New Zealand’s Utility Electric Vehicle, UBCO, now on-road and offshore

After successfully raising NZ$4.20M earlier this year, including NZ$1.40M from US investors, Spring Capital and successful technology entrepreneurs Bob and Ethan Ralston, UBCO is now growing their global market both on- and off-road. The off-road market in North America alone is estimated at US$12.7bn (including both 2 and 4-wheel drive vehicles) and the on-road market is about US$6.21bn USD.

Over the last year funds have been spent on R&D, market development, marketing and operating costs. The results are looking good both in product and market outputs.

In May 2017 UBCO Bikes USA, LLC was established in Eugene, Oregon as a dedicated distributor of all Ubco products in the USA. Subsequently, a dealer network has been established across a number of US states, from Oregon to Mississippi, including BMW and John Deere dealership groups. With 120 units dispatched to the US to date, and a further 90 units on-order, the size and frequency of orders is increasing.

In Australia, UBCO appointed a national distributor that is focussed on rural agricultural equipment and there is already a 20′ container of 2018 2x2s being distributed across Australia.

The latest UBCO 2×2 is a road registerable Utility Electric Vehicle that is classified as a moped/scooter/motor-driven cycle globally and can be driven on-road with as little as a learner car driving license. The new model has been significantly upgraded with proprietary design, parts, and improved electrical integration it has improved strength, durability, ride comfort as well as higher performing motors and improved sealing.

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$1m investments for Mount company DROPIT

A Mount Maunganui start-up is the talk of the investment community after eclipsing the previous investment record of New Zealand’s largest Angel investor group.

Enterprise Angels has pledged more than $1 million to DROPIT, on behalf of its investors.

This is the first time the membership-based investment facilitator has achieved the seven-figure mark with a software company.

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Idealog’s Guide to Tauranga: Follow the money

Businesses in Tauranga looking to scale up should count themselves lucky: the Bay of Plenty is one of the only regional centres in New Zealand with funding available for nearly every stage of business growth. There are three organisations on hand ready to help: early-stage investment provider Enterprise Angels, tech investor and incubator WNT Ventures and later-stage private equity provider Oriens Capital.

For companies in the early stages of investment, WNT Ventures is technology incubator that’s been put together to nurture innovative ideas nationwide. It’s currently on a five-year pilot trial receiving government support through Callaghan Innovation.

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Rockit Global’s mini-apples grow maxi-value

Rockit markets the miniature Rockit variety apple snacks and can’t keep up with demand. The apple snack is grown in both hemispheres with Rockit holding variety rights.
Pioneer Capital and Oriens Capital’s purchased Mr Alison’s stake in March.
“This result, while not cash-in-the-pocket, is a great outcome for the angel investors in these companies, the early-stage investment community and the agtech sector in New Zealand,” Mr Murphy said.
“Not only does it demonstrate that it is possible to get close to that mythical 10x return but that it’s possible to achieve that in a New Zealand food/agtech company. That’s something we’ve been working on for years.”
Enterprise Angel investors first invested in Rockit Global Limited (then called Havelock North Fruit Company) in 2011 and in the Rockit Orchard Limited Partnerships, becoming the first large-scale growers of the Rockit apples variety in 2012 and 2014. They formed the board of Havelock North Fruit Company Limited (now Rockit Global Limited) and guided growth thanks to expertise in the kiwifruit industry.
Last year Rockit exported 77 containers and earned its first profit while a wrestle for control between Mr Alison and six other shareholders went to the High Court. Mr Alison owned the largest single share in the company and had sought to buy the others out, instead bowing out a wealthy man this year.
“Securing funding as Rockit has from New Zealand private-equity growth investors is very significant and something I hope we see a lot more of in future,” Mr Murphy said.
“It sends a signal to the early-stage investors and entrepreneurs that it is possible to achieve post angel-round funding to better position young New Zealand companies to provide substantial investment returns.”
Rockit chairman John Loughlin said it was very positive that high-calibre growth equity investors such as Pioneer and Oriens recognised “the tremendous potential” in Rockit and would contribute governance expertise and additional capital to help the company deliver on “ambitious” growth plans.
Mr Murphy said Mr Alison did a great job in identifying “the lovely little apple” and a successful marketing strategy.
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Bay of Plenty investors take control of Rockit apple company

