Investors have confidence in startup futures

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

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

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

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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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Investor Activity in NZ Tech Sector Continues to Intensify

Auckland, May 9, 2017 – Investment in New Zealand’s technology companies continues to rise, with record amounts of funding coming from offshore investors, according to the second annual Investor’s Guide to the New Zealand Technology Sector published jointly by the Ministry of Business, Innovation and Employment (MBIE) and the Technology Investment Network (TIN).

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New Zealand’s biomedical sector to benefit from Australian Government initiative to make Australia a global leader in life science research commercialisation

Medical Research Commercialisation Fund (MRCF) creates fourth and largest fund
Wellington, 15th December, 2016 – The Australian Government’s launch of the AUD$500 million Biomedical Translation Fund (BTF) this week, an initiative to make Australia a global leader in the commercialisation of biomedical discoveries, will benefit New Zealand’s biomedical sector, says Dr Chris Nave, Managing Director of venture capital firm, Brandon Capital.
The BTF is a pool of public and private capital which will be managed by three venture capital fund managers who were announced this week. Brandon Capital has been allocated to manage the largest fund of AUD$230 million comprising AUD$115 million from the Commonwealth government matched with AUD$115 million from private investors.

The new fund, the MRCF BTF, is the fourth and largest investment fund of the Medical Research Commercialisation Fund (MRCF). Brandon Capital manages the MRCF, a unique collaboration between over 50 of New Zealand’s and Australia’s leading medical research institutes and research hospitals. These organisations contribute biomedical investment opportunities to MRCF funds as well as their expertise to support the development of these discoveries.

In April this year New Zealand joined the MRCF, enabling New Zealand research organisations to become members of the fund and seek investment support for emerging technologies from the third MRCF fund, MRCF3, an AU$200 million fund. Currently six New Zealand research institutes are members of the MRCF*.

“This is a bold and visionary initiative by the Australian Government to ensure Australia reaps the benefits from our world-class medical research,” says Dr Chris Nave, who is also Principal Executive of the MRCF.
“On all measures, Australia and New Zealand produce some of the world’s leading biomedical research, but unfortunately, too often, we see promising discoveries leave our shores early in development, with little value returned. The size of the MRCF BTF provides the opportunity for these technologies to be developed to much later stages in Australia, and in some cases through to the market and importantly patients, retaining greater value and leading to the creation of new jobs and income. The BTF program will be transformative for local industry, providing the ability for research discoveries to be developed from concept to commercialisation in Australia.”

While New Zealand member institutes will not be able to participate in the MRCF BTF, the new fund significantly deepens the pool of investment capital under management by the MRCF, with the advantages that brings to all members. Promising early stage medical discoveries from New Zealand member institutes can continue to seek investment from MRCF3 and follow-on funding.

Duncan Mackintosh, Brandon Capital New Zealand’s Investment Manager says the new fund means there is now AUD$430 million investment capital available for promising biomedical research, giving the MRCF real scale. “The MRCF is the largest life science investment fund in Australia and New Zealand by quite some margin. We are now competing at a global level and this will benefit our New Zealand investments by getting them greater attention internationally. It will also help us to attract offshore capital for New Zealand discoveries, attention from strategic partners and will mean we can attract and retain talent to run New Zealand investment companies.”

The BTF will see $250 million of Commonwealth government funding matched with private sector capital, creating $500 million for investments in companies with medical research projects at advanced pre-clinical, Phase I and Phase II stages of development.

The MRCF BTF private investors include CSL Limited, Australia’s largest and most successful biotechnology company, and the leading superannuation funds, AustralianSuper, Hesta, Statewide and HostPlus.

Brandon Capital is ranked as one of Australia’s top performing venture capital firms**. MRCF BTF will focus on supporting later stage opportunities, with the MRCF3 continuing to seed promising early-stage discoveries.

CSL Limited will be the only biopharmaceutical investor in the fund and will provide both investment capital and later-stage development and commercialisation expertise.
“CSL is a strong supporter of the need for a greater focus on translational research in Australia. The opportunity for the BTF to support the development of promising discoveries, onshore, is very exciting,” says Dr Andrew Cuthbertson, Head of Research and Development, CSL.

“The MRCF-BTF will not only have access to the pipeline of opportunities and capabilities of its member medical research organisations, it will also have access to the global medical research development capability and expertise of CSL,” says Dr Stephen Thompson, co-Managing Director at Brandon Capital.

It is anticipated the MRCF BTF will begin making its first investments in early 2017.

*New Zealand MRCF members: Auckland Cancer Society Research Centre, University of Auckland; Institute for Innovation in Biotech, University of Auckland; Brain Health Research Centre, University of Otago; Malaghan Institute of Medical Research; Ferrier Research Institute, Victoria University of Wellington; Callaghan Innovation.

