding rules in New Zealand. In company’s second year, it introduced a private offer service and added a nominee service that lets companies manage multiple investors through a single legal entity. This year it introduced an investor profile that lets investors control what types of private offers they get access to and a director matching service that helps companies find independent or non-executive directors. 80 people have completed their independent director profile. Snowball Effect has also introduced a share registry management service which is currently tracking the shareholding of 468 investors.

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2017 Angel Summit focuses on next 10 years

The tenth Annual New Zealand Angel Summit will be held at Cable Bay Winery – Waiheke Island from 1 – 3 November 2017. It’s theme; “Doubling down on success… the next ten years!”

New Zealand is now decade in to formal angel investing in New Zealand and has amassed some impressive statistics for a nation of our size. Over $500m into nearly 1000 deals in the more formal part of our market. Ten years ago there were 4 clubs and 100 or so angels. Today there are 10 clubs and over 650 angels. All this activity has delivered hundreds of jobs and tens of millions of revenue. It’s this value creation we want to continue to accelerate.

Ten years ago there were 4 clubs and 100 or so angels. Today there are 10 clubs and over 650 angels. All this activity has delivered hundreds of jobs and tens of millions of revenue. It’s this value creation we want to continue to accelerate.

The 10th Annual NZ Angel Summit is being held back where it all started at Cable Bay Winery on Waiheke Island. The choice of the small intimate venue continues the deliberate approach by the Angel Association to ensure it creates the right atmosphere for relaxed and informal conversations between active angel investors. The last two summits have sold out and it unapologetically prioritises attendance for those who are ‘doing deals’.

On the first morning the Summit will celebrate our community of investors and founders and their achievements in the past decade. There is so much to be proud of. The rest of the event will be spent digging into what we need to do to double down on our successes based on stories and insights from New Zealand’s heroes. International speakers, carefully vetted for their ability to both understand New Zealand’s unique circumstances and our aspiration for outcomes and success are flying in to present.

Showcasing Angel Investor Backed Ventures

The Showcase event which kicks off the event will include up to 10 venture in three tiers; seed, first formal round, last raise with a clear exit path. Each group of ventures will be introduced by an experienced angel investor who will talk about the investment opportunity, the return profile, valuations and potential acquirers.

New Zealand Investor Keynotes

Key Note sessions will include deep insight into what we can be proud of and what’s next. Stalwart investors will share memories of getting started – what was their vision and what inspired them, their challenges and what we need to do in the next decade to ensure value is delivered. These sessions will explore why our environment looked as it did 10 years ago, how far we’ve come and how we build on what we’ve created and set the vision for the next 10 years.

International Angel Investors

International special guests include Justin Milano (Good Startups, San Francisco, USA) who will explore the role of fear in the early-stage space. A veteran of Silicon Valley, Mr Milano has worked with angels and entrepreneurs to use cutting edge psychology and neuroscience, including emotional intelligence skills to help entrepreneurs and angels create break-throughs and unlock potential. Ron Wiessman (Band of Angels, San Francisco, US) will deliver a dose of reality exploring the critical the role of capital strategy and how tough it can be to source and entice an acquirers.

Actionable Insights

The extensive programme includes gritty content which covers; building strategic value, actively managing your portfolio for returns, Government’s role – identifying the right policy levers, the role of NZ corporate venture, and deep dives into term sheets – how have they have evolved and what role do they play in venture success lead by AANZ Expert Partner, Avid Legal’s Bruno Bordignon. Insight into which industries and technologies are going to irrevocably disrupt markets in the coming decades and make the best investment opportunities round out the valuable programme.

Finally, the event will also include the presentation of Arch Angel Award and two inaugural awards “Contribution to the industry” and “Lead angel and best venture award” – celebrating a great angel/founder collaboration.

To book your seat (preference is given to active angel investors) click here.

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Christchurch agritech company CropLogic launches prospectus

Christchurch agritech company CropLogic’s​ long-awaited plans are coming to fruition with the launch of a prospectus to raise A$8 million (NZ$8.45m)

Chief executive Jamie Cairns will lead a roadshow presentation in New Zealand and Australia over the next fortnight.

CropLogic helps improve crop yields by combining research and technology with field support teams to provide
accurate advice to growers.

