Is NZVIF directionally correct?

The New Zealand Venture Investment Fund was set up 14 years ago with the best intentions – to foster an early stage investment sector in New Zealand by being a fund of funds. It’s had $250 million for VC and PE funds but only $129.7 million of that had been invested to June 2015 and $100 million of it is an underwrite facility.

NZVIF later added the now $50 million Seed Co-Investment Fund (SCIF) which co-invests alongside accredited angel investors. As at June 2016 it had placed $38.2 million of that.

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NZVIF Investment Report

The investment performance to 30 June 2015 highlights both the volatility of early stage investing and the reliance on a few ‘outlier’ investments to generate the bulk of the returns.  The overall portfolio result is positive based on a very conservative valuation assessment.  While it is down on the previous year, this is due mainly to the volatility of listed portfolio companies, which now comprise over 40 percent of the value of NZVIF’s portfolio.  The volatility is illustrated in that – post the reporting period – the portfolio’s value rebounded from $156 million to over $181 million at 31 December.

Click here to download the NZVIF Investment Report for the year to 30 June 2015.  It is the second such report on the performance of NZVIF’s two funds – the Venture Capital Fund and the Seed Co-investment Fund.

Crowdfunding laws a turnoff for venture capitalists

Any business that raises capital using equity crowdfunding laws that passed the House Of Representatives on February 10 will have no chance of attracting venture capital investors in future, a leading angel investor says.

Adrian Bunter, a prominent member of the Sydney Angels investor group, says venture capitalists won’t want the hassle of investing in businesses with potentially hundreds of underlying shareholder agreements.

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As Angel Investors Pull Back, Valuations Take a Hit

Agreeing the valuations is often a spicy discussion. In this Wall Street Journal article some of our US-based colleagues – Bill Payne, Rob Wiltbank and Allan May – set out their views on data showing valuations are taking a bit of a hit.

A dose of reality may be hitting angel investing.

After valuations for young companies seeking funding soared to five-year highs last year, some angel investors—or wealthy individuals who buy stakes in startups—are starting to pull back.

On AngelList, a crowdfunding site aimed at such investors, the average valuation for a company receiving funding reached $4.9 million for two quarters last year, its highest level in five years. But valuations dropped to $4.2 million in the fourth quarter, the lowest level since early 2012. Dow Jones VentureSource data shows that deals involving angel investors fell by 16% last year.

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How to start investing in tech and innovation startups

Some tips and tricks in this story which you might like to share with those exploring angel investment by Idealogue’s Henry Oliver.

We talk to Suse Reynolds, executive director of the Angel Association of New Zealand, and Greg Shanahan, managing director of the Technology Investment Network, about how to start investing in early-stage tech and innovation companies in New Zealand.

One of the consistent threads running through the history of this publication is that New Zealand needs to get over its obsession with housing, dairy and tourism, and start investing in technology and innovation.

Sounds great! some readers have said. But how? How does a ‘mum and dad investor’ help fund, and (let’s be honest) profit from, the high growth of those sectors are experiencing in New Zealand?

Read the full interview here

Winging it with crowdfunding

Some fascinating perspectives about the intersection of crowdfunding and angel investment are discussed in Lesley Springall’s article written off the back of ABAF.

The old and the new went head-to-head at the recent Angel Summit, as equity crowdfunding took to the platform to sell its case to more traditional start-up investors.

Internationally-known Scottish angel investor and angel fund manager Nelson Gray has travelled the world discussing best practice in early stage investment, to help encourage more business people to dig deep, don wings and take the early stage investment plunge.

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The Role and Relevance of Listing #ABAF15NZ

#ABA15NZ: The Role and Relevance of Listing

Where does listing fit in the lifecycle of an early-stage company? Is it different internationally? What are the options?

Introduction presentation from Tim Bennett, CEO, NZX who explains New Zealand’s regulatory environment, markets and opportunities for high growth companies and angel and venture capital investment markets.

Moderator – # Chris Twiss (NZVIF, NZ)

# Chris Twiss, New Zealand Venture Investment Fund

# Garth Sutherland, and Bronwyn McGrayth from Adherium, NZ who recently listed on the the New Zealand stock exchange

# Chris Twiss, NZVIF explains the NZ fund investing and compares to international markets with comment from Ron Weissman, US and David Chen, China.

How much time should founding team of early-stage companies be giving to thinking about IPO.

Click here to view video on youtube

Equity Crowd Funding #ABAF15NZ

#ABAF15NZ: Equity Crowd Funding

Presenters from three platforms spanning UK, Australia and New Zealand look at current developments and dynamics of both accredited and unaccredited equity crowd funding. They also discuss its impact on angel investment and advances made by early-stage companies to change the world.

