Manawatu Agtech Start-Up Koru Diagnostics Raises $900k Seed Investment

A Palmerston North-based start-up company, Koru Diagnostics, has had impressive success with its first funding round.

Koru, which is developing cost-effective laboratory and rapid farmside tests, was substantially oversubscribed when it closed its seed funding round recently with close to a million dollars.

CEO, Rhys McKinlay, is very happy with the outcome. “We raised over $900k, mostly from angel investors, which will give us a commercialisation runway through until late 2019. These funds will be directed towards product development and commercial scale-up, protecting our IP and securing new commercial partnerships,” he says.

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Aquafortus wins global award

New Zealand’s Aquafortus Technologies has won the TechXchange Rising Star award for best new technology at Singapore’s International Water Week, this closes out a successful six weeks for the start up, which included an oversubscribed funding round and breaking ground on its first pilot plant in the U.S.

Aquafortus was invited to exhibit under Singapore’s National Water Agency, the Public Utilities Board at Singapore International Water Week. Singapore International Water Week is a global event that brings together world leaders in the wastewater industry, with more than 21,000 participants from 125 different regions.

The tradeshow was a great success for Aquafortus – generating more than a dozen sales leads across eight countries. It also saw new sector applications for Aquafortus’ Zero Liquid Discharge (ZLD) technology, with significant interest from major players in the semiconductor and textile industries, says Daryl Briggs, CEO of Aquafortus.

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Angel investment rises 26% to reach record level

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

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

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

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

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

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

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

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

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

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

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

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

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Software the top sector for NZ angel investors

More than half the investment made in early stage companies in New Zealand last year was in the software and services space (53.8%), followed by 17% in technology hardware and equipment.

“Technology is increasingly the engine of growth for all companies, regardless of size” explains PWC’s Anand Reddy.

“It’s no surprise that it’s these areas where the most activity is happening and where angel and early-stage investors are putting their energy. This reflects global trends too. Data generated by Crunchbase notes that the software and services remains the dominant sector for investment.”

Speaking personally, John O’Hara said that his own portfolio leant towards software generated ventures.

“I am particularly proud of Ask Nicely, which produces software for NPS (net promoter score) collection and analysis. This company has already generated tangible returns for a number of the early angel investors. The company is now scaling into the US, with the founder moving to Portland, Oregon in the last couple of months.

“New Zealanders have a knack for practical problem solution and we are increasingly seeing them turn this knack into compelling business opportunities,” said O’Hara.

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

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

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Angels Tell the Truth: What Makes a New Company Fundable

There’s more than $100 billion dollars currently being invested annually by venture capitalists, private equity firms and angel investors. Why do some businesses get a piece of the action and others don’t? It comes down to the fundability of the company.

Entrepreneurs may think they have a great business idea, but investors may not see it that way. To learn why, entrepreneurs need to look at their business from the investor’s point of view. Just like the founder, investors are looking for a match made in heaven – when both company founder and investor make money in the end and all live happily ever after.

As an experienced angel investor, managing partner and CEO of Sofia Fund, here’s my advice – consider this the ultimate primer on demystifying the angel world.

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BioLumic raises US$5M for UV crop enhancement system

BioLumic has raised US$5 million in funding to help deal with growing global demand for increased agricultural crop yields using short-duration ultra-violet treatments rather than genetic modification or chemicals.

The Palmerston North-based company, creator of the world’s first crop-yield enhancement system using UV light, attracted funding from Silicon Valley agritech investor Finistere Ventures, the Radicle Growth acceleration fund whose investors include Finistere, Rabobank’s recently-launched global Food & Agri Innovation Fund and existing investors from across New Zealand. Finistere has previously backed Israeli agritech company CropX, which licensed research from New Zealand’s Landcare Research.

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Two New Angel Awards Announced

MIG Angels’ Dean Tilyard and PowerbyProxi recognised

In recognition of Angel Association New Zealand’s 10th Anniversary Summit two new awards have been announced to augment the Arch Angel Award which was first awarded in 2009 to Sir Stephen Tindall and yesterday awarded to Debra Hall.

The Puawaitanga Award recognises the founder and investor-director who best exemplify what can be achieved when committed people draw on their collective skills and experience. This award celebrates an angel-backed venture achieving world class success. This venture has excellent governance, a compelling business proposition and a well-defined strategy for exponential returns.