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Capital Markets Report: Making it a bigger deal

There’s still a big gap in the market for traditional venture capital, with long lead-ins, writes James Penn.
The average transaction value in New Zealand’s venture and early stage capital sectors more than doubled from 2015 to 2016, according to a recently released report. However, concerns about the fragility of the sector remain.
The New Zealand Private Equity and Venture Capital Monitor, published by EY and NZVCA, paints a rosy picture for the venture and early stage sector, with growth of 47.7 per cent in the value of deals — which don’t include angel investments — compared with 2015.
Interestingly, despite this growth in total investment value, the number of transactions has declined. This has resulted in the average transaction value growing from $906,000 in 2015 to $1.85 million in 2016, suggesting a maturing of the sector.
A similar, albeit more moderate, story can be observed for angel investments.
A recent report by the New Zealand Venture Investment Fund (NZVIF) stated that while the number of investments by angel groups and funds decreased 15 per cent, the total value of investment increased by 13 per cent, reaching $69m in 2016.
Willingness to invest larger sums in each individual company is indicative of investors having more confidence that those companies have strong, often international, growth potential.
However, this means that the sector is highly focused on growth capital — for companies that have already generated a significant level of revenue.
“A big gap remains in the market for more traditional venture capital targeted at businesses that have long lead times and deep intellectual property,” says Colin McKinnon, Executive Director of NZVCA. “We don’t have a New Zealand fund in the market at the moment that would be likely to invest in (say) Rocket Lab or 8i while they remain pre-revenue.”
Managing Partner of Movac, Phil McCaw, sees fragility in the early stage capital sector, arguing that New Zealand needs at least a couple more significant funds around the $150 million mark. Movac for its part recently raised $110 million for its Fund 4, and has already made a significant investment from that fund in retail software developer Vend.
“My vision for the venture industry is to see that we’ve got three or four long term sustainable funds that are $150 million type funds,” says McCaw. “We’ve got to find a way to lift this industry to get to that position.”
Engender Technologies, a Kiwi company that has developed laser technology to sort livestock sperm by sex, is illustrative of the benefits that come from these growth-focused capital sources.
After closing a $4.5 million capital raise — led by Kiwi venture investment firm Pacific Capital — in June last year, Engender has started growing its footprint globally. To date in 2017, Engender has announced a $1 million deal with Asia’s largest animal genetics company and has been named one of the five most innovative Agtech start-ups at Agfunder Global Innovation Awards.
The positive headline figures are also reflected in a flurry of activity among old and new specialised funds. In March this year, for example, NZVIF announced its 17th partnership for its seed co-investment fund with ArcAngels, a group of private individuals focused on investing in female-led start-ups.
Meanwhile, the NZ Super Fund broadened its scope of investments over the past year, with investment in funds that target a spectrum of companies, from early to late growth.
“New capital commitments for funds including Movac and Global from Day One were complemented by on-going fundraising by Punakaiki Fund,” says McKinnon, “Crowdfunding platforms Snowball Effect and Equitise, and the public listing of Powerhouse Ventures also raised capital.”
KiwiSaver is nowhere to be seen in venture or private equity which is disappointing.
Colin McKinnon
McCaw says “I’m more confident than I’ve ever been. There’s more cash in the market and there’s more opportunity, and I don’t see those things changing in the next few years.”
Despite this dynamism, there remains work to be done to foster a deep early stage and venture capital market that can
satisfy the needs of rapidly scalable ventures.
Public funds and institutional investors need to play a greater role. While the Super Fund has taken a step in this direction, it has taken some time and the industry would welcome other funds following suit.
“KiwiSaver is nowhere to be seen in venture or private equity which is disappointing. International investors prioritise larger markets,” explains McKinnon.
“Creating a framework that incentivises the early-stage growth market until a long-term track-record is developed should be considered. The industry is close, but not quite there yet.”
McCaw also sees a need for policy change in this regard, noting the success of recent Australian policy changes and the subsequent growth in their sector.
“If we want a growth economy that grows from entrepreneurship, you’ve actually got to put in place a policy framework that supports it across the spectrum,” says McCaw. “And I think there’s an absence of policy at the moment in the venture and growth capital class that is not enabling the scaling of funds.”
And the age-old question of returns still remains. Yet again, there was an absence of divestment within the venture and early stage capital sector in 2016.
According to the Capital Monitor, just one of the past six years has seen any divestment, and that was a mere $400,000. However, McCaw says this is the nature of the beast and the early stage capital sector is always expected to have long pay-off timelines.
“It is still a developing story. Around the world, that’s a story that takes 20 years to create, across a couple of fund iterations,” says McCaw. “But it’s coming.”
“You can kind of justify the growth that’s incurring inside of these companies, because there really is some really fast revenue growth occurring — so there’s definite signs that the industry is investing in things that are creating long term value.”
“The rate of return at the moment in terms of cash back is not fast enough,” accepts McCaw. “But it’s getting faster.”
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NZ early stage investors have eye on global prize

Entrepreneurs are being encouraged to chase global markets if they want to win backing for their early stage ventures, with investors having their eye firmly set on international markets with little regard for domestic sales.