An argument over the ownership of the high-profile company responsible for producing the miniature Rockit apples has been resolved, with Bay of Plenty-based Oriens Capital and Auckland’s Pioneer Capital buying out company founder Phil Alison.
The Havelock North Fruit Company had been producing the apples, which are marketed in plastic tubes as a high quality snack food in New Zealand and internationally.
Mr Alison, who controlled a 49.5 per cent share of the company, originally wanted to buy out the remaining shareholders, which included a number of prominent Bay of Plenty investors. The disagreement went to the High Court last year after the parties failed to agree on price.
However, the company announced yesterday that an agreement had been reached by the shareholders under which the two experienced private equity companies would acquire all of Mr Alison’s shareholding. The transaction was also significant in being the first investment by Oriens Capital, the regions-focused Tauranga private equity firm launched last year.
Mr Alison has sold all his Rockit-related interests and would no longer be involved with the company, its subsidiaries, or related orchard suppliers of fruit.
Effective immediately, the company would begin trading as Rockit Global Ltd. Acting chief executive Austin Mortimer has been appointed chief executive of Rockit Global.
Chairman John Loughlin said the value of the transaction remained confidential.
Rockit snacks were now grown in seven countries and sold through partners in 22 countries, he said. In 2016, the company exported 77 containers of fruit and earned its maiden profit.
“With only 3 per cent of Rockit apple snacks sold in New Zealand, our sales and marketing focus is on key international markets,” Mr Loughlin said.
“We have strong growth plans for 2017 and the years ahead. The new shareholders have experience in growing New Zealand export businesses. They will contribute governance expertise and additional capital to help the company deliver on its ambitious growth plans.”
The Rockit Global board will include four members of the previous board – Mr Loughlin, plus well-known Tauranga investors Murray Denyer, Steve Saunders and Neil Craig. They would be joined by Oriens Capital chief executive James Beale and Pioneer Capital investment director Craig Styris.
Mr Loughlin said Mr Alison had made a huge contribution in recognising the potential of the fruit, then establishing and leading the business toward building the Rockit global brand.
“We will always be greatly appreciative of the work he put in to creating the international platform for the business,” he said.
Mr Denyer, a partner with Cooney Lees Morgan, Steve Saunders, founder of the Plus Group, and Neil Craig, founder of Craigs Investment Partners, are all Tauranga members of the Bay of Plenty’s Enterprise Angels start-up funding group.
“This is a major milestone for us,” said Mr Denyer.
“Bringing Pioneer and Oriens Capital into the business strengthens our share register enormously, and gives us access to their business expertise and experience,” he said.
“It’s also a success story for Enterprise Angels. Steve, Neil, John McDonald and myself all invested into this business back in 2011 when the founder first sought to raise capital. We’ve worked very hard to get the business to where it is today – to a point where it has gained the attention of and attracted investment from private equity players. It has graduated out of the angel investment space – something that few start-ups ever manage.”
Mr Mortimer described Rockit as significant New Zealand success story.
“It clearly demonstrates how high-quality fruit can be positioned as a premium, value-added product through a robust brand strategy. Rockit Global is now well-positioned to continue its rapid growth and capitalise on the substantial grab and go, healthy snack market.”
Rockit Global
– Rockit are miniature apples (1.5 x the size of a golf ball) with a sweet flavour, thin skin, and distinctive bright red blush.
– North Havelock Fruit Company worked with Plant & Food Research, together with Hawke’s Bay company Prevar, to develop the apple.
– Rockit Global now has the exclusive international licence to grow and market the PremA96 apple variety.
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Bay of Plenty angel investors facing challenges

Experienced American angel investor Brian Cohen has warned the New Zealand industry that the local capital cycle is stunted.

“You’re not in the investment business – you’re in the exit business,” he said, in comments delivered at the recent Angel Association of New Zealand annual Angel Summit. “Your job is to make money, stop being so nice.”

Bill Murphy, executive director of the Bay of Plenty’s Enterprise Angels, the country’s biggest angel group, said the warnings were well taken by the local industry.

“The most experienced investors in this space are getting more and more discerning about what they invest in and in ensuring everything is in place to make that investment a success,” he said.

“It’s getting more difficult to raise money for investment opportunities, which reflects that. But it’s also a reflection of where the industry is at here – we’ve only really had an angel community for the past decade or so, whereas they’ve been going for twice as long in the US and Europe.”

Mr Murphy said because so far there had been relatively few liquidity events from very early stage investments, it was not yet clear whether there was an additional challenge and risk for those investing in New Zealand companies, compared to the risks facing American or European investors operating in their home markets.

“In our case we invest in these companies and then we have to take them into the international market. And we’re just not sure how much risk that adds.”

Enterprise Angels provided a copy of remarks made by Mr Cohen – chairman of New York Angels, the world’s biggest angel network, who was one of the international keynote speakers at the summit.

Mr Cohen said New Zealand appeared to have a great angel ecosystem

“It’s full of enterprising people, there is a good level of government funding into universities, centres of excellence and crown research institutes producing great intellectual property,” he said.

“And ‘top of the pipe’ activity, including incubation and acceleration, seems very active – your entrepreneurs do more with less. They are working hard to succeed despite the gaps in your system.

“What’s missing, and crucial to your future as a globally attractive incubation nation, is the depth of capital to grow New Zealand companies to a size where they are attractive and competitive in international markets. Your capital life cycle is stunted.”

Mr Cohen told delegates at the event that they were responsible for this, and must get serious about fixing it. Promising companies which are being seeded and started would wither and die if they didn’t, he said.

Mr Murphy said the New Zealand Angel environment was dynamic, with a lot of investing going on.

“But there are still lessons to be learned about backing the best investment opportunities and then being able to take those companies them right through the cycle. The critical stage for all parties is the liquidity event.”

Anne Blakeway, investor relations manager for Enterprise Angels and its recently created online investor platform AngelEquity (see box), said the Mr Cohen’s comments aligned with those heard from founders and business angels.

“They need follow-on capital to address the market opportunities they are developing,” she said.

“If we don’t get more investment into them, by making it possible for more investors to get into this space, we’ll limit their chances of success. They’ll miss out, and so will New Zealand.”

First published NZ Herald – 11 Feb 2017

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Angels propose dance with wholesale investors

New Zealand’s latest crowdfunding venture should benefit from the wide definition of ‘wholesale investor’ under the Financial Markets Conduct Act (FMC), according to founder, Bill Murphy.

Murphy said the FMC expanded the number of potential NZ wholesale investors – who are not subject to the stricter, and more expensive, retail disclosure regime – opening up a broader target audience for the AngelEquity investment platform that launched last week.

In a statement he said: “We’re not just talking about banks or institutions. Many high net-worth individuals, or people with sophisticated knowledge and experience of financial markets are now considered wholesale investors.”

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MEDIA RELEASE: Angel Association commends initiatives like AngelEquity

The Angel Association today welcomed the launch of AngelEquity, a new equity crowd-funding platform leveraging deals from New Zealand’s formal angel networks such as AngelHQ, Ice Angels and Enterprise Angels.

“Early stage, high growth companies are always looking for capital. Without capital the growth path is exponentially slower,” said Suse Reynolds, AANZ Executive Director.

The Angel Association exists to support those investing in these companies and welcomes any initiatives to help broaden and deepen the pool of capital available and raise the profile of the ventures they are funding.

Angel Association members include the networks or clubs, early stage funds, investor-led tech incubators and equity crowd funding platforms.

Suse Reynolds said she believed there is still plenty of room for growth and specialisation in this end of the capital markets.

Early stage, high growth companies are highly risky investment prospects but they are absolutely vital for NZ’s future economic and social wellbeing. The companies our members are backing are the Xero’s, F&P Healthcare companies of the future.

In order to give these companies the best chance of success what they need, along with the capital, is the exposure and support to the expertise and connections the capital can help deliver.  AngelEquity provides a link between the angel networks and individual high networth investors improving the prospect of those synergies being created.

–Ends–

For more information, please contact:

Suse Reynolds, AANZ executive director on 021 490 974 or [email protected]

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; to support the angel networks and help create new networks; to promote the growth of angel investment in New Zealand by encouraging and educating entrepreneurs, new angel investors and angel groups; and to ensure the ongoing success of the angel movement through developing industry strategy, encouraging collaboration and educating the wider New Zealand public about the importance of angel investing in growing our economy.  AANZ currently has 20 members representing more than 550 individual angels associated with New Zealand’s key angel networks and funds. Recent NZ Venture Investment Fund data revealed angels have invested more than $NZ438 million in over 680 deals in the last 9 years. For more, please visit: www.angelassociation.co.nz

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What is great about NZ angel community?

The following interview with Nelson Gray, non-executive director of the Scottish Angel Capital Association, was conducted at the Asian Business Angels Forum and AANZ Summit 2015.

Nelson Gray talks about what is great about the New Zealand angel investment community and what New Zealand can do better.

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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USA ACA trip reports

In May, a “Kiwi Contingent” of about a dozen angels attended the US Angel Capital Association conference in Philadelphia. Five lead investors were awarded an AANZ “scholarship” to support their attendance at the conference. Susan Iorns from AngelHQ, Blake Richardson from Flying Kiwis, George Gong from Ice Angels, Christopher Boyle from MIG Angels and Tina Jennen from Enterprise Angels have all completed reports on the conference. Some of their key insights included; no one ever thinks they changed the management of an angel backed company too soon, company boards must regularly discuss the exit, look for founders who are obsessed with making the business work, the CEO should not lead the exit, there are so many people to learn from at the ACA conference and angel investment is in the best place it’s ever been. You can access all the scholarship recipient’s reports and read more here.

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Firms vie for slice of Enterprise funding

This week’s Enterprise Angels meeting saw funding pitches from three companies, including Bay of Plenty-based Balex Marine.

Balex is looking to close out its third funding round of $900,000 and has already raised $415,000 in a rights issue from shareholders in its latest round.

Enterprise Angels (EA) is also about to begin beta testing its new online funding platform, AngelEquity, which will allow any qualified investor in New Zealand to take part in an angel investment deal either originated by or syndicated through the early stage BOP funding group, said executive director Bill Murphy. EA has members from Tauranga, Rotorua, Taupo and the Waikato.

Balex Marine has been developing its production and distribution channels for its Automatic Boat Loader (ABL), which allows for remote controlled launch and retrieval of trailer-boats. The ABL is now being used in the NZ market, with 21 marine dealers, four trailer manufacturers and three boat manufacturers on board.

The company has also lined up a distribution deal with Forge UK for Europe and the Middle East, and is developing its Australian network.

To date, in addition to seed and early stage capital from founders and friends of the company, Balex has completed a first round of $600,000, a second round of $1.2 million, and is now almost halfway through its third round of $900,000, with $415,000 raised in a rights issue from existing investors, including Enterprise Angels members.

“The company is looking to raise funds from new shareholders, including EA members that are new to the deal,” said Mr Murphy.

Paul Symes, Balex’s chief executive and a major shareholder, said it was possible the company could complete the latest round through EA members.

“We’re continuing to work closely with Enterprise Angels,” he said.

“However, we are also going to be casting our net a little wider and will be working with other potential investors, including crowdfunding options such as AngelEquity when it goes live.”

Balex will be taking part in the Sydney International Boat Show where it will share a display with Sydney-based Watersports Marine, which is a key dealer for Dunbier Trailers, Australia’s biggest boat trailer company. Balex is currently in discussions with Dunbier on Australian distribution.

This week’s EA meeting also saw funding pitches from Agersens, a fenceless farming agri-tech startup developing a virtual shepherd, and Synthase Biotech developing a proprietary technology known to neutralise lipid peroxides, which could extend the life of bull semen used in artificial insemination.

Mr Murphy said Enterprise Angels had been busy this year with eight follow-on investments and a number of new deals under way.

First published –  NZ Herald 28 July 2016

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Preparing the ground to grow strong companies

The confirmation that new Tauranga-based private equity fund Oriens Capital is on track for a $30million first close is great news for the region’s business sector.

Oriens Capital’s executive team have noted it will not focus exclusively on the Bay, with other regions also likely to be targeted.

But a key driver of setting up the new fund was to help close the gap in the Bay’s entrepreneurial and funding ecosystem.

The reality is that no other region outside the major metropolitan centres has the supportive infrastructure of experienced investors to pull together a $30 million-plus private equity fund.

The Bay has long been the home of the country’s largest angel investor group, Enterprise Angels, with 200-plus high-net-worth members from Tauranga, Rotorua, Taupo and the Waikato.

Tauranga is also the base for WNTVentures, the only regional entity to get the nod from Callaghan Innovation when it backed a series of new technology business incubators 18 months ago.

Oriens Capital will be focused on lower mid-market companies with enterprise values of $10 million to $50 million and potential investments ranging from $3 million to $10 million.

But Enterprise Angels executive director Bill Murphy says Oriens Capital could still potentially provide backing to some companies emerging from the angels funding system.

While Enterprise Angels’ investments typically top out at around $2 million, Mr Murphy notes electric offroad bike company Ubco is targeting $2.5million in its current round.

Meanwhile, WNTVentures is focused on identifying innovative companies at the very early stage.

“We are about the development of intellectual property,” says chief executive Carl Jones.

WNTVentures has backed four companies with investments ranging up to $600,000, with two more currently going through due diligence.

First published on nzherald.co.nz 21 June 2016

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Bay private equity fund targets regions

A new region-focused private equity fund, Oriens Capital, has been launched in the Bay of Plenty and expects to hit its first closing target of $30 million within the next month. It is understood to be the first regional fund of its type in New Zealand.

The Tauranga-headquartered fund has been in gestation for a couple of years and is aimed at filling a gap in regional funding sources. The Bay already has WNTVentures, focuses on incubating extremely early stage tech companies, and the country’s biggest angel investor group, Enterprise Angels.

“There is a gap in the market,” said James Beale, who is chief executive of the new fund’s management entity.

Peter Tinholt will serve as chief operating officer of Oriens Capital, which has also lined up a strong, well-connected board (See story below).

“We will be targeting profitable mid-market companies that have growth opportunities. The biggest problem for all these businesses right now is that there is no formal source of capital, so we are going to fill a really niche space.”

The fund is aiming to complete up to eight investments in companies with an enterprise value of from $10 million to $50million during its initial five-year life, with individual stakes of $3 million to $10 million. Oriens Capital plans a second fundraising round to bring the total up to $60million.

The new fund has a distinctive structure in that investors in the Limited Partnership will also receive a stake in the ownership of the General Partnership, providing full alignment of interests and reduced costs, Mr Beale said.

Mr Tinholt said the fund had been getting good support, with commitments from Quayside Holdings, TECT, iwi and high-net-worth investors.

Scott Hamilton, chief executive of Quayside Holdings, the investment arm of the BOP Regional Council, said Quayside was approached by many private equity funds.
“Oriens Capital opens up the opportunity to achieve the same return profile through having something focused closer to our own backyard. Genuine growth in businesses is genuine capital growth and that’s what we want to see. It grows jobs, salaries and exports.”

Carl Jones, chief executive of WNT Ventures, said Oriens Capital was a fantastic addition to the region.

“You’ve got the full flow-through from the early and seed stage we do and Enterprise Angels and now on to the mid-market,” he said.

“That’s something that hasn’t been here before.”

Enterprise Angels executive director Bill Murphy said the new fund would provide access in the region to funding for all the critical stages of a company’s growth.

“It’s a tremendous outcome for us as a region and very positive for the business community.”

Tauranga MP Simon Bridges said the new fund would be valuable for business and the wider community.

“It’s also a sign of the growing maturity of our area where we are starting to see new financial tools that weren’t around before.”

Bay of Plenty MP Todd Muller said the fund’s promoters had been smart in seeing the opportunity in the mid-market, and the regional pipeline.

“The fund is a great addition to the regional economy of New Zealand and I have every sense it will be successful.”

Colin McKinnon, executive director of the New Zealand Venture Capital Association, said the fund’s focus was unique.

“NZVCA welcomes the opportunity for new investors to get involved in private equity. And it’s interesting there’s been enough interest in a regional fund to lead to its establishment.”

The challenge was going to be around ensuring diversity of the portfolio and deal flow, he said

“But it’s very positive for the asset class.”

Bay of Plenty’s New Funding Ecosystem:

* WNTVentures – incubation

* Enterprise Angels – early stage

* Oriens Capital – growth capital

Experienced executive team at helm of Oriens Capital
Oriens Capital will come into operation with a very experienced executive team and the support of a well-connected board that is expected to help drive deal flow.

Chief executive James Beale has 20 years of experience, including 14 years at Craigs Investment Partners, where his roles included chairing the investment committee.

Most recently, he has been running his own firm, meeting a need in the region to assist private companies in raising capital.

Chief operating officer Peter Tinholt was a management shareholder in successful exporter Taura Natural Ingredients and left after the company was acquired late last year.

Oriens Capital has also identified a chief financial officer who has extensive experience in private equity. All three key executives will also be investing as LPs.

The founding board of the GP will be chaired by John McDonald, a director of Pohutukawa Private Equity, and a former executive of Fletcher Challenge.

Other directors include Neil Craig, founder and chairman of Craigs Capital Partners – who has been a key supporter of the new fund – and Michael Smith, a director of Port of Tauranga and Quayside.

Once the fund is established, Mr Smith and Mr Craig will be replaced by representatives of the three largest LPs, and Mr Craig will move to the LP board.

Other LP director designates include Colin Groves, a former director of M&A for global packing giant Tetra Laval, Richard Hughes, a director of WNTVentures, as well as Mr McDonald and another GP to be determined.

The investment committee will consist of the executive team, plus Colin Groves, Neil Craig and Richard Hughes.

Also designated are Bob Major, who has significant executive experience with Fonterra, and Dallas Fisher, a shareholder/director of NDA Group.

One other committee member will also be appointed. The focus of the new fund will be very much on regional cornerstone investors focusing on regional New Zealand capital growth opportunities, with specific flow-on benefits from within the BOP-Waikato triangle.

“One of the really important features of the new fund is the network of people appointed and the LPs,” said Mr Beale.

First published on nzherald.co.nz on 15 June 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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Ubco charging ahead to meet target By David Porter

Ubco, the Bay of Plenty-based offroad electric bike manufacturer, is on track to meet its minimum $1.5 million target in second stage funding and is aiming for a maximum of $2.5 million.

As well, Timothy Allan, founder of Tauranga industrial design and development company Locus Research, which has worked closely with Ubco’s co-founders in developing the bike, has now taken on the role of chief executive. Mr Allan will be restructuring his role at Locus in order to commit to the bike company.

“Ubco has been through a thorough due diligence process with Enterprise Angels and the company has good support,” said Enterprise Angels executive director Bill Murphy.

Ubco pitched to EA in February. Firm commitments now sit at $1.22 million, said Mr Murphy, who added that EA member Deion Campbell was joining the Ubco board in his capacity as a private investor in the startup. Mr Campbell is general manager generation for Trustpower.
Ubco’s funding is expected to come from a mix of EA members, matching funding from the Seed Capital Investment Fund and the angel group’s sidecar fund, as well as other wealthy private investors and regional funds.

Mr Allan, who returned on Monday from a trip to China to commission Ubco’s second production line and liaise with suppliers, said he was confident the fundraising was building healthily towards the total.

“It’s looking pretty good,” he said. “I’m hoping we will hit our target of $2.5 million. We’ve got some other interested investors doing due diligence at the moment, and we’ve also got interest from a couple of offshore investors.”

Mr Allan said Ubco hoped to close its funding round this month.

The company has also recently concluded a partnership with Blackhawk Tracking Systems, which makes advanced GPS tracking systems. “This gives us a technology platform that relates directly to the bike’s communication,” he said, adding that Blackhawk chairman Keith Oliver would be also joining the Ubco board.

Ubco has now fulfilled its pre-orders and is ramping up production and building up its team. The company recently hired former BMW mechanic Gareth Hills to supervise production. Mr Allen said the company was now recruiting for leadership roles in product and technology, sales and marketing, and operations and logistics.

Co-founder Anthony Clyde, who also runs his own company importing electric bicycles, was likely to scale back a little to more of a director role in the next phase, said Mr Allan. Meanwhile the other co-founder Darryl Neal was expected to serve as a design director.

The next major long term project for the company would be developing a road legal version of the Ubco electric bike.

Locus founder to focus on electric bike firm
Timothy Allan will restructure his involvement with Locus Research, the design and
development company he founded more than a decade ago, to focus on his new role as chief executive of offroad electric bike company Ubco.

“I’m stepping back from my roles at Locus and that is being discussed at the moment with the various parties,” he said.

Locus Research, based out of the Newnham Technology Park in Te Puna, Tauranga, is a product development and innovation consultancy. It has become a key player in the Bay’s entrepreneurial ecosystem and has been deeply involved in the development of a number of first-to-market products, including the Inverse Hair Treatment System and the Balex Marine Automatic Boat Loader.

Founded by Mr Allan in 2002, Locus has increasingly been taking equity stakes in companies it has worked with, including Ubco. Mr Allan said he estimated he had been spending around half his time on the electric bike company in recent months.

“I think Ubco has wheels, no pun intended,” he said, adding that taking on the chief executive role offered a different opportunity for him.

Mr Allan said Locus was evolving and would probably seek outside investment for the first time in order to go after more opportunities where it could become deeply involved in startup companies, rather than just provide contracted services.

“We’ve been fairly stretched over the last six months with the level of support we’ve had to supply to all of the startup companies we’re involved with,” he said.

He envisaged the senior Locus team would be stepping up, and he would be adding a couple more staff. But he will continue to be involved in the company, particularly in terms of selecting companies where Locus will take an equity stake.

The Locus ownership structure would not be changing, and the team had been getting used to his changing role.

“But we will be putting in place an employee share options scheme to make sure the key people have a stake in the outcomes and successes. A lot of them have put a huge amount of time into the various companies,” he said.

Ubco:

* Co founders: Whakatane-based Antony Clyde and Wellington-based Darryl Neal.

* Design and development: The founders, together with Tauranga’s Locus Research.

* Manufacture and assembly: Core components are built in China and assembled in Tauranga.

First published on nzherald.co.nz on 4 May 2016

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Volpara raises A$10m by listing on ASX

Volpara Health Technologies, an investee of Bay of Plenty startup group Enterprise Angels’ EA Fund 1, successfully listed on the ASX last week.

EA Fund 1 invested $100,000 in Volpara, then named Matakina Technology, in October 2014.

The fund now holds a total of 239,856 ordinary shares, which have a listing value of A$119,928 ($133,000), an uptick in value of 33 per cent from its initial investment, said Enterprise Angels executive director Bill Murphy.

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Angels head to TechweekAKL

New Zealand’s angel investors, a community which actively supports the development of new technologies, will be out in force at TechweekAKL.

Angel Association of New Zealand member’s are involved in two key events, positioned right in the centre of the week-long celebration of all things new and innovative.

[email protected]: 18th May, from 6pm, The Grid – book your seat here.
Tech Innovation Showcase: 18th May, 3.30–5.50pm, Astrolab – apply for an invitation here.

[email protected]

An important event revealing personal accounts of angel-entrepreneur relationships. It is a must-attend evening for founders, and would-be angels.

In relaxed and informal format investors from Flying Kiwi Angels, AngelHQ, Ice Angels and Enterprise Angels will share their personal stories, including their individual entrepreneurial experiences, investment thesis, what they expect from entrepreneurs and how they help grow successful companies – alongside investing their money.

As well as bringing together angels, entrepreneurs and angel groups [email protected] event also brings together key organisations in our New Zealand innovation ecosystem. The event is being held at The Grid, organised by Venture Centre, and is only made possible with the sponsorship of AANZ, alongside New Zealand Software Association and AngelEquity.

To book your ticket and make the most of the opportunity to share a drink, nibbles and some rare ‘get to know you time’ up close and personal with Angel investors click here

The Tech Innovation Showcase

An opportunity for current angel group members to register for a private event focusing on some of the IP rich organisations emerging from government-funded Tech Incubators, Astrolab, Powerhouse Ventures and WNT Ventures. Set up by Callaghan Innovation the incubators are mandated to draw complex IP from Crown Research Institutes and NZ University R&D departments for commercialisation. The event is being held at Astrolab for an invitation click here.

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Platform’s aim to allow angels to fly into enterprise online

Bay of Plenty start-up funding group Enterprises Angels plans to launch an online crowdfunding platform aimed at eligible investors within the next month.

“The investment world is shifting and changing all the time and we’re seeing more and more investment opportunities being made available online,” executive director Bill Murphy, told an Enterprise Angels meeting this week.

However, most equity crowdfunding opportunities were open to all. Early stage investments were typically high-risk, with a high failure rate.

Mr Murphy said the Enterprise Angels platform would aim to offer deals that had gone through a strong level of due diligence to a wider platform of qualified investors across New Zealand.

“We saw a real opportunity in the market to take angel-backed high quality investment opportunities that have already had the full scrutiny of Enterprise Angels’ and make them available more widely.”

The deals would only be available to people who were qualified as eligible investors under New Zealand securities regulations, he said.

Enterprise Angels, which had almost doubled to more than 200 members over the past year, was both numerically and in funding terms the strongest of New Zealand’s angel groups and included members from Rotorua, Taupo, Tauranga and Hamilton. Its deals were frequently syndicated through other angel groups around the country.

Mr Murphy said the Angel Association of NZ and other angel groups throughout the country had been kept informed about the proposed platform.

Enterprise Angels had formed a strategic partnership with Tauranga-based Locus Research to develop the platform.

Locus managing director Timothy Allen, who is on the Enterprises Angels board, said that as with other aspects of life, digitisation of funding was occurring because it was easier and more efficient.

New Zealand-based company crowdfunder Snowball already offered an option for qualified wholesale investors, he said.

“Our point of difference is that we will be solely focused on eligible angel investors, and the deals we present will bring the depth of experience and due diligence available through the Enterprise Angels membership and processes,” he said.

First published on nzherald.co.nz 7 April 2016

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Growing interest in Bay hair product

Interest in Tauranga company Roholm’s sub-zero Inverse Hair Conditioning Treatment is running hot internationally, says acting chief executive Daryl French.

In a pitch to Enterprise Angels in Tauranga this week, Mr French described Inverse as the most significant advance in the hair treatment sector since GHD began globally marketing its hot flat irons in the late 1990s.

Inverse used sub-zero temperature cores in hand-held tongs to lock in moisture to hair.

The company said its tests have shown it is less damaging to hair than hot treatments or chemical conditioners, and that it significantly improved hair quality. The concept was invented by Tauranga hairdresser David Roe and developed with Locus Research.

Mr French had just returned from a trip to meet with Inverse distributors in Europe, the UK and Canada.
The company had a two-pronged marketing strategy and would use distributors servicing professional hair salons to promote local market awareness, backed up by direct e-commerce operations in each market.

The company had distributors in Canada, Dubai (for the United Arab Emirates) and the UK, and would shortly make a decision on its European distributor.

Mr French said the product had generated a “huge” social media response, as well as coverage by CBS and NBC in the US.

The company planned to keep production in New Zealand, where Hamilton-based Millennium Plastics is a key part of their global supply chain, and would be building out its Tauranga operation with a number of new staff.

“We made a conscious decision to keep manufacturing in New Zealand. The savings on the cost of goods was insignificant. And it became more evident as a factor when I was in Europe. A number of our potential distributors said they were glad we are manufacturing in New Zealand and not in China.”

Mr French said keeping control in New Zealand with a globally scalable supply chain and logistics approach would help keep control of quality and reduce the risk of copying.

Global patents had been filed for the system, he said.

“But we will be copied. We could have built a cheaper product, but we aim to have a very high quality brand – that’s going to be our protection.”

Locus managing director Timothy Allen, who is also a Roholm executive director, said the key patent was focused around the thermal storage core technology.

“It doesn’t just protect what we have now. We are starting out with the handheld device, but we have a range of other products on the drawing board.”

Roholm was founded in 2013 and raised $1 million in initial capital. It recently went to market for a further $900,000, around $711,000 of which it raised in a convertible note from existing shareholders, all of whom were in the Bay of Plenty.

It was seeking a further $189,000 from angel investors at this week’s meeting.

Enterprise Angels:

* Membership total April 2016: 205

* Membership total April 2015: 138

* Members who have invested in deals: 111 (54%)

* Members who have invested in five or more deals: 29 (14%)

First published on nzherald.co.nz 7 April 2016

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EA Fund 2

Enterprise Angels, a BOP and Waikato based Angel group, has recently launched EA Fund 2.  Please click here to view the EA Fund 2 Information Memorandum.  Hard copies are also available upon request.

The IM provides a unique insight into the early stage investment market in New Zealand and the largest investor group, Enterprise Angels.  It also provides you the information you’ll need to make an informed decision about joining EA in investing in this exciting and potentially highly rewarding investment sector.  Pages 4 and 5 provide a summary of the Fund’s Key Terms.

This is an easy and accessible way to get involved in startup investing and is open to all Wholesale Investors.

Why consider investing?

  • EA Members:  Sector experts and experienced early stage investors invest first, providing the Fund confidence in its investment decisions;
  • EA Team:  Professional staff and Investment Committee members have years of experience in the early and later stage markets and funds management;
  • Investor Protection:  Protective investor terms and valuation are negotiated to help mitigate the risk of investing in this high risk/high reward sector; and
  • Investment Management:  All investee companies are monitored, provide quarterly, 6 monthly and annual reports and (where possible) provide a board seat to an EA / EA Fund Investor Director.

If you are interested in learning more about the Fund, please click here.

Please also contact Enterprise Angels directly if you have any questions.  You can find out more about us on our website.

This is an early stage investment opportunity and as such is high risk and potentially high reward.  Any investment in this Fund is illiquid and should be considered a medium term (5-10 years) investment.  This is a wholesale offer and is only available to people meeting the criteria for a wholesale investor as defined in the Financial Markets Conduct Act 2013. 
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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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Ubco: Kiwi Electric bike maker starts first order

Bay of Plenty-based electric off-road bike maker Ubco has begun assembling, testing and shipping its first production models to meet pre-order and dealer demand in New Zealand and Australia.

The award-winning startup, which was co-founded by Whakatane-based Antony Clyde and his partner Daryl Neal in Wellington, is also seeking $1.5 million to $2.5 million in second stage funding from the Bay’s early stage funding group Enterprise Angels.

Read more

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Balex Marine strengthens its board

Enterprise Angels backed, Balex Marine, continues to surge ahead with the appointment of new board members to assist with growth plans.

Tauranga startup Balex Marine this week announced the appointment of Comvita co-founder Alan Bougen as an independent director and Tuatara Breweries chief executive Richard Shirtcliffe as board adviser.

The company also announced it had successfully closed its second fundraising round on $1.2million.

Mr Bougen is the co-founder, deputy chairman and a director of NZX-listed Bay of Plenty honey and health products company Comvita. Mr Shirtcliffe’s former roles include heading up global marketing at export success story phil&teds.

“We were looking for people with strong governance experience who had grown significant companies from small startups,” said Balex Marine’s chairman Daryl French.

“Alan is an ideal fit. He has experience in taking Comvita from a startup all the way to it becoming a significant large publicly listed entity.

He brings governance experience and will add to our capabilities, particularly if we decide to look to an IPO as part of a future exit strategy.

“Richard has experience in taking a number of companies from startups through to medium size, great marketing expertise and real passion and enthusiasm. Together, they will really strengthen the board.”

Balex Marine makes the hydraulically powered Automatic Boat Loader 2500, installed on trailers, which lets users launch and retrieve their boat by remote control. “The ABL makes launching so stress-free we believe it will become an automatic add-on for trailer boat owners,” said Balex Marine’s managing director Paul Symes.

Mr Bougen, an investor in the second round and long-time Bay of Plenty resident and boatie, said the fact Balex was a local company was a key element in his becoming involved.

“When I first saw the ABL, I thought it was a great idea with tremendous potential. What got it over the line for me though was seeing the work they had done on developing their IP and assessing market opportunities.

“Balex has a strong, creative team under the leadership of Paul Symes and I feel they have a good chance of creating substantial future value.”

Mr Shirtcliffe previously worked at phil&teds with Balex Marine’s sales director Paul Yarrall. “I’m attracted to smart people who are very committed, very passionate and very forward thinking. And I’m attracted to very smart ideas that can fundamentally change elements of the world. Balex has a wonderful intersection of those elements.”

By the numbers

Balex Marine’s successful second fundraising round of $1.2 million included a strong commitment from first-round investors, as well as substantial new investors. A number of the investors are members of the Bay of Plenty’s Enterprise Angels and the startup funding group’s sidecar fund EA 1 made a follow-on investment of $50,000.

In addition, the Government’s Seed Capital Investment Fund came in with a $175,000 follow-on commitment – in the top quarter in size of follow-on investments for the New Zealand Investment Fund’s portfolio.

Enterprise Angels executive director Bill Murphy said the reason Balex was attracting continued investment support was because it not only met its milestones, but exceeded them.

“Investment in these startup companies is the first step. What’s so important is the post-investment management. Appointing directors with relevant skills, such as these appointees bring to the table, will be critically important to the success of the company.”

First published on nzherald.co.nz 26 Nov 2015

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TV campaign for innovative system

Another Enterprise Angels backed venture doing great things with cool technology.

THE Tauranga team behind the Roholm Inverse Conditioning System has reached an agreement with Brand Developers, the biggest direct response marketing (DRM) company in Australasia.

A DRM TV campaign for the innovative hair conditioning product will be launched this month, said Timothy Allan, managing director of product development and innovation company Locus Research, which is also an equity investor in Roholm.

Brand Developers developed, manufactures and distributes the Thin Lizzy women’s beauty line, among other products.

Roholm was close to signing a deal for distribution into professional hair care companies in the UK and was also in advanced discussions for distribution in the Middle East, said Mr Allan.

“I think the potential of Inverse is substantial. It represents a paradigm change in women’s hair conditioning. Inverse is probably the first significant new product category since the advent of hair straighteners.”
The concept was the brainchild of Tauranga hairdresser David Roe, who was inspired by his wife using an ice-rinse on her hair.

The system uses sub-zero temperature to induce a natural conditioning effect, using removable ice cores that are frozen to set the sub-zero temperature. When run through the hair like a traditional hot tool, the cold temperatures lock in moisture.

Members of Bay of Plenty startup funding group Enterprise Angels invested in and set up Roholm to develop the concept and Locus has worked closely with the company to refine the design, develop the manufacturing process and bring the product to market.

The Inverse system will be assembled in New Zealand and most of the product is also made in New Zealand.

Mr Allen praised the contribution of Hamilton-based Millennium Plastics, which has evolved from providing components to leading the supply chain process.

Tony Rutz, Millenium Plastics general manager, said his company had helped refine the product for manufacturing.

“We deal with a lot of brand owners who compete on the international stage,” said Mr Rutz. “So we work pretty hard to make sure we can drive out wasteful costs and remain competitive.”

Brand Developers director Wendy Nowell-Usticke said the company was in the business of creating brands.

“We are always looking for something which is innovative. Inverse is a great concept. It’s a chemical free way of improving hair – all you need is a freezer.”

Ms Nowell-Usticke said Brand Developers had done its own testing with a sample group of users and was very satisfied with the results.

She said the company expected to follow its usual model, beginning with DRM television marketing, and would then move the product into retail outlets.

First published on nzherald.co.nz 12 November 2015

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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

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Angel connections help ideas grow wings

This great story illustrates “the eco-system in action” with Enterprise Angels and WNT Ventures working together to create the angel food of the future…

The boss of Bay of Plenty startup funding group Enterprise Angels says it is working closely with WNTVentures.

“We’re able to refer opportunities that are at too early a stage for Enterprise Angels to WNTVentures, and we’re able in all kinds of ways to be able to give more certainty to that next round of funding at the angel stage,” executive director Bill Murphy said.

Enterprise Angels is a shareholder in the incubator through its sidecar fund EA1, and sits on its investment committee. That involvement could include providing expert guidance and appropriately qualified directors for the incubated company.

Mr Murphy said the Scion nanofibre research was at too early a stage for angel investors because the commercial possibilities were still being worked out.

“We’re really pleased to see Scion is able to take some of its really cool research into WNT and give us the opportunity to invest in it at a later stage.”
WNTVentures chief executive Carl Jones said the incubator to date had three companies that had received the full $600,000 available from a combination of Callaghan Innovation repayable grants and the incubator’s 1:3 matching funding.

Bay of Plenty-based Onesixone has developed a software-hardware solution, which bridges the gap between industry standard DJ software and entertainment lighting systems.