**In an Australian Financial Review ranking of Australia’s top performing venture capital and private equity funds (31 August 2016), Brandon Capital’s Brandon Biosciences Fund 1 was ranked second.

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Theresa Gattung Venture Capital fund

ArcAngels and Angel Association New Zealand today welcomed the launch of Theresa Gattung’s new Venture Capital fund which aims to raise capital from women, for women entrepreneurs.

“Boosting the pool of capital for entrepreneurs is vital for New Zealand’s ecosystem of start ups to grow,” said Cecilia Tarrant, Chair of ArcAngels, a New Zealand based angel organisation focused on funding women entrepreneurs.

“As an organisation, focused on women-founders, we are delighted to hear Theresa Gattung, one of New Zealand’s preeminent business leaders has launched an initiative to fund women entrepreneurs, supported by women. Having a Venture Capital fund will help expand the capital and mentorship female entrepreneurs need to develop their businesses,” Tarrant said.

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Movac Fund 4 reaches first close at $105 million

MEDIA RELEASE

Movac Fund 4 reaches first close at $105 million

Movac Fund 4 has raised $105 million to invest in the next generation of iconic Kiwi technology companies.

The Fund is underpinned by $75m in investment commitments from institutional investors including Ngāi Tahu Holdings, with the balance coming from the New Zealand Venture Investment Fund, leading New Zealand family offices, community trusts, and private investors.

Movac Fund 4 will be investing in established New Zealand technology companies that are seeking capital to accelerate their growth.  These are companies with an established track-record of sales, a team in place to grow the business, and the ambition and potential to scale their business internationally.  This is a later stage fund than Movac’s previous funds.

Phil McCaw, Movac Managing Partner, commented: “We are really encouraged by the commitments from all of our investors, and in particular our new cornerstone investors who have recognised the significant investment opportunity that exists in the New Zealand technology sector right now.”

“Importantly, we have a strong pipeline of potential investments for Movac Fund 4.  We have already been meeting with and conducting due diligence on various opportunities, and are very impressed by the quality of the companies that we’re seeing.  We anticipate that we will make Fund 4’s first investments prior to Christmas.”

Ngāi Tahu Holdings Chief Executive, Mike Sang, commented: “Ngāi Tahu Holdings is excited about the addition of Movac Fund 4 to our portfolio.  We are looking forward to our new partnership with the Movac team and the added diversity the investment brings us from its focus on investing growth capital in the technology sector.”

Mr McCaw added: “As a team, we have 55 years of collective investment experience and we believe that we are uniquely placed to invest in and help accelerate New Zealand technology companies.  Our Fund 4 investors include a number of highly successful founders and business builders, experienced investors, as well as family offices and investment funds.  We also have a number of investor migrants investing in Fund 4.  We would like to thank them for their commitments, and look forward to working with them to grow the next wave of iconic Kiwi companies and delivering an outstanding investment return.”

Movac Fund 4 remains open for eligible investors until its final close in April 2017.

ENDS
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Labour targets ICT as second largest economic contributor

A Labour-led government would target the ICT sector to be New Zealand’s second largest contributor to the economy by 2025, believing it is a job-rich source of growth for a nation of small businesses.
While the precise definition of what constitutes ICT is up for debate, the party believes it currently sits somewhere between the third and fourth largest sector, behind tourism and the dairy and wine industries.
The party’s finance spokesman, Grant Robertson, unveiled the target when launching the results of the party’s two year ‘Future of Work Commission’ at its annual conference in Auckland over the weekend, unveiling a raft of proposals to improve intellectual property protection for small and medium-sized tech businesses, infuse schools and communities with digital learning opportunities, and a shake-up for innovation, science, and university research funding.

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Kiwi Landing Pad Spreads it’s Wings

New Zealand’s tech community – Kiwi Landing Pad – is on the move in San Francisco.

Set up in 2011 with funding from the New Zealand government and private investors, the Kiwi Landing Pad (KLP) has already helped hundreds of innovators keen to break into the highly competitive United States start-up scene.

The non-profit organisation caters for high growth technology companies. As well as reducing the risks and time involved in setting up an office, KLP also offers valuable access to necessary business information and networks.

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NZ-born LanzaTech makes biofuel breakthrough for Sir Richard Branson’s Virgin Atlantic

New Zealand-born company LanzaTech has made an aviation biofuel breakthrough with partner airline Virgin Atlantic.

The company has produced nearly 5700 litres of low-carbon ethanol produced from waste gases for the airline, founded by Sir Richard Branson.