Massey University Master of Management student Hattaf Ansari worked with the university’s start-up incubator – the ecentre – to investigate the criteria of investors in early stage ventures in New Zealand and compared that with similar US data.

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Skin is the game for Kiwi regenerative medicine spinoff

AUCKLAND: Patients suffering major burns may eventually benefit from the launch of a new regenerative medicine company, Upside Biotechnologies, which is developing an advanced, world-class skin replacement treatment in Auckland.
Regenerative medicine develops methods to regrow, repair or replace damaged or diseased cells, organs or tissues to restore or establish normal function. The global regenerative medicines market is projected to reach US$30 billion by 2022.

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

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

First published – NZ Herald 6 November 2016

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‘The jockey’ key for angel investing

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

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

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

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New Zealand’s need for growth capital

As early stage investors we need to start getting real about the wisdom of our backing early stage, high growth ventures without far more consideration being given to where we source follow-on growth capital.

Even if we only look at last year’s New Zealand Venture Investment Fund’s seed co-investment data where about $50million was invested in early stage companies, the growth capital required for this cohort of companies is likely to be 10x this figure. So we are talking about finding $500m.

This is not just a problem for the investors in these companies; it’s a problem we need to grapple with in partnership with the government and the institutional investment community. These high growth companies are the engines of our economic growth. We can’t afford to drop the ball.

The development of an innovation led economy is widely accepted to take place over three ten-year horizons. We are coming to the end of ‘horizon one’ where the focus has been on inputs. New Zealand has done well here. The number of startups, early stage investors and dollars being invested has trended upwards over this period.

In the second ten-year horizon we should start to see outcomes from these innovation led companies in the form of jobs, export and tax revenue. But to generate these outcomes and see the true benefit of this investment, we need growth capital. Only then will the third horizon truly deliver in the form of financial returns and recycled capital and ultimately higher standards of living.

As I’ve just mentioned, there is no shortage of deal flow. The quality of that deal flow is improving every year too. This is in large part due to Government support for initiatives such as the Lightning Lab and the investor-led Tech Incubators. It is also a result of work others have done to upskill our entrepreneurs and angel investors.

To date, angels and other early stage investors have been able to fund the early growth of the companies meeting their criteria. We have been investing in startup, high growth ventures in a targeted sense for about 8 years but the really exponential upswing in investment has taken place in the last 3-4 years.

Quite logically, there is therefore an increasing and pressing need for growth capital in New Zealand.

This is illustrated in the recently released NZVIF data showing most investment is into existing deals. Angels are having the stay the course longer and dip back in their pockets for capital it could be argued should be coming from deeper more experienced pockets.

We need to give credit to those venture capital firms raising funds to meet the need for growth capital such as Movac’s Fund 4, the $40m fund GD1 is working hard to raise and the $40m fund raised by Oriens Capital. But it is not enough.

Closing the “growth capital gap” is going to need New Zealand’s pension and other institutional funds to broaden their investment mandates to allocate at least 3-5% to the growth needs of our high growth, early stage companies. We must support work Immigration NZ is doing to inject capital from experienced high network migrants into these companies. We need to tap into our rural and regional wealth more effectively. We have therefore been delighted to see angel networks forming in Taranaki and Marlborough reflecting an increasing awareness that high growth, tech based companies can be the source of future jobs and social and economic wealth in the regions. The banks also need to come to the party.

There is a great deal at stake here. We can’t afford “a hands off, market forces will deliver” approach. If ever a NZ Inc approach was needed, it is now.

Marcel Van Den Assum
Chairman
Angel Association New Zealand

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Help benchmark the NZ ecosystem globally

Maximising the success of New Zealand’s startup ecosystem, and the worldwide ecosystem on which we rely requires input from startups themselves.

If data isn’t collected then how do we know what’s working and what’s not? Where our ecosystem could do with more support and where its doing quite well under its own steam. This is why the AANZ is supporting distribution and participation in the 2016 Global Startup Ecosystem Report (#GSER).

The GSER will include insights from more than 20k executives across the globe which will deliver leaders of all kinds; investors, government and support service providers; with an in-depth understanding of how to best attract, accelerate, and sustain startups.