Moderator – # Ashley Krongold (Our Crowd, AUS)

# An intro to crowd funding in Australia

Slides available here

# Josh Daniell (Snowball, NZ)

# David Wallace (Armillary Private Capital and Crowdcube, NZ)

Click here to wtch video on youtube

What’s Your Portfolio Strategy? #ABAF15NZ

#ABAF15NZ: What’s Your Portfolio Strategy?

Over three decades Bill Payne has successfully founded and invested in over 50 start-up companies. He talks briefly to the delegates of the Asian Business Angel Forum 2015 about building an early-stage investment portfolio.

Find out more about # Bill Payne here.

Click here to view video on youtube

Angel advice for Tauranga’s entrepreneurs

Making the most of the recent conference, we tour some of our rock star angel visitors around the country.

Leading American angel investor Bill Payne will be part of a panel at next week’s [email protected] event in Tauranga for aspiring entrepreneurs.

Organised by the Venture Centre as part of its buildup to next month’s Tauranga Start Up Weekend, the event aims to expose people embarking on start-ups to how angel investors think, said Venture Centre co-founder Jo Allum.

“We want to give entrepreneurs a good idea of all the different elements involved in the journey of building their start-up company,” she said. “Getting capital into the business is an important part of it and one of the ways of doing that is through angels.”

Ms Allum described the event as a “reverse” Dragon’s Den.

“Instead of entrepreneurs pitching ideas, they will be able to question the angel investors on how they can contribute to their business and what they require.”

Mr Payne sold his first company to Du Pont and for the last three decades has invested in more than 55 start-up companies. From 1995 to 2007 in his role as Entrepreneur-in-Residence with the Kauffman Foundation (Kansas City), he worked on educational programs for entrepreneurs and their investors.

In 2010 he concluded a five month stay in New Zealand at the BNZ University of Auckland Business School advising investors and entrepreneurs.

A frequent visitor to Tauranga, Mr Payne told NZME during an interview in 2013 he thought Kiwi deals and pitches had improved significantly. “There are all kinds of opportunities here,” he said. In addition to Mr Payne, this year’s panel will include investment adviser James Beale, lawyer John Gordon and power engineer Deion Campbell, who are all members of Tauranga’s Enterprise Angels, the country’s biggest start-up funding angel group. Since launching in 2008, Enterprise Angels has facilitated the investment of more than $14 million in more than 40 early stage and established businesses.

[email protected] is from 5.30 till 8.30pm on Wednesday, October 28, Tauranga Art Gallery.

The Seven Secrets Of Top Angel Investors

A useful and interesting framework for angel investors is set out in this article from Forbes.

Angel investors, sometimes known as business angels, typically invest between $25,000 and $500,000 in new start-ups, often with the aim of taking them on to the stage where they can attract venture capital funding. The rewards for top angel investors can be significant, but it can also be risky. So how can angel investors maximize their chances of success and avoid feeling like they are pouring money down the drain?

Read more on www.forbes.com

New England Venture Summit calls for promising early-stage startups

youngStartup Venture are bringing together a large group of VCs, Corporate VCs, angel Investors, Investment Bankers and CEOs of early stage and emerging companies for the New England Venture Summit being held on December 9th, 2015 at the Hlton in Boston, Deham and wanted to see if any of our colleagues at Angel Association New Zealand or any of the startups in your portfolio would like to attend.

Nominations are now being accepted for promising early-stage startups from the Tech, Life Sciences/Healthcare, Ed-tech, and Clean-tech sectors.

To nominate a company click here.

More information

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.

KPMG: Make migrants take a risk

The AANZ backs calls for more wealthy migrant money to be directed into early stage ventures. Some of our most active and effective angels are migrants. We need more!

Growth-focused investments should be required over passive ones such as government bonds, says report.

High-profile business organisations are calling for investor migrants to be required to channel more cash into productive, growth-focused New Zealand investments rather than safer options such as bonds.

Almost 80 per cent of investor visa recipients’ funds currently ends up in government and corporate bonds, according a paper published by professional services firm KPMG.

“Whilst these [bond investments] are still beneficial to New Zealand, some simple changes to our immigration policies can bring diversity and may help better leverage these migrants’ funds and valuable networks to help New Zealand business grow and expand,” KPMG said.

Business incubator The Icehouse, which is also calling for a policy overhaul, describes passive investments such as bonds as “lazy money” that does nothing to address capital constraints facing companies.

“Changing the rules on entry and for allocation could better align investment with the need to grow New Zealand’s economy and to increase its productivity, while aligning a stream of investment from the private sector, rather than relying on the Government to step in.”
KPMG said Kiwi businesses would require more than $420 billion in capital by 2025 to support the export growth required to achieve the Government’s Growth Agenda.

Its analysis suggested a $115 billion shortfall that would need to be funded by foreign investment.

“KPMG believes the best way to grow the economy is for investor migrants’ capital to be deployed in funding New Zealand businesses, particularly start-ups and early-stage businesses.”