Puawaitanga – ‘best return on integrated goals’.

The Kotahitanga Award recognises those people in the angel community who have made an outstanding contribution to the industry. It acknowledges those who have selflessly given personal time and energy for a sustained period and contributed to the professionalism, profile and reputation of angel investment in New Zealand.

Kotahitanga – ‘unity and a shared sense of working together’.

The inaugural Puawaitanga Award has been presented to PowerbyProxi’s founder Fady Mishriki and investor-director, Movac partner David Beard. Movac were the first angel investors in the company after Fady and his business partner, Greg Cross founded the business in 2007 with the Icehouse becoming the first external shareholder joined in the following years by UniServices. Auckland-based IceAngels investors also contributed capital in later rounds alongside other investors including Evander Management. PowerbyProxi was recently acquired by Apple for an undisclosed sum.

In making the award, Angel Association Chair, Marcel van den Assum said Fady and Dave are shining examples of what great alignment can achieve.

“A consistent message in angel investment is the importance of founder and investor alignment. Both parties need to be committed to the same end-point.  This has clearly been the case with PowerbyProxi. From the outset, eight and a half years ago, both Fady and David were in sync on the end game; to generate stunning returns, financially for the investors and just as importantly for the New Zealand economy,” he said.

PowerbyProxi employs over 50 people and holds over 300 wireless charging related patents.

The first recipient of the Kotahitanga Award is MIG Angels founder, Dean Tilyard.

Dean founded MIG (Manawatu Investment Group) Angels in 2007. Since then the group has raised in excess of $20m for 19 technology based and largely agtech companies. Dean led the fund raising for two MIG Angels side-car funds, and oversees the investment committee to co-invest with MIG members. Dean was instrumental in the establishment of the Sprout Accelerator, which has 16 agtech alumni. Companies taking part in Sprout have gone on to triple their sales and raised $2m in funding. Dean was Treasurer of the Angel Association from its inception in 2008 until 2016.

“Dean is the kind of leader and influencer who has a tremendous impact on all those who work around him by leading powerfully and unobtrusively.”

“Dean has spent countless unpaid hours with founders and budding angels mentoring, encouraging and inspiring them all. He has also championed early stage investment to others on the periphery of angel investment; those whose support is vital to the successful growth of New Zealand’s startup ecosystem,” said Marcel.

–Ends–

For more information, please contact:

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

Marcel van den Assum, AANZ chair and 2015 Arch Angel
mob: 021 963 459 or email: [email protected]

The Angel Association of New Zealand (AANZ)
The Angel Association is an organisation that aims to increase the quantity, quality and success of angel investments in New Zealand and in doing so create a greater pool of capital for innovative start-up companies. It was established in 2008 to bring together New Zealand angels and early-stage funds. AANZ currently has 30 members representing over 700 individual angels associated with New Zealand’s key angel networks and funds. Recent NZVIF data revealed angels have invested more than $NZ484m in over 928 deals and 296 companies in the last 10 years. AANZ works closely with NZTE and Callaghan Innovation and a number of private sector partners including NZX, First NZ Capital, PWC, Avid Legal, AJ Park, KiwiNet, Uniservices and Spark Ventures. For more, please visit: www.angelassociation.co.nz

 

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Peer review is essential to good science – it’s time to credit expert reviewers

Although expert evaluation of research papers and funding applications is still widely regarded as central to the quality control of research, publishers and funders have increasing difficulty getting academics to agree to spend time on what can often be an onerous, thankless task. In short, peer review has problems.

The strain on the system is due in part to worldwide growth in research activity, but also arises because there isn’t a universal mechanism for recognising or crediting people for serving as peer reviewers.

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Capital Markets Report: Making it a bigger deal

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

New Zealand’s technology sector saw record growth in funding, driven by overseas investors in the year to March, according to the second annual Investors’ Guide to the New Zealand Technology Sector.
“The tech sector is New Zealand’s third largest exporting sector, contributing $16 billion to GDP (gross domestic product) and it is growing fast,” Economic Development Minister Simon Bridges said in a statement. “It presents multiple opportunities for New Zealand and international investors.”

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Lead Partners

NZTE NZVIF PWC

Expert Partner

AVID “FNZC.jpg”

AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”