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.

The pitfalls of asking an investor to sign an NDA

There’s one way to lose a potential investor before you even start: demand that they sign a non-disclosure agreement (NDA).
It happens all the time. Someone thinks they have a great idea but won’t send the pitch deck without an NDA first. They’re terrified that the “billion dollar blueprint” will be stolen by some unscrupulous VC guy.
It’s a classic amateur mistake. It means you probably have no knowledge of how the startup ecosystem works. Worse, it means my first impression of you is that you’re an idiot.

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Simon Brown: Entrepreneurs and investors descend on Hawke’s Bay

For two days last week the Black Barn Winery in Havelock North was the focus of the world’s venture capital and angel investor communities.
Entrepreneurs and investors from New Zealand, Canada, North America, China and Europe spent last Thursday and Friday at the 2016 NZ Angel Summit discussing investment strategies, sharing their expertise and creating opportunities for innovative Kiwi start-ups in need of early stage finance.
These were some of the most successful investors in their field. People like North American business and equity finance consultant Ross Finlay, who has come to New Zealand with the support of Callaghan Innovation to help local businesses understand what Angel Investors expect from them, to show them how to establish relevant relationships and introduce them to North American and NZ Angel networks.
Ross has secured 35 Angel investment deals in recent years and has assisted in the development and review of countless business plans for start-up companies.
He has extensive networks within the world of international finance and he knows how to leverage them for the greater economic good.
Hawkes Bay’s stunning environment was a bonus for local and international financial high flyers like Ross but they weren’t here primarily for the scenery. These were all seasoned and experienced business people who have made their money in a range of sectors.
Naturally, they’re looking for a return on their investment but they’re also motivated by a desire to help others with the same drive and ambition they have and, crucially, to do their bit to grow the New Zealand economy.
Government ministers and officials, colleagues from Callaghan Innovation and the nationally located business incubators also attended the summit.
They came away with re-enforced enthusiasm and confirmation of the optimism and dynamic evolution in this fast growing sector of our economy.
Last financial year was a record breaker in terms of deals made with Kiwi start-ups and dollars invested.
Deals worth a total of $61.2 million provided 92 creative and passionate New Zealand entrepreneurs with the kick start they needed to get their great idea off the ground. In addition to this investment, Callaghan Innovation supported 152 start-ups through incubators.
That’s an unprecedented deal flow and a strong indication that NZTE’s Investment Showcase events and Callaghan Innovation’s incubation funding and accelerator programmes are bearing fruit.
New Angel regional networks are forming. Syndicated Angel funds are proliferating and long standing networks are experiencing a surge of interest. Wellington’s Angel HQ, for example, has gained 30 new members in just the last six months.
Increasingly businesses are successfully exiting the start-up phase of their journey but still face challenges in accessing growth capital and appropriate commercialisation expertise. International capital exists but the New Zealand eco-system is looking at how it can work better together to facilitate the access to it.
We’re doing great but we can do better. Investment in research and development in New Zealand still lags behind OECD countries. Areas like SaaS, FinTech, AgriTech and other areas of the digital sectors are doing well but there are also great ideas brewing in MedTech, BioTech and food and beverage production.
A few of those could well be the disruptive industries we need to take New Zealand and the world into a healthier and wealthier future.
– Simon Brown is general manager accelerator services of Callaghan Innovation

First published – NZ Herald 6 November 2016

New Zealand’s need for growth capital

As early stage investors we need to start getting real about the wisdom of our backing early stage, high growth ventures without far more consideration being given to where we source follow-on growth capital.

Even if we only look at last year’s New Zealand Venture Investment Fund’s seed co-investment data where about $50million was invested in early stage companies, the growth capital required for this cohort of companies is likely to be 10x this figure. So we are talking about finding $500m.

This is not just a problem for the investors in these companies; it’s a problem we need to grapple with in partnership with the government and the institutional investment community. These high growth companies are the engines of our economic growth. We can’t afford to drop the ball.

The development of an innovation led economy is widely accepted to take place over three ten-year horizons. We are coming to the end of ‘horizon one’ where the focus has been on inputs. New Zealand has done well here. The number of startups, early stage investors and dollars being invested has trended upwards over this period.

In the second ten-year horizon we should start to see outcomes from these innovation led companies in the form of jobs, export and tax revenue. But to generate these outcomes and see the true benefit of this investment, we need growth capital. Only then will the third horizon truly deliver in the form of financial returns and recycled capital and ultimately higher standards of living.

As I’ve just mentioned, there is no shortage of deal flow. The quality of that deal flow is improving every year too. This is in large part due to Government support for initiatives such as the Lightning Lab and the investor-led Tech Incubators. It is also a result of work others have done to upskill our entrepreneurs and angel investors.