Canada and Australia already require a portion of investor migrants’ funds to go into “at risk” investments.

New Zealand’s current investor immigration policy, which came into force in 2009, has attracted over 1600 applicants with over $3.7 billion to be invested into this country, according to KPMG.

There are two visa categories – Investor Plus and Investor – for migrants who want to use their capital to gain residence in New Zealand.

The latter requires a minimum of $1.5 million to be invested for four years, but applicants must be 65 or younger, meet English language requirements and spend at least 146 days in New Zealand in each of the last three years of the four-year investment period. They must also provide $1 million in settlement funds.

Investor Plus migrants must invest at least $10 million for three years but face no language or age requirements and have to spend only 44 days in New Zealand in each of the final two years of the investment period.

The Icehouse suggests some policy changes that could help channel migrant funds into more productive investments, including:

• Introducing a third investor visa category requiring $5 million to be invested, 10 to 20 per cent of which would have to go into growth investments such as angel, venture capital or small cap private equity funds. In return, other requirements would be reduced or eliminated.

• Amending the Investor Plus category to require a 10 per cent (or higher) investment in growth capital funds or direct investments.

Icehouse chief executive Andy Hamilton said migrant capital could also be deployed in other areas, such as creating new residential housing stock or regional economic development. KPMG said a portion of migrant investor funds – possibly 20 per cent – should be invested into angel or venture capital.

“This could be through a designated fund which has the same investment profile as the [government-backed] New Zealand Venture Investment Fund (VIF).

“This would offer some comfort to migrant investors that the portion of their investment capital at risk is being invested in early-stage companies that the New Zealand Government is happy to support through VIF.”

Yue Wang, KPMG’s director of immigration services, said most investor migrants would welcome such changes if they came with benefits such as faster visa processing or reduced requirements. “I don’t think it’s going to necessarily put them off.”

Angel Association executive director Suse Reynolds said changing investor migrant rules to direct a portion into growth investments would provide a “terrific boost” for early-stage companies.

“If wealthy migrants were required to invest into the growth areas of our economy, it will bring the New Zealand rules into line with what is happening in other developed countries.”

She said early stage investment would also help migrants integrate into New Zealand society as it was “a very collaborative affair”.

“It’s not just the capital but the networks and skills the providers of that capital bring to the table.”

See KPMG paper here

First published on nzherald.co.nz 14 Sept 2015

#ABAF15NZ Speakers – Raiyo Nariman

Meet the speakers #ABAF15NZ – Raiyo Nariman

The Angel Association of New Zealand brings the 2015 Asian Business Angel Forum to Queenstown this October. Leading investors and early stage business specialists from around the globe will share their knowledge and make their New Zealand connection at this premier global investor forum

Presenters sharing personal learnings garnered from years of investing with the carefully curated audience of Angel groups, network and fund members from across this dynamic country include Raiyo Nariman founding VC of the Malaysian Business Angel Network.

Register-now

Raiyo Nariman specializes in commercialization of technology, research & IP, and the development, funding and growth of start-ups. As a Venture Manager, Raiyo personally invests and partners with founders, taking a hands-on role to ensure successful execution of commercialization & growth strategies, including international market entry and capital raising.

Raiyo’s entry into the venture arena started in New Zealand, as part of the founding executive team for a Foundation, where his focus was on the development, funding and incubation of new ventures. Raiyo’s executive-level engagements include CEO of Canterprise, the venture company at University of Canterbury, and MD of Encore Professional Services, a business he spun-out, established and grew for a PE fund in Hong Kong.

As the founding VP for the Malaysian Business Angel Network, Raiyo played a key role in establishing the current angel investor community in Malaysia and has also established, developed and managed angel networks in Hong Kong and Singapore, and works with angel clubs and associations across Asia and the West.

Raiyo is MD and Partner for Mercatus Ventures, a Malaysian-based early stage venture firm that invests in, and takes a hands-on role to develop, regional ventures. He is also a Partner in Serendipity Ventures, a Hong Kong-based boutique venture management firm, where he personally invests in early stage ventures and takes them to market.

Meet Raiyo, along with a host of angels from New Zealand’s angel investment community and the world at the Asian Business Angels Forum, Queenstown, October 14-15. Only a handful of seats remain.

Be quick to register yours. ABAF2015, NZ

App aims to ease pain of building projects

“Over time” and “over budget” are two phrases well known to anyone working in construction, so a couple of industry veterans have seized on these perennial pain points to create a high-tech solution they believe has global potential.

Antonia and David Speight are the entrepreneurs behind Acuite, a cloud-based web application that provides real-time visibility into the performance of construction projects.

It’s designed for those managing large-scale commercial jobs, helping them assess critical metrics as they are happening, such as time, cost, quality, health and safety, and relationships with subcontractors.

The Speights know first-hand about the risks involved in managing commercial construction projects, with David’s experience on the building contractor’s side and Antonia’s on the client side.

“If you look into industry statistics you’ll find about 75 per cent of projects go over budget and 90 per cent are delayed,” Antonia said.

David said current solutions did not allow users to access information with the kind of timelines needed in the fast-moving environment.

Early last year the couple decided to test their idea, joining business growth centre The Icehouse’s business incubation and market validation programme.

The process gave them confidence there was a market for their concept and in October last year they came up with a visual concept for Acuite.

They presented it to three major construction companies, convincing them to come on board as trial customers and have since been developing the software with those industry partners.

The pair have been working full time on Acuite since October.

The company also recently gained $500,000 of seed investment from the Auckland early stage investment group the Ice Angels and the national female investor-led group the ArcAngels, allowing them to grow their team and push ahead the development of the product, which is due for official launch this year.

First published on Nzherald.co.nz 20th August 2015

Small Business: Brand partnerships – Unovent

One of the most powerful things angels can do for a venture is provide commercial introductions. In this terrific story by Caitlin Sykes, John Wadsworth of Unovent provides a terrific example of this…

John Wadsworth is the inventor of home ventilation system Unovent, which launched on the market last year. Unovent has a brand partnership with Showerdome – a company that produces a moisture reduction product for bathrooms.

How did you first connect with Showerdome to form a brand partnership?

In August last year I decided I needed to get some serious investors on board for Unovent, so I did a presentation to the Enterprise Angels angel investment group in Tauranga.

From that experience I ended up connecting with Maurice O’Reilly and Dan Keller – people who I thought could make a big difference to the business, not only as shareholders but in terms of contributing their skills and experience to the development of the company.

Maurice was already a shareholder and director of Showerdome, and he could see we were chasing the same customers, so he and Dan came on as shareholders of Unovent, and Maurice also came on as a director.

Because we had this common shareholder and director, and we had this market link with Showerdome, it just made a lot of sense for us to listen very carefully to what Maurice had to say about how they had developed the Showerdome business, and to look at their business plan.
Showerdome is in the business of moisture reduction in the bathroom to reduce mould and other nasties, and we’re in the business of reducing moisture in the other living spaces like bedrooms, lounges and dining areas so the complementary nature of what we were doing was obvious.

What kinds of things do you do to work together?

The first is that at the bottom of certain pages of our website we’ve got the Showerdome logo, commentary about putting in a Showerdome and a link to the Showerdome website that opens in a new window. They also do the same on their website, and we know from Google Analytics that around 8 per cent of the people who look at our website have come there from clicking that Unovent link on Showerdome’s website.

Also, throughout the country Showerdome has a network of resellers and in some parts of the country they’ll also have a master distributor who the resellers in that area draw from. From time to time we get asked by those people if they could also represent Unovent. We’ve only made a small start on following those leads, but that’s another way we’re picking up on their network and brand.

And thirdly, we both have a DLE promotional brochure for our product, and Showerdome will put one of ours in with their goods when they send them off and we do the same.

Given your company is young it must be a benefit to leverage off a more established brand?

Exactly. They’ve been around for 11 years or so and they’re a proven success story. A big part of their success is due to the way they’ve made advertising and marketing of the product the engine of the business, and today it’s pretty much a household brand name.

I don’t think it’s any secret that every Showerdome year has been a record year, and in the short time we’ve been operating every month for us has pretty much been the same. We’d definitely like to copy their record. Like any business they will have made some mistakes in their early years in terms of how they’ve promoted the business for growth, and by aligning ourselves with them we’re gaining huge benefit from their learning.

What are some future opportunities you’re looking to explore in terms of brand partnerships?

Throughout the year both companies have been running prize giveaways in various publications, and recently for the first time we completed the draw of a large prize comprising an Unovent system and a Showerdome. That’s a combined activity that we should develop further.

Also, for every house to be effectively made comfortable and healthy, there needs to be effective heating, effective insulation, and effective ventilation plus a Showerdome to get rid of moisture. If you take away any one of those three elements the overall result isn’t as effective. So there is potentially the opportunity for us to do a range of things with organisations that work in those other areas as well.

First published on nzherald.co.nz 12 August 2015

Research Delivers Investment Lessons for Achieving International ROI

In May 2014, New Zealand tech success story GreenButton was acquired by US software giant Microsoft adding the company to a small but growing list of successful Angel funded kiwi technology exits. 

Dan Khan a tech entrepreneur, investor and former director of Lightning Lab, New Zealand’s first tech company accelerator, has conducted in-depth research on behalf of AANZ and NZVIF into the journey of the company from startup to exit. The resulting papers provide valuable insights for kiwis driving towards doing international deals, the subject of this years Asian Business Angels Forum (#ABAFNZ15) in Queenstown, October 14-16 2015.