Conducted by Startup Genome (formerly Compass Research), the report also gives startups themselves a benchmark to measure how they stack up to others across the globe.

By completing this survey founders will enable NZ’s leaders to:
• Assess and benchmark the NZ startup ecosystem across 50+ key metrics
• Accelerate the pace with which NZ ecosystem leaders reach consensus on key issues and develop action plans for change
• Attract a greater share of global resources to our region
• Empower startups everywhere to use data in decisions around raising funds, locating an office, and recruiting top talent
.

The 2015 Global Startup Ecosystem Report helped millions of local leaders globally reach consensus on specific challenges and drive action to improve their ecosystems.

By participating in the 2016 Survey, you will help New Zealand voice to be heard among the voices of entrepreneurs globally and accelerate the global startup ecosystem for hundreds of New Zealand’s entrepreneur’s locally and millions of entrepreneurs worldwide.

*All the information you provide in the survey is confidential. Results are published in aggregate values only.*

To participate in the survey click here and share the link with the founders in your ecosystem.

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How crowdfunding is changing business

Two years after craft beer maker Renaissance Brewery kicked off the first licensed crowdfunding offer, another high-profile brewer – ParrotDog – is tapping the crowd for at least $1.2 million to expand.

However, the platforms haven’t limited themselves to craft beer – among 44 successful deals from 59 offers are the sale of shares in a film production, a hydro-turbine maker and a mortgage broker.

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Investible launches education program for first time angel investors to democratise Australia’s investing community

Australian startup generator Investible has today launched First Angel, a new education program for first time angel investors. The 12 month program aims to fill the knowledge gap of local angel investors in the early stage investing process.
The First Angel program was launched by Investible cofounders Trevor Folsom and Creel Price to democratise angel investing in Australia and generate a more diverse investing community.

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What do angels need to grow early stage investment industry?

We have interviewed Nelson Gray at the Asian Business Angels Forum and AANZ Summit 2015, in Queenstown. Nelson Gray is an educator, angel investor, mentor, fund manager, and non-executive director of the Scottish Angel Capital Association.

Nelson Gray explains what investors need to understand in order to get support to achieve successful exits and grow the early stage investment industry.

You can meet a quality network of investors and experts in early-stage company growth, acquisition and exits in person by registering your place at the 9th Annual NZ Angel Summit 2016.banner NZAngelSummit16

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Improving volume of exits in NZ’s early-stage investment community

In the following interview with Bob Kelly, conducted at the Asian Business Angels Forum and AANZ Summit 2015, he talks about the challenges New Zealand Angel community have to face.

 

You can meet a quality network of investors and experts in early-stage company growth, acquisition and exits in person by registering your place at the 9th Annual NZ Angel Summit 2016.

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Innovators to rub shoulders with investors

The Fieldays Innovations Centre should be at the top of visitors’ lists this year, say the organisers.

This is where inventors – from backyard to established companies – present their latest innovations on a global stage.

Fieldays has announced a new element to the 2016 Innovations line-up – the Fieldays Innovations Capital Event, partnered by Enterprise Angels.

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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.

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Why New Zealand is punching above its weight in start-ups

New Zealand is a magical land of mountains, milk, sheep, rugby and fibre internet to most homes.

To this list we can now add: interesting technology companies.

In recent times, at least two genuine members of Silicon Valley royalty have poured money into start-ups born in the country.

Last week, Fairfax Media revealed that Sequoia Capital, which over the years has invested in the early stages of some of history’s most successful technology companies – think Apple, Google and Oracle – led a $10 million funding round for 90 Seconds, an Auckland based corporate-video marketplace.

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Family first for Wanaka kin2kin social media app developer Hamish McGregor

It used to be when you pulled a stupid face at your grandmother, you did it right in front of her and got a gentle reminder that if the wind changed, you’d look like that for life.

Oh the perils of social media! A gurning grandchild is probably the least of a grandmother’s worries now.

She might catch you on social media with your pants down, which could be less appealing for her and you than when she used to change your nappies.

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Angel funds invest over $60m in 2015

Angel networks and funds invested a record $61.2 million into 94 young New Zealand companies in 2015 – a 9 percent increase on the previous record set in 2014, New Zealand Venture Investment Fund investment director Chris Twiss said today.

Releasing the latest Young Company Finance Index, Chris Twiss said New Zealand now has a strong core of investors involved in angel networks and funds which are driving the continued growth of investment into start-ups.

“The last year was noteworthy not just for the high level of investment – hitting over $60 million for the 2182047.jpgfirst time – but also that we are now seeing angel-backed companies successfully raising capital from overseas investors – including venture capital firms, angel groups and equity crowdfunding.

“That indicates that New Zealand is increasingly on the radar for international investors looking for opportunities.  Offshore investment brings capital and access to networks and markets, and widens the shareholder base for companies.

“While the activity is at healthy levels, significantly more capital is needed to ensure that more New Zealand companies can become internationally competitive companies of scale.  There is also a lot more to do to develop and broaden the investor base in New Zealand, particularly outside the main centres.”

NZ Angel Association chair Marcel van den Assum said that it is particularly pleasing to see the level at which ventures were engaging overseas and raising funds offshore reflected in the recent data.

“Four companies raised $7.2 million from overseas venture capital firms through series A and B rounds and three companies raised $7 million through overseas angel networks.  The market for capital is global and these results illustrate that New Zealand companies are internationally competitive.

“Another feature to note was that more than two-thirds of the investment into our companies last year was follow-on investment. Our market is beginning to mature. We’ve been at this for nearly ten years and we need to focus increasingly on outcomes, driving for the investment returns required of angel investment.

“The high level of activity mirrors what the Angel Association is seeing in terms of interest and growth in membership. My own network, Angel HQ in Wellington, has doubled its membership in the last 18 months which is heartening.

“We need to bear in mind that the Young Company Finance data is an indicative one – and does not capture much of the investment by individuals and others outside the formal angel networks and funds. There is a great deal of activity not captured in these figures.”

Chris Twiss said the $61.2 million was invested into the 94 companies across 132 deals (also a record) compared with $56.4 million across 119 deals in 2014.  Cumulatively, $414.7 million has now been invested into young companies by angel groups since the Young Company Finance Index began measuring activity in 2006.

2015 saw $39.4 million investment into the software and services sector, which was a significant increase on the $26.2 million invested into software companies in 2014, and comprised over 60 percent of all angel fund investment over 2015.

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Click here to read the latest issue of Startup.

Media contacts:

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

Angel Association: Suse Reynolds, m: 021 490 974, [email protected]

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Angels win chance to be at the table in Philly

Two members of the Bay of Plenty-Waikato Enterprise Angels funding group have won scholarships from the Angel Association of NZ to attend the major US angel summit in Philadelphia next month.

The winners were Tina Jennen, chief executive of Tauranga-based Plus Group, and Blake Richardson, from Hamilton, who works with his father Neil in their family investment office, which has co-invested on Enterprise Angels deals.

Ms Jennen has a track record of mentoring start-ups and recently joined Enterprise Angels as an investing member.

Scholarship winners are put forward by angel groups around the country, with the national body making the final selection.

“The scholarships enable some of the most up and coming and promising people involved in the angel industry to attend the Angel Capital Association meeting in the US, which is really the granddaddy of the industry,” said Enterprise Angels executive director Bill Murphy.

The event brings together all the major US angel investors as well as a significant international delegation, and regularly includes a large New Zealand contingent. The winners will also attend the one-and-a-half day conference, which follows the summit meeting.

“We’re particularly keen on encouraging younger business people,” said Mr Murphy.

“We look for them to come back and add a lot of value in the group. It helps cement their understanding of early stage investing, and they can then come back and add value to what we are doing in New Zealand.”

Ms Jennen said attending the US summit would allow her to connect to worldwide angel networks, share best practice, and begin to understand the connection points in other markets.

“It’s about building capability for New Zealand, and improving connectivity,” she said. “Those are both areas I’m very interested in – how to improve the tool kit so we make sure we’re getting the right deals and building the capability with the deals we are choosing to invest in.

“And then, how we build those networks for cross-border investment so the third or fourth round of investment actually happens in another market that is strategic to growing the value chain in that market.”

First published on nzherald.co.nz 30 March 2016

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Boaties welcome start-up’s automatic launcher

Bay of Plenty start-up Balex Marine has begun rolling out its award-winning Automatic Boat Launcher ABL2500 (ABL) to retail customers.

Veteran Mount Maunganui boatie Peter Bell became the first retail customer to launch using his new ABL at Pilot Bay last week.

The company has drawn strong support from Enterprise Angels’ members and other investors for the hydraulically powered ABL.

The system is installed on trailers and lets users launch and retrieve their boat without getting their feet wet, using a remote control to start, stop or pause the process.

Mr Bell, 76, a keen fisherman and boatie, said he was delighted with the ABL.