To date, angels and other early stage investors have been able to fund the early growth of the companies meeting their criteria. We have been investing in startup, high growth ventures in a targeted sense for about 8 years but the really exponential upswing in investment has taken place in the last 3-4 years.

Quite logically, there is therefore an increasing and pressing need for growth capital in New Zealand.

This is illustrated in the recently released NZVIF data showing most investment is into existing deals. Angels are having the stay the course longer and dip back in their pockets for capital it could be argued should be coming from deeper more experienced pockets.

We need to give credit to those venture capital firms raising funds to meet the need for growth capital such as Movac’s Fund 4, the $40m fund GD1 is working hard to raise and the $40m fund raised by Oriens Capital. But it is not enough.

Closing the “growth capital gap” is going to need New Zealand’s pension and other institutional funds to broaden their investment mandates to allocate at least 3-5% to the growth needs of our high growth, early stage companies. We must support work Immigration NZ is doing to inject capital from experienced high network migrants into these companies. We need to tap into our rural and regional wealth more effectively. We have therefore been delighted to see angel networks forming in Taranaki and Marlborough reflecting an increasing awareness that high growth, tech based companies can be the source of future jobs and social and economic wealth in the regions. The banks also need to come to the party.

There is a great deal at stake here. We can’t afford “a hands off, market forces will deliver” approach. If ever a NZ Inc approach was needed, it is now.

Marcel Van Den Assum
Chairman
Angel Association New Zealand

Canterbury Angels flying with new partnership

The New Zealand Venture Investment Fund is partnering with the newly formed Canterbury Angels to invest into start-up companies.

The Christchurch-based angel investor group was formed in 2015 and now has 35 members, most of whom are experienced investors or have been involved in establishing businesses previously. Its leadership includes chair Ben Reid, who chaired the Canterbury Software Cluster, Shane Wakelin, Joan McSweeney, Ria Chapman, Mark Cathro, Raphael Nolden, Ian Douthwaite, and SLI Systems co-founder Geoff Brash.

Canterbury Angels chair Ben Reid said the partnership will bring more investment into innovative companies in the Canterbury region and around New Zealand.

Read more

 

New Zealand Innovation Awards celebrates most successful homegrown trailblazers

The New Zealand Innovation Awards 2016 winners were announced last night, recognising the cream of the crop across 11 industry categories and 10 business disciplines including technology, science, marketing and agri-business.

The Awards attracted more than 700 entrepreneurs, innovators, businesspeople and investors at the SKY City Convention Centre last night. 21 winners and 19 highly commended awards were handed out on the night to companies creating the most ‘game-changing’ innovations.

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Success focused vs. Founder friendly or investor friendly

It’s a universal truth that we achieve much more working with each other, than against each other. What’s more, very few of us achieve as much on our own, as we do together.

This is certainly true in early stage investment. In this endeavour, no one ever achieves success on his or her own. No one!

That’s why I struggle – to the point of getting pretty vexed – with the whole “founder friendly vs. investor friendly” thing. I can’t see how it helps either side to the deal; especially founders.

Pitting ourselves against each other is not a great way start to a relationship.

As angel investors we are backing founders because we think you and your business are unbelievably awesome. We want to be part of the inspirational story you are telling. We believe we can add value. We want to help.

We know investors become members of our networks for the following reasons:

  • To lift New Zealand higher – economically and socially;
  • To be actually involved in doing this – by contributing money, expertise and connections;
  • For the cool company – to be involved with like-minded, optimistic, creative people; and
  • For the rich rewards – of course we hope for a financial return but the “psychic return” of doing good and contributing to lifting NZ higher is a key reason why people become angels.

When angel investors are negotiating the terms of a deal they are not looking to ankle-tap the founder or give themselves an unduly, unfair advantage over the founder. Negotiating a term sheet is about aligning the founder and investor to give the business the best chance of success.

Ideally negotiating a term sheet is front footing discussions around economic and control rights to establish three key things:

  • What expectations do we have about the venture’s future?
  • What expectations do we have about each other’s involvement? This should be based on an honest appreciation of each others strengths and weaknesses and how the terms of the deal and our involvement with each other address these; and
  • What happens when things go wrong?

Both investors and founders must fully understand the implications of all the terms of any deal. They need to be realistic about the needs of the business at that particular point in time, with an eye to positioning the business to be in the best position for securing more investment in the future. High growth businesses invariably need more capital.

There is no such thing as a stupid question in early stage investment. So whether you are an investor or a founder be sure you understand the implications of all the terms, understand the impact they will have on future funding rounds, understand the implications they have when things go wrong and when things go well.

To be success focused we need to be founder friendly AND investor friendly. It’s all about alignment.

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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Help benchmark the NZ ecosystem globally

Maximising the success of New Zealand’s startup ecosystem, and the worldwide ecosystem on which we rely requires input from startups themselves.