The company was founded in New Zealand 11 years ago and the parent company remains New Zealand-registered while its headquarters have moved to Illinois.

LanzaTech and Virgin Atlantic say they will work with Boeing and others in the aviation industry to complete the additional testing that aircraft and engine manufacturers require before approving the fuel for first use in a commercial aircraft.

“Assuming all initial approvals are achieved, the innovative LanzaTech jet fuel could be used in a first of its kind proving flight in 2017,” LanzaTech and Virgin Atlantic say.
The two companies have been working together since 2011.

The Lanzanol fuel was produced in China at the RSB (Roundtable of Sustainable Biomaterials) certified Shougang demonstration facility. The alcohol-to-jet process was developed in collaboration with Pacific Northwest National Lab with support from the US Department of Energy and with the help of funding from HSBC.

Sir Richard Branson said: “This is a real game changer for aviation and could significantly reduce the industry’s reliance on oil within our lifetime.”

In 2008 Virgin Atlantic was the first commercial airline to flight test bio-fuel flight – derived from coconut and babassu oil.
“We chose to partner with LanzaTech because of its impressive sustainability profile and the commercial potential of the jet fuel,” Branson said.

The airline’s understanding of low carbon fuels had developed rapidly over the last decade.

The company, which has received more than $14 million in New Zealand Government funding, shifted much of its previously Auckland-based research and development workforce to Chicago in 2014.

LanzaTech has raised more than US$200m from investors including Silicon Valley-based Khosla Ventures and the NZ Superannuation Fund, which has invested US$75m. Other investors included Sir Stephen Tindall’s K1W1 fund and Mitsui.

Its technology is based around steel production, which produces waste carbon monoxide (CO) gas, frequently flared to the atmosphere as carbon dioxide.

The process involves capturing carbon from the waste gas via fermentation to ethanol, which is recovered to produce ethanol feedstock for a variety of products, including aviation fuel.

Other airlines have trialled biofuel made from waste cooking oil, and in the case of Air New Zealand the Jatropha plant.

 

First published – NZ Herald 15 September 2016

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MENTORLOOP RAISES $300,000 IN SEED FUNDING

MENTORING is acknowledged as a vital part of career development, but even some of the most well-run businesses struggle to do it right.

This was an issue that long-time Melbourne-based friends Heidi Holmes and Lucy Loyd identified, and then targeted with a new cloud-based software offering named Mentorloop.

Having recently raised $300,000 in seed funding, which valued the business at $2 million, the pair’s idea to creating a mentoring management system has clearly taken hold.

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READY FOR LAUNCH

SHOWCASING INNOVATIVE NEW ZEALAND COMPANIES THAT ARE SEEKING TO FUND THEIR NEXT STAGE OF GROWTH.

The Investment Showcase is a partnership between NZTE and the Angel Association NZ and will be held on the opening night of the 2016 Angel Summit.

Guests include Angel Summit delegates, local and international investors and other key stakeholders in the NZ investment community.

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University Startup Challenge gives chance for student founders to pitch for funding

The University Startup Challenge is back for its second year to give student startups the chance to get funding from investors.

Student-led investment group First Cut Ventures started the University Startup Challenge last year to give university students who have their own startups the chance to pitch in front of investors at the Ice Angels annual showcase.

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Ask the expert: where to go for funding

OPINION. Q: I need to raise funds to upgrade the IT infrastructure for my small business. What’s available and how do I access it?

A: That depends on a range of factors such as your current finance structure (are you in debt, highly leveraged, debt-free?), what stage your business is at and how much you need.

But, before you explore external capital raising options, ensure you’ve covered off any internal sources such as savings you can access or surplus assets in the business that could be liquidated to raise funds.

Once you’ve done that, you then need to calculate how much more funding you’ll need by preparing cash flow forecasts.

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Government earmarks $15m towards commercialising hi-tech developments

The Government’s $15 million investment into initiatives supporting Kiwi start-ups is a step in the right direction but there’s still more to be done, a Massey University economist says.

The Pre-Seed Accelerator fund is aimed at developing “cutting-edge” research into viable start-up businesses.

Science and Innovation Minister Steven Joyce said hundreds of savvy hi-tech Kiwi companies were succeeding on the world stage.

“These programmes are all about filling the pipeline with the next generation of quality Kiwi start-ups.”

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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]table: 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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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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Building investment in New Zealand’s future

This year New Zealand is hosting the Asian Business Angels Forum, combining it with its own Angel Summit to strengthen ties, build alliances and make it possible for our entrepreneurs to have the cash and the connections they need to become New Zealand’s businesses of tomorrow.

On October 14th to October 16th 2015, in the stunning surrounds of Queenstown, alliances will be forged and best practices shared at the combined eighth annual New Zealand Angel Summit and the Asian Business Angels Forum (ABAF).

More than 150 angels, including 50 representatives from about a dozen countries, are expected at the event. All are dedicated to helping young businesses achieve their potential by building the networks they need to thrive in today’s global world and providing the capital they need to compete.

“Having this many investors visit with an appetite for early stage entrepreneurial ventures rather than property, and from such a range of countries is unique, if not a first for New Zealand,” says Marcel van den Assum, chair of the New Zealand Angel Association (AANZ).

“Angels invest their own ‘courageous capital’ in high growth startups. They are largely motivated by the desire to ‘give back’ and support their local economies. It’s not a financially rational endeavour because on a deal-by-deal basis angels are more likely to lose their money than not. So it’s a portfolio game where, both personally and from a wider economic benefit perspective, investors plant a lot of small seedlings to grow the giants in the forest.”

That’s why building alliances with other angels nationally and overseas is so important as it opens up a wealth of educational and experiential talent for the investee entrepreneurs and helps spread the risks and diversify angel portfolios, says van den Assum.

Given the tie-up with ABAF, the theme of this year’s Summit is Doing Business Together.

The summit kicks off with a a New Zealand Trade & Enterprise (NZTE) hosted technology showcase where 15 ventures, most of them angel-backed, will pitch to the gathered national and international angels on the Wednesday evening.

“While it will be terrific if some of the inbound visitors invest in these companies, the real value is in building an international network,” says van den Assum. “Angels are collaborative by nature. And without doubt the New Zealand angel-backed success stories have benefited from relationships built with prominent US angels over a number of years, which we are now extending into Asia.”

Building a global business from New Zealand is challenging, says van den Assum. “It’s a bit like climbing Everest – you need a good team behind you. A connected international network of support is critical to their success and that is what ABAF is all about: connecting Kiwi entrepreneurs and angel investors with angels in other places where we want and need to do business.”

For more information, please contact:

Marcel van den Assum, AANZ Chair, on mob: 021 963 459 or email: [email protected]; or

Suse Reynolds, AANZ Executive Director, on mob: 021 490 974 or email: [email protected]

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The Globalization of Angel Investments

A fascinating Harvard/MIT study released in August this year and looking at the impact of angel investment on things such as firm survival, likelihood of follow on funding and employment, determines that angels have a positive impact on the growth, performance and survival of a company.

Nature and consequences of the globalization of angel investments across a variety of geographies with varying levels of venture capital markets and other forms of risk capital.

Read more

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App developer gains $5m in US funding round

Congrats to StQry Inc – now Area360 – who have raised US venture funding. Terrific to see the acknowledgement they have given to the wider ecosystem including angel investors in their success to date.

Wellington startup Stqry (pronunced “story”) has closed an initial $5.5 million funding round and announced a name change as it expands off-shore.

Now named Area360, the company’s software allows organisations such as museums, art galleries, airports and hospitals to engage with customers through geo-location technology – including beacons, GPS and WiFi – helping them to discover, connect and engage with what’s around them.

The startup was formed in 2012 by Chris Smith and Ezel Kokcu and now counts more than 400 customers worldwide – including Emirates, Te Papa, Seattle-Tacoma International Airport and the Smithsonian Museum in Washington D.C.

Read also:
Mentors help hotelier develop new app
Crimson Consulting flush with new funds

“We started AREA360 to give organisations the ability to enhance their customer experience by providing navigation as well as relevant information and unique opportunities along their path,” Smith said.

“Using beacon and other location data, our platform enables customers to create a broad portfolio of useful services.

“For example, airports can deliver navigation to and from gates, along with a stop at the nearest Starbucks, museums can bring to life that new piece of art by presenting a video on the artist’s inspiration, and an operations manager can track their most valuable assets in real time.”

The funding round was led by US technology venture group Madrona Venture Group and comes as they were expanding their Wellington office and opening their US headquarters in Seattle, Smith said.

Area360 had received support in New Zealand from advisors Gareth Morgan, Dion Mortensen, Alan Gourdie and Sven Baker, as well support from organisations including the Callaghan Innovation, NZTE, Grow Wellington, and the ICE Angels.

“The support from New Zealand’s startup community helped us to thrive and our customer response has been overwhelming,” Smith said.

“We look forward to continuing to grow our business in the US, New Zealand and the rest of the world.”

New Zealand Trade and Enterprise (NZTE) customer manager Mike Evans said the company was a great example of an ambitious New Zealand tech company growing internationally by entering new markets.

“Their partnership with Madrona is an important endorsement of their already considerable success.”

First published on nzherald.co.nz 3rd September 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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Lead Partners

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Expert Partner

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AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”