ABAF2015, NZ

GreenButton’s success was not born overnight. The reality is one of relentless determination by the founder; big, bold decisions, backed by serious hard work; emotional challenges resulting from financial strains and extensive periods of being away from friends and family; an unrelenting focus on the end goal and a substantial commitment of expertise, time and effort by lead investors.

Angels invested in, or working on investing in Kiwi tech companies can learn how to achieve the highs and bear the lows of tech success on the world stage from the detailed research paper which steps through the “Anatomy of a Successful Exit: The GreenButton story”. Download it here.

Dan has also written a short form overview of his findings in a personal “Reflections on a Successful Exit: A Post-Post-Mortem of the GreenButton Story”, to entrepreneurs as he tours the country. His travel is being supported by the Angel Association of New Zealand and The New Zealand Venture Investment Fund. To receive a copy of the overview paper click here.

Angel Association attracts major global investors to NZ

Hosted by the Angel Association of New Zealand, the 2015 Asian Business Angel Forum takes place in Queenstown, New Zealand, 14 – 16 October 2015.

The event, an expertly curated, three day and completely investor-centric summit subsumes the AANZ’s annual summit this year.

It brings together leading investors from around the world to share their knowledge and join together in celebrating this small country’s big contribution to early stage investment.

The AANZ is pleased to have attracted a stellar line-up of international speakers who bring with them hundreds of investment experiences and personal involvement in the most significant international investment funds and angel groups.

Their combined portfolios include some of the biggest, most important and well known early-stage companies in the world.

Thought-leaders gathering to present at ABAF in New Zealand’s beautiful Queenstown’s include:

Jayesh Parekh – Jungle Ventures, 500 Startups and Mumbai Angels

David Chen – AngelVest

Sasha Mirchandani  – Kae Capital and Mumbai Angels

Nelson Gray – LINC Scotland, Firth Ventures and winner of the Queen’s Award for Enterprise Promotion for individuals who have played an important role in promoting enterprise skills and supporting entrepreneurs,

Bill Payne – ACA, Hans Severiens Memorial Award for Outstanding Contributions to Angel Investing and 2010 New Zealand Arch Angel Award for his impact on angel investing in New Zealand

Jon Medved – OurCrowd

Ian Sobieski – Band of Angels

Jamie Rhodes – ACA, Central Texas Angel Network (CTAN) and Texas into the Alliance of Texas Angel Networks

Marcia Dawood – ACA Board member, MD, Golden Seeds and Blue Tree

Allan May – Life Science Angels, Emergent Medical Partners

and Carolynn and Jon Levy – the legal team from the United States most successful incubator – Y Combinator, which has launched the likes of Airbnb, Dropbox and Stripe.

Register-now

To see the entire stream of social media as Angels actively connect New Zealand to the globe, the latest from international guests, hashtags and other social networks in one place click here.

Using twitter you can follow the Angel Association of New Zealand at @AngelAssn, and keep up to date with the Asian Business Angels Forum news and the event itself as it unfolds by using the hashtag #ABAFNZ15.

To meet and hear from New Zealand’s largest gathering of global investment thought leaders, along with a host of angels from New Zealand’s angel investment community in person secure your seat now.

There are only 30 places left at one the southern hemisphere’s largest and exclusive investor events Asian Business Angels Forum, Queenstown, New Zealand, October 14-15 2015.

 ABAF2015, NZ

#ABAF15NZ Speakers – Jayesh Parekh

Meet the speakers #ABAF15NZ – Jayesh Parekh

Queenstown, New Zealand, is gearing up for 2015’s Asian Business Angel Forum. The event runs from 14-16 October 2015 with an impressive line-up of business angels from all over the world.

Among the investment experts coming to New Zealand to share their knowledge and networks is managing partner of Jungle Ventures, Jayesh Parekh.

Register-now

Mr Parekh has accumulated an extensive portfolio of technology, media and social impact investments with over ten exit or acquisition events among them.

He is also well placed to provide attendees of #ABAF15NZ with an authoritative view on funds and the benefit of angel networks, incubators and accelerators as a partner in a wide range of early-stage business growth and investment vehicles including Jungle Ventures, 500 Startups and Mumbai Angels.

Jayesh is a Singapore citizen and lives there with his family where he is actively involved in the ecosystem. He is Chief Mentor at the Hub Singapore, an Entrepreneur-in-Residence at INSEAD, an Executive Advisor to NUS (National University of Singapore) Enterprise and a TiE (Tech In Asia) Charter Member. As a judge at TiE’s Startup arena in Jakarta in 2014, Tech in Asia’s biggest Startup Asia to date with 2,202 participants, Jayesh was on the judging panel coaching founders to clearly articulate their monetization strategies.