If data isn’t collected then how do we know what’s working and what’s not? Where our ecosystem could do with more support and where its doing quite well under its own steam. This is why the AANZ is supporting distribution and participation in the 2016 Global Startup Ecosystem Report (#GSER).

The GSER will include insights from more than 20k executives across the globe which will deliver leaders of all kinds; investors, government and support service providers; with an in-depth understanding of how to best attract, accelerate, and sustain startups.

Conducted by Startup Genome (formerly Compass Research), the report also gives startups themselves a benchmark to measure how they stack up to others across the globe.

By completing this survey founders will enable NZ’s leaders to:
• Assess and benchmark the NZ startup ecosystem across 50+ key metrics
• Accelerate the pace with which NZ ecosystem leaders reach consensus on key issues and develop action plans for change
• Attract a greater share of global resources to our region
• Empower startups everywhere to use data in decisions around raising funds, locating an office, and recruiting top talent
.

The 2015 Global Startup Ecosystem Report helped millions of local leaders globally reach consensus on specific challenges and drive action to improve their ecosystems.

By participating in the 2016 Survey, you will help New Zealand voice to be heard among the voices of entrepreneurs globally and accelerate the global startup ecosystem for hundreds of New Zealand’s entrepreneur’s locally and millions of entrepreneurs worldwide.

*All the information you provide in the survey is confidential. Results are published in aggregate values only.*

To participate in the survey click here and share the link with the founders in your ecosystem.

Investible launches education program for first time angel investors to democratise Australia’s investing community

Australian startup generator Investible has today launched First Angel, a new education program for first time angel investors. The 12 month program aims to fill the knowledge gap of local angel investors in the early stage investing process.
The First Angel program was launched by Investible cofounders Trevor Folsom and Creel Price to democratise angel investing in Australia and generate a more diverse investing community.

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What do angels need to grow early stage investment industry?

We have interviewed Nelson Gray at the Asian Business Angels Forum and AANZ Summit 2015, in Queenstown. Nelson Gray is an educator, angel investor, mentor, fund manager, and non-executive director of the Scottish Angel Capital Association.

Nelson Gray explains what investors need to understand in order to get support to achieve successful exits and grow the early stage investment industry.

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.banner NZAngelSummit16

Creating the board of directors

The following interview with Jaeysh Parekh, Managing Partner of Jungle Ventures, Singapore, was conducted at the Asian Business Angels Forum and AANZ Summit 2015.

Jayesh Parekh talks about what should entrepreneurs and investors think about when creating their board of directors.

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.

banner NZAngelSummit16

More women need to tell their investment stories

Successful women investors and entrepreneurs need to stand up and be counted if diversity is to be encouraged in the heavily male dominated field of private equity and leveraged transactions the 2016 New Zealand Private Equity & Venture Capital Association’s (NZVCA) Workshop on Women in Growth Capital was told (23rd May).

Chania Rodwell, director, Helmsman Capital, Sydney says: `We do have to drive recruitment to private equity. It can appear less attractive than some of the other alternatives open to female applicants. It helps if women working in the industry build recognition to break down the misconceptions and help others to see the opportunities.’

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R9 Accelerator Demo Day – 2 June

It would be great if NZ angels could get along to the R9 Demo Day to show our support for the large swathe of public servants in our community who are also aspiring to innovate and create ventures which are disruptive and scaleable….

We’re excited to announce that R9 Accelerator is having its second Demo Day on Thursday 2 June from 2:30pm – If you’re interested in attending please email Edd Brooksbank.

You’ll have the opportunity to invest in teams who are pitching their innovative solutions to improve public service for business customers, meet the teams and find out how they could help you. You will also hear what our panel of experts have to say and know why the R9 Accelerator is important to businesses across New Zealand.

Event details

  • Thursday, 2 June 2016, doors open at 2:30pm for a 3pm start
  • The Embassy Theatre, Kent Terrace, Wellington
  • Presentations will finish by 5:30pm with light refreshments and an opportunity to meet the teams from 5:30pm onwards

Any questions, please email Edd Brooksbank.

More information on R9 Accelerator

R9 Accelerator is a real life example of making it Better for Business when interacting with government. The teams are each working on an opportunity to make it better for businesses to interact with government.

The R9 Accelerator is led by the Result 9 Better for Business programme and delivered by Creative HQ to power better public services to business customers.

The R9 Accelerator brings together teams of entrepreneurs, developers, private sector specialists and government experts to work on projects to help solve major pain points for New Zealand businesses and reduce their effort in dealing with government.

The process takes just 14 weeks to generate a customer-validated prototype – ready for further investment. It takes a learn-as-you-go, fail fast approach to develop and test new products and services.
One of the teams – CoHelix. Dan, Nicole, and Alex are helping businesses be compