A start-up founder’s biggest blunder?

This timely article from the BBC summarises some of the key points from the AANZ’s Governance Course very neatly.  It includes “no friends on the board”!!

With a nod and a wink, a well-known venture capitalist said something that made my blood run cold.

I was at this closed-door meeting for founders of high octane new technology ventures to give a talk about the importance of establishing company boards. It was there that this renowned investor said smugly, “You should not have anyone on your board who isn’t an investor or a friend.”

He went on to say that only people who funded the start-up “will care enough” to help founders achieve their goals, whether it be acquisition, fast growth or becoming a public company. He added that only a friend “can side with you in a board fight if you really need it”.

Read more on www.bbc.com

Early-stage board governance

Improve your chance of success with AANZ’s governance course!

A board is a valuable asset to any company. In the development of early stage, high growth ventures the board is critical.

On Monday 30 March, 9.30am to 4.30pm the AANZ are running the second iteration of a course we are building to build governance capability.

There will be a charge of $350+gst per person to attend the course. This compares to the usual IoD course charges of around $800 for full day courses!

The board is one of the most useful mechanisms through which angels can help founders navigate risks. Particularly those inherent in a period of extreme uncertainty where the customers, business model (and more) are being validated.

At an earlier iteration of the workshop Marcel van den Assum explained, “boards in angel backed companies are navigating the ledge… constantly! So its about bringing some discipline to how the company grows without moving away from where the excitement is.” Drawing on his experience in growing and selling Greenbutton he went on to say “during the early stages when the activities of the business are about discovery not execution a level of intellectual engagement and willingness to use your own resources and networks is necessary.

“It’s all about managing risk, which includes finding mentoring for special elements of the business and so much more…it’s complex! But it is extremely rewarding when an early-stage board is operating effectively” he concludes.

Recognising angel investors have an important part to play on these boards and that they should be willing to roll up their sleeves and get involved with the executive team, the AANZ will work with the Institute of Directors to develop a specific early-stage board directors’ course.

Designed to up-skill angels and assist our investee companies to grow faster, stronger and more successfully the course includes information on how to;

  • give founders the confidence to move forward
  • manage the “softer side” of a high growth company, including making sure that the founders don’t burn out
  • introduce the company to sales channels and resources.
    manage the cadence and speed of business development.
    devise frameworks for making tough calls with imprecise information
  • define leading indicators; and,
  • govern according to the requisite legal structures

If you would like to take part (and in turn contribute to its development) the AANZ has some capacity to support angels who need to travel to Auckland. Email [email protected] for more information.

Firm aims to help cystic fibrosis sufferers

Breatheasy is a wonderful example of what motivates and inspires angels to invest in early stage ventures. Founder and CEO, Andrea Millar spoke compellingly about the difference her venture could make to cystic fibrosis suffers at last year’s Angel Summit.  A New Zealand drug company is seeking $500,000 to trial an experimental cystic fibrosis treatment it plans to have produced locally.

Auckland-based Breathe Easy aims to produce Citramel, a spray designed to dissolve biofilms on the mucus which accumulates in cystic fibrosis sufferers’ lungs.  It is launching a $500,000 share offer on online investment company Snowball Effect.

Chief executive and former Timaru resident Andrea Miller, said the company had already raised more than $1 million from “angel investors”, including at least one South Cantabrian and through investment companies New Zealand Venture Investment Fund and Pacific Channel. Breathe Easy director Brent Ogilvie is also a director of Pacific Channel.

Read more on www.stuff.co.nz

Jones to head tech incubator

Former Seed Co-Investment Fund team member, Carl Jones is profiled in this story as he takes up the CEO role at WNT Tech Incubator in Tauranga putting the Enterprise Angels in the front seat to receive some high quality ‘angel food’ in the near future.

Carl Jones, a former Tauranga local with a strong track record in government-led venture capital investment, has relocated back from Auckland to take on the role of chief executive with new local technology business incubator WNT Ventures.

Mr Jones, who began his career with Craigs Investment Partners, was previously investment manager for the Government’s New Zealand Venture Investment Fund (NZVIF). He also played a leading role in NZVIF’s Seed Co-investment Fund (SCIF), which provides matched investment alongside selected partners, including Tauranga early-stage investment group Enterprise Angels.

“Our partners are extremely important,” said Mr Jones, who took up his new role late last year. He noted WNT Ventures was a collaboration bringing together virtually all of the key early stage and technology investment entities in the region.

“The WNT Ventures structure is unusual, but the real selling point for me is to be able to walk into a Crown research institute or university and say, I have this really deep and wide network of not only people and capability, but experience and capital.
That’s really attractive to them.”

WNT Ventures was one of only three new technology incubators announced by the Government last year. It will access a repayable grant programme from Callaghan Innovation for start-up businesses based on locally developed intellectual property and novel technologies.