Drawing on his background as an engineer with a Bachelor’s degree in Electrical Engineering from MS University in Baroda, India, a Master’s degree in Electrical Engineering from the University of Texas at Austin, USA and over 12 years at IBM based in Houston and Singapore, he supplies valuable guidance around product believing “best of class product is extremely important and that means the user experience fits across all regions.”

Jayesh also works with existing businesses to help them apply a more entrepreneurial mindset and approach to their enterprises. He delivers in-company presentations and often facilitates deep discussions with sales and marketing and business development teams to help them embrace corporate entrepreneurship as a way to identify new business opportunities.

In his long list of achievements Jayesh counts being a co-founder of Sony Entertainment Television, a major network launched in collaboration with Sony Pictures Entertainment and his board membership of One Animation, Shemaroo, Milaap, and investment in Asvathaa (gaming & animation), Game Ventures (online gaming) and eBus (TV commercial digital distribution).

He is also a passionate advocate and investor in ventures which give back to the community with roles on the Boards of social enterprise focused ventures such as the Investment Committee of Aavishkaar India, which invests in enterprises active in the social infrastructure sector in rural and underserved India. He was on the board of SONG, a fund owned by George Soros which invests in SMEs in India that meet social objectives. He served on the Board of United Way International for six years and is a founder of ProPoor, a non-profit portal for Non-Governmental Organizations in South Asia, and now a service of CharityFocus.

You can follow Jayesh on Twitter and meet and hear from him in person, along with a host of angels from New Zealand’s angel investment community and the world at one the southern hemisphere’s largest angel investor events Asian Business Angels Forum, Queenstown, October 14-15. Seats are now very limited. Be quick to register yours. ABAF2015, NZ

Start-up investment rewarding but takes time and money

Don’t miss out on NZVIF’s snapshot or our market…  just released today.

It contains a raft of fascinating insights into the NZVIF portfolio. Franceska’s press statement is below and the report is attached. It includes such things as:
•    for every dollar of initial investment 2-4 times is needed for follow-on investment
•    20% of exits have earned the level of investment back or better
•    average hold times for investments are 3 years for angels
•    $1 of public investment leverages $9 of private capital
•    57% of the portfolio (131 angel and 66 venture) were valued under $1m at investment and 27% under $500,000.

Investing in start-ups and young technology companies can be rewarding but investors should not hold high expectations of fast turnarounds in investment gains, according to a New Zealand Venture Investment Fund report released today.

NZVIF’s Snapshot Report says that speedy profitable exits occur occasionally but, in general, investors should take a portfolio approach, be prepared for the long haul, and be well provisioned for follow on investments.

As an example of the latter, the report says that investors making an initial investment of $20,000 into a young technology company should typically expect to make follow-on investments taking their stake to between $40,000 and $80,000.

NZVIF CEO Franceska Banga said that while early stage investing is a high risk investment class – at least four in 10 companies fail – it is enjoying a period of marked growth.

Read more on www.scoop.co.nz

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

Inside Wellington’s thriving startup scene

Rod Drury and Stefan Korn from Creative HQ promote Wellington as the place for startups, including a thriving angel community!

The land drives development

Wellington is surrounded by hills which limit urban sprawl and is built around a bay which is too cold to swim in most of the year. Rather than brave the icy wind which lashes the region, entrepreneurs instead prefer to build software indoors.

It’s a geography which Drury says smashes everyone together into a small area, creating a “petri dish” of talent and creativity.

Throw in a significant amount of buy-in from all levels of government and you’ve got yourself a tech community which can hold its own against some of the best in the world.
There are talent issues

However, it’s still a small city so recruiting talent, with the likes of Trade Me and Xero hoovering up all the bodies they can get their hands on, means the country is “shamelessly” recruiting Aussies to jump across the ditch and get involved, Wellington Councillor Jo Coughlin says.

Read more on www.businessinsider.com.au

 

Equity crowdfunding’s strong start

A strong start for equity crowdfunding platforms reflects a genuine appetite to support inspirational NZ businesses. It’s important that these companies get more than just support in the form of capital but also with value and market growth strategies.

Fifteen young firms have raised a total of $8.7 million through three equity crowdfunding platforms since the low-strings fund-raising mechanism got the green light from regulators last year.  The sum may be small compared to the $55m that well-heeled “angel investors” pumped into high-growth businesses last year and to the $4.7b bigger businesses raised through the NZX stock exchange in 2014.

It looks even tinier when compared with the current value of bank loans to businesses, which stood at $80b in April, according to the Reserve Bank.

But Chapman Tripp corporate lawyer Bradley Kidd says the start is encouraging.

More platforms have been set up than he expected to support equity crowdfunding and there have been some “really good offers”, he says. “I’d say it has gone a bit better than I’d of expected.”

Read more on www.stuff.co.nz

How Should You Value an Early Stage Company?