IPO, based in Dunedin, is developing a point-of-care bovine mastitis diagnostic test, which will guide antibiotic treatment decisions. The technology only requires minimal laboratory requirements through vet practice or on farm, a simple sampling procedure.

Mr Jones said he was not yet able to provide details of the third company, which was in the software sector, for reasons of business confidentiality. There was also an agri-tech company at the same pre-incubation stage as Scion’s nanofibre project.

First published on nzherald.co.nz 12 August 2015

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Steve Blank – Angels and the Lean Startup #ACAAngelSummit15

Angels Connect NZ series – Bill Murphy from Enterprise Angels reports from ACA Conference 2015

A major highlight of the American Capital Associations annual conference was Steve Blank’s presentation of his customer development methodology – a process which has had an impressive impact on the teaching of enterprise creation in the last decade.

Steve, an academician, serial entrepreneur and investor with over thirty years experience in the technology industry who has founded or worked within eight startup companies, (four of which have gone public), is recognised for being one of three founders of the Lean Startup movement.

His contribution was recognising that commercialisation is a process of testing a series of hypothesis. He currently shares his theories at Haas School of Business, University of California Berkeley, Columbia University and the California Institute of Technology (Caltech). His methods are now being taught in more than 200 universities worldwide, and are recommended by the National Science Foundation and National Institutes of Health in connection with federal grants.

Prior to the lean startup movement and wide spread use of Steve’s customer development methodology investors assumed because they funded a company the entrepreneur would follow a set plan and the board simply monitored it. Investors were treating startups like they were big companies – work out a business plan and then simply implement it.

Great tools were built for execution against plans in large corporations and then used in early-stage ventures and it was assumed this was enough. People who didn’t execute were fired.

Steve proposed that while large companies execute known or proven business models, startups don’t. What angels and other early-stage investors thought they were funding – execution – was actually the search for a scaleable business model that created true value. Instead of assuming entrepreneurs were ‘doing it wrong’ the question that should have been asked was ‘are the critical assumptions about the business plan wrong’?

He has gone on to show that a large percentage of the time entrepreneurs are just guessing about execution. There are no models for early stage venture execution – and no-one is executing in that first year. They are in fact just burning cash conducting a search for that business model – performing a series of experiments to test a problem, solution, a product and a market.

He then went on to create a much-needed methodology to do this work in a robust and repeatable way.

The customer development methodology is now well documented. A good place to start learning more about it is at www.steveblank.com or on his free Udacity Lean Startup course.

Here are the key points Steve shared with angel investors at ACA:

  • Customer development is a process – founders need to get out of building and turn hypotheses into fact by testing the problem exists, the solution is valuable, the product will work and the market wants it.
  • Only then should they build a minimum viable product.
  • Founders need to do the work themselves so that they hear first hand that ‘this or that’ is a bad idea or ‘I wouldn’t pay for it’, read non-verbal signals and pick up on leads to alternatives that might prove to be the solution, ‘Oh we don’t want that – but if you could invent X we would…’
  • Talking to a minimum of 10 to 15 customers a week is the role of everyone working on the startup, with a goal of talking to 100 to 150 potential customers being the benchmark. This number is shown to produce the best results.
  • Then the founder can report back, ‘here’s what I thought, here’s what I learned, here’s what I’m going to do’.

At the conference Steve also pointed out a great thing about this process is tech founders already understand it. The process of defining hypothesis and testing it is used in their work to create and test software and hardware. Striving for evidence based commercialisation is similar to the process engineers go through to work towards deploying programmes and technologies that work.

Its a proven process for minimising time, money and resources.

So, what should angels learn and do that’s different in light of the lean startup movement and in particular customer development methodology?

  • Recognise that often all the entrepreneur has in reality is a hypotheses – ask for evidence or at least what the plan is to collect the evidence.
  • Understand that a startup is a temporary organisation designed to search for repeatable and scaleable executable business model – it is not a business yet.
  • Know the goal is not to stay a startup, but rather to build something which has real value to a set of customers – a sustainable enterprise – and if it scales too you are going to increase the speed of growth and hopefully the size of your returns.
  • Don’t fund people to execute on an idea, that shouldn’t be done on angel money. Before investing check what evidence the entrepreneur has collected that who they say are customers, really are the customers of the product or service they propose. Ask who they have talked to (and how many) and how they have tested their hypotheses. Rather than angels finding out by funding entrepreneurs ideas and blowing $500k, get the founder to go out and do this validation work themselves. Take the time.
  • Then insist you get access to all those conversations and get the founders perspective on the evolution of the idea.
  • Work with founders who are passionate about doing the quantitive and qualitative validation of facts themselves, using a marketing research company to validate the market is not as effective. It is critical is that the people with skin in the game validate whether anything a marketing company tells you is true.
  • Get out of the building yourselves as angels too, make validation your work too – the purpose being to inform the founder’s vision.
  • Your job is not to fund someone to just do focus groups which come up with superficial data such as ’47 say one thing 3 say another’ the skill you’re investing in may be a founder’s ability to pick up on the feedback from the 3 and testing the opportunity to build a business model around them. (47 say sell it for $9.99 – 3 say its an enterprise play and we’ll pay $200k).
  • Once you have a marketing plan aim to test it yourself and see what you learn that’s different from the entrepreneur’s plan.
  • Celebrate the fact that the startup is a search for that executable business model rather than focus on the original business plan and its implementation. Be glad when you and the entrepreneurs learned these new important things instead of beating up the founder for not delivering on a plan.
  • Do the customer validation test yourselves. When you hear ‘I want to order now’, say ‘OK give me $20 I’ll hold it and give you the product when its done’.
  • Invest with the full understanding the initial goal of a startup is to maximise learning not revenue. Returns come from real value-creating scaleable, sustainable business models that are born from that learning.

Bill Murphy

For more highlights from attendees who attended the conference clik.vc/Angels_connectNZ

To meet and hear from international angels and leaders in New Zealand’s angel investment community 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.

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