“There is a gap in the market I call where angels fear to tread, between post-research and where the angel investors get involved.”

While angel investors may like the look of a new technology, they usually required a degree of incubation to prepare it for commercialisation, he said. “We can leverage our internal funding and our Callaghan funding and take on the risk to help the people with the technology to get to the next stage where angels want to invest.”

He added WNT Venture’s ability to help new companies was greatly enhanced by the experience of its partners, as well as Enterprise Angels’ 150-plus members, who have invested almost $12 million in 37 early-stage deals to date.

The incubator had a goal of investing in four early stage technologies a year.

First published on nzherald.co.nz 12 February 2015

Consumer Watch: Prosper by following the crowd

Congratulations to the crowd funding guys – Snowball and PledgeMe – who are getting some great profile at the moment and providing another source of capital for early stage ventures.

Fancy a slice of a New Zealand company with its sights set on growth? Backing businesses in their first growth phases were once for mega-wealthy angel investors but since the Financial Markets Conduct Act made crowdfunding investment possible it has opened up to “mum and dad” investors.

Previously, only charitable crowdfunding was permitted, in which people did not want anything in return for their money except maybe a copy of the new album they were helping to record.

But people can now buy shares in companies that should aim to eventually pay dividends. So far licences have been granted for crowdfunding equity platforms Snowball Effect and PledgeMe.

Snowball Effect has closed two offers, one for funding Renaissance Brewing, which raised $700,000 from 287 investors, and one for a new Lee Tamahori film The Patriarch, which raised $468,800 from 182 investors.

It has one offer, for as much as $1.5 million for cleantech company CarbonScape. If the offer raises $400,000 then 4.32 per cent of the company will have gone to crowdfunding investors. If it gets $1.5m, almost 14.5 per cent will be in the hands of the funders.

PledgeMe has two equity offers open, for investment in tourism company H2Explore, which wants to provide hovercraft trips on the Tasman River, and computer museum Techvana.

PledgeMe also runs a “projects” arm that offers more traditional crowdfunding, helping fund projects in return for small, non-financial rewards. Another company, Liftoff, is still waiting for a licence.

Tim Langley, of Carbonscape, said crowdfunding was an accessible way for people with relatively small investments to be involved. It had been difficult to raise capital under the old rules.

“We saw moves being made last year to amend the rules to enable crowdfunding and thought it was an opportunity.”

Carbonscape uses microwave technology to turn carbon in waste wood into products such as high-quality coking coal.

The company wants the money to build a pilot plant to supply New Zealand Steel.

Snowball Effect spokesman Shaun Edlin said crowdfunding was a way to “democratise” investment. “It’s allowing mum and dad investors to get on board. They previously didn’t have the opportunity to invest in companies that weren’t making a public offer.”

Edlin said most offers could be described as high risk but high return. “This is a great way to broaden a portfolio with some investment in small to medium businesses at an early stage in their growth.”

Crowdfunding offers don’t have the same disclosure requirements as most financial products so investors should have a clear idea of what they are getting into. The shares may not be easily traded if you want out.

Claire Matthews, of Massey University’s school of economics and finance, said investors should understand what returns were expected. “If you’re expecting a return, do the normal analysis: what are the risks, what is the risk I’m not going to get any return or I’m not going to get my money back?”

Adviser Liz Koh said the fact investments could be small meant the risk would be spread.
First published on nzherald.co.nz 9 November 2014

$2.2m Investment from Angels for Lightning Lab startups

Five of the nine start-ups to go through Lightning Lab’s digital accelerator programme have raised a combined $2.2 million of seed funding, more than what they were seeking at a demonstration day in May.

The five successful groups, Common Ledger, Cloud Cannon, GlassJar, CoachSeek and Twingl, were seeking $1.94 million to support the commercial ambitions for their respective software-based ideas, of which $740,000 had already been committed before their May 28 presentations. Lightning Lab’s programme seeks to prepare early stage companies to pitch to investors.
“I was delighted to see that all the teams who pitched on Demo Day 2014 matched the best of what last year had to offer,” angel investor Trevor Dickinson said in a statement. “It was therefore no surprise that the 2014 graduates have attracted serious interest from experienced angel and venture capital investors.”

Last month the government-backed New Zealand Venture Investment Fund said it was too early to judge the success of its Seed Co-Investment Fund, which backs early-stage firms alongside angel investors and was set up in 2006.

In the opening address for the Lightning Lab event in May, Angel Association chairman Marcel van den Assum, who was also part of the successful sale of local software firm GreenButton, urged angel investors to broaden their portfolios if they wanted to improve their chances of a return, with too many backers relying overly on a small number of ventures.

First published on nbr.co.nz 12 August 2014

Lead Partners

NZTE NZGCP PWC “NZX” Callaghan Innovation

Expert Partner

AVID “Jarden”

AANZ Summit Sponsors

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