Ralph Shale provides some interesting insights for angels on how to value an early stage company.

Investors should try to use a range of methods to validate what is a reasonable valuation. The only certainty in any valuation is that it will be wrong, in hindsight either too high or too low.

Valuing any business is an art not a science, with a lot of room for personal interpretation. There are a number of valuation approaches that investors can use. The best advice is to cross-check several before determining what is or not a reasonable valuation. My own approach:

Value invested to date
Although this is probably the crudest approach, it is interesting to understand how much has been invested to date to get the company to its current position. This should include both cash and an allowance for time (sweat equity). This ‘replacement’ cost can then be adjusted for the following:

  • What are the barriers to entry for competitors, such as intellectual property rights?
  • How long would it take a competitor to replicate the opportunity?
  • Has the investment to date been 100% effective? If money invested is going down the wrong path, the opportunity should be excluded.
  • What is a reasonable return on the investment, given the risks taken by the entrepreneur and investors?

Read more on www.wholesaleinvestor.com.au

Snapchat gurus get big bucks for US mission

The power of the eco-system, including accelerators and angel investors is powerfully illustrated in Mish Guru’s story.

After one accelerator programme, a spell in a start-up incubator and a tonne of two minute noodles, digital venture Mish Guru has a springboard of nearly half a million dollars to break into the US market.

It’s the place to be for founder Tom Harding and his team, because their software is designed to help businesses get bang for their marketing buck on Snapchat. And a big chunk of Snapchat’s hip, young user base is in the US—by late last year, 14 percent of mobile internet users were active Snapchat users, matched only the UK.

With work for music festivals like Rhythm and Vines, sports teams like the Breakers, Bigpipe Broadband and the band Jupiter Project on the company’s CV, Harding’s moved to the Big Apple to seize the growth opportunity.

Read more on www.idealog.co.nz

Angel evangelist making the New Zealand connection

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

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

It hasn’t disappointed.

But to what end, exactly?

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

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

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

So you wanted to come here to build connections?

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

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

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

 

JohnMay_Dinner

 

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

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

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

Why is that so important?

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

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

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

Doesn’t it depend on the angel they get?

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

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

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

Should angel investors always have representative on the board?

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

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

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

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

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

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

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

What’s the most common thing angels do wrong?

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

Why do you love this area so much?

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

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

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

JohnMay_IceAngels

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

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

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

We tend to talk to ourselves far too much.

by Lesley Springall

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

ABAF2015, NZ

Garden shed start-up digs for feedback

Another brilliant example of the aspiration and energy angel backed companies have for growth and value creation. Congratulations to Ice Angels and John O’Hara who are leading this deal.

Auckland company AskNicely has launched an immediate, email-based feedback system to help companies know whether their customers are driving away happy.

Aaron Ward and John Ballinger launched AskNicely from their Parnell garden shed in November and have since seen customer growth double monthly to 1000 clients, with no signs of slowing, according to the pair.

Ward, who has a background in corporate marketing, said net promoter score systems had become a key barometer for measuring customer satisfaction in a lot of companies, ranking service and product based on ratings from questionnaires, but often by the time feedback had been received it was a few days or even weeks down the track, and the lengthy questionnaire often put customers off placing feedback.

“Everybody hates answering surveys so what we’ve done with AskNicely is break all of the conventions around traditional surveys,” Ward said.

“So instead of having multiple custom questions we’ve got one question and instead of putting it on to a website we embed the question directly into the email so that customers just have to click the zero to 10 button on the email so we’ve made it really light and fast and respectful of the user’s time.”

According to Ward, the biggest difference between AskNicely and other surveys is the response time, with results from AskNicely collated and reported immediately so that any issues or feedback can be resolved.

“The immediacy is absolutely core to our proposition,” Ballinger said. “So typically after you’ve had an interaction with a brand – so after you’ve bought something or called through to a support desk – what we do is automatically trigger that survey out so while that experience is fresh in the customer’s mind their opinion is going to be strongest, and because we make it really easy for the customer to respond, they’re happy to provide that feedback.”

Ballinger said time was particularly important when it came to negative feedback for a brand or company, where leaving an issue unresolved could result in further complaints from customers and potential damage to a brand or firm’s reputation.

According to Ward, response rates from customers using AskNicely were also up to five or six times higher than using regular net promoter score (NPS) systems, and the platform filled a previously vacant market niche for small to medium companies that could use the software as a service model on the scale they wanted from a free service for less than 100 surveys a month and scaling up in cost for larger companies sending out up to 100,000 surveys each month.

“Beyond any other marketing tool, positive word of mouth has become the holy grail of business success,” Ward said.

“Until now, businesses unable to afford the six-figure price tags for NPS have put up with conventional survey platforms that get poor response rates (less than 10 per cent) and deliver feedback too late,” he said.