“I’m getting a bit older and it was getting a bit harder to get the boat in and out, so I thought I’d try one,” he said.

“It’s going to make it that much easier to get the boat on and off the ramp.”

Balex delayed its original pre-Christmas retail release date in order to incorporate an additional hydraulic lift to the device.

The lift engages the hull and lifts the boat up, drives it forward then settles it back on to the roller cradle.

“It’s made it even more user-friendly,” said Balex sales director Paul Yarrall. “It enables the ABL to accommodate a wider range of boats and trailers, and delivers better performance.”

Balex has spent 12 months building up its global supply chain, and a reseller network that includes DMW and Voyager Trailers, and national retail chain Boating and Outdoors.

Trev Terry Marine supplied the ABL for the DMW trailer for Mr Bell’s new Stabicraft 2400 Supercab.

Trev Terry Marine owner Brock Terry said his company wanted to make boating as easy as possible. “And it’s not just older people – we’ve pre-sold two to younger guys who just want to have all the best equipment.”

Boating and Outdoors director John Bolitho said the chain already had many pre-orders.

Balex managing director Paul Symes said Mr Bell’s installation signalled the company gaining momentum.

“The sale to Peter is a massive milestone in terms of highlighting that we have brought together our production supply chain and retail reseller channel.”

First published on 29 March 2016

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Angels aim for $6m with a second sidecar fund

The Bay of Plenty’s Enterprise Angels has launched an ambitious second sidecar fund targeting up to $6 million, which has already attracted more than $700,000 in commitments from members.

The early stage investment group, which now has 200-plus members across Tauranga, Rotorua, Taupo and Hamilton, closed EA Fund 1 on $2.4 million.

The first fund has to date invested $1.65 million in 15 companies and has reserved about 30 per cent of the fund for follow-on investments in the fund’s most successful companies over the next couple of years.

“The initial response from members has been great,” said Enterprise Angels executive director Bill Murphy. “We’re expecting it will be able to be quite a bit bigger than our first fund.”

The fund’s managers are targeting about $4.5 million, with a minimum size of $2 million and a maximum of $6 million.

The fund was launched at last month’s Enterprises Angels meetings and will close on April 15.

“There are two ways to minimise risk in the early stage investing space,” said Mr Murphy.

“The first is to do a very good job of due diligence and really understand what you are investing in. The second is to build up a portfolio of investments because the research tells us that the more quality investments you have, the greater the chance of getting the returns you need.”

Neil Craig, who chairs EA Fund 1 and EA Fund 2, said the new fund represented a unique opportunity for wholesale investors to invest alongside the largest and best-resourced angel group in New Zealand.

“Investing in early stage companies is high risk and potentially high reward,” he said.

“A key way of mitigating this risk is to invest in companies that have been through a rigorous due diligence and negotiation process backed by experienced early-stage company investors. The only way to achieve high levels of diversification for all but the most active and wealthy angel investors is to invest via a fund like EA Fund 2.”

Mr Murphy said the fund would rely on a combination of Enterprise Angels professional staff and the enormous sectoral and due diligence expertise of the group’s members.

Get in early: Studies have shown that an investor investing in 12 early stage companies has a 75 per cent confidence of achieving the returns of the Wiltbank Study (IRR 27 per cent, ROI 2.6X), and by investing in 48 companies, has a 95 per cent confidence of achieving these returns. Source Enterprise Angels.

First published on nzherald.co.nz 23 March 2016

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Agribusiness Investment Showcase connects business to capital

OPINION: New Zealand ticks all the boxes for its potential to produce world leading agricultural technologies – it has an economy built on primary industries and a long history of expertise in agriculture, as well as a culture of innovation.

This is why I see huge potential for New Zealand agritech businesses to grow internationally.

The latest estimates value the agritech sector at around $1.2 billion, and investors are taking notice.

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Angel Investors Pumped $24 Billion Into Startups. Here’s How to Get Your Share.

Angel investors are still the lifeblood of early-stage startups, despite the surge of activity in crowdfunding and an increasing early interest from venture capitalists. According to the Angel Capital Association, at least 300,000 people have made angel investments in the last two years, totaling $24 billion in the U.S. alone. These are all accredited investors who risk their own money.

As an active angel investor myself, I understand how the process works, and I see the disappointment in the eyes of entrepreneurs who approach angel groups for funding and often get turned away for not being timely or prepared in the minds of potential investors. In the interest of getting you off on the right foot, here is my priority list of recommended preparation activities.

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