“We knew the timing was right to launch an affordable, cloud-based solution that will deliver regardless of scale, sector, region or language.”

The pair had always aimed to be a global company and with 80 per cent of new customers coming from overseas and more than half of these in North America, where Ward said the NPS market was particularly strong, they saw the company’s success internationally as a good sign for New Zealand start-ups in general.

“We’re both very passionate about the idea of New Zealand tech start-ups taking on the world and while we’re effectively going global from a garage,” Ballinger said.

“We’re quite committed to growing a business that’s really small on the inside but can scale very large on the outside with customers.”

As published NZ Herald 7 May 2015

Equitise raises $211k in first campaign

Equity crowd funding closes another deal in NZ. Equitise, together with PledgeMe and Snowball have now raised $8m for their ventures. It was clear at the recent Angel Capital Assn conference in San Diego that these platforms are bringing valuable additional funding into the early stage funding market. We need to be sure we keep reminding those taking part of the risk inherent in these investments.

Equity crowd-funding platform Equitise has closed its first campaign after successfully raising $211,000 for Tourism Radio NZ.

The company, which provides location-specific digital travel guide commentary through mobile devices in motor homes and rental cars, says it will use the cash to develop technology, expand its sales force and prepare the business for expansion into Australia.

The 30 investors that took part in the crowd-funding campaign, which valued the firm at $1.2 million, now hold a combined stake of 18.2 per cent in Tourism Radio.

The company, which had revenue of over $950,000 last year, said the investment would drive future revenue growth of 50 per cent year-on-year.

Equitise managing director Jonny Wilkinson said the platform had received a lot of interest from potential issuers since completing its first campaign.

“People have obviously seen that out first deal has closed [successfully] and that has provided some certainty and surety in people’s minds,” he said.

Equitise gained authorisation to operate from the Financial Markets Authority in December.

Wilkinson said Equitise expected to announce its second campaign within the next few weeks.

Equity crowd-funding, which became possible in New Zealand last year through a once-in-a-generation overhaul of securities legislation, allows companies to issue shares to the public through online platforms.

More than $7 million has been raised by three local equity crowd-funding providers – Snowball Effect, PledgeMe and Equitise – since August.

As published  NZ Herald 6 May 2015

Publons pair get scientific publishing moving faster

Frustrated by the glacial pace of academic research, Daniel Johnston and Andrew Preston decided to propel scientific publishing into the 21st century.

“Everybody thinks of science as moving at a blistering pace, but it’s actually one of the most technologically challenged industries out there,” Johnston says.

Preston was working as a physicist in Boston when he and Johnston dreamed up Publons, an online platform for researchers and academics to review and discuss scholarly work and, for the first time in centuries, to earn credit for their efforts.

The idea won Publons $300,000 in startup funding via the 2013 Lightning Lab accelerator programme. According to Johnston, who earned a BA in history and political science from Victoria University, it takes 150 days on average to get a scientific paper published, with 120 of those days because of the peer review process.

Publons pair get scientific publishing moving faster – Business – NZ Herald News

“The way we publish and share research hasn’t really changed in the last 350 years.”

This slowness is caused by a lack of incentives for peer reviewers, he says.

“They don’t get recognition for their contribution, they don’t get paid and they don’t even get anything they can put on their CV, so this crucial part of science is seen more as a chore than anything else.”
Though Publons started off as a platform to discuss published research, this finding caused Johnston and Preston to switch Publons’ primary focus last year to incentivising peer reviewers before publication, bringing on board companies such as GitHub, Amazon Web Services and Makey Makey to sweeten the deal for participants with a rewards programme.
The concept is taking off, says Dave Moskovitz, a Wellington angel investor and one of the first investors to be attracted to Publons.
“The first 500 users took six months, we moved from 500 to 5000 in another eight months, while today Publons boasts nearly 35,000 researchers and 83,000 reviews.”
Moskovitz, a self-described failed PhD student, has watched Publons grow from its very early days three years ago, when Johnston and Preston attended one of his Lean Startup clinics in Wellington.

His own experience in academia showed the promise of the core idea and then when he saw the progress Johnston and Preston made during the 2013 Lightning Lab – where Moskovitz was helping as a mentor and evaluator – he decided to join the team. “I really like their approach to problem solving, to building a team and a market. This is going to democratise science to a degree.”

Johnston says the next big step for Publons is to set up a base in London where it can more easily establish partnerships with potential customers in scientific publishing and find industry investors.

The company’s capital raising, which stemmed from Lightning Lab, came from a number of sources, including the Government’s New Zealand Venture Investment Fund and several Wellington-based angels.

Johnston says it has helped build up the company’s team and rapidly increase its user base.

Publons pair get scientific publishing moving faster – Business – NZ Herald News

Produced in conjunction with the Angel Association of NZ.

As published in NZHerald 16 April 2015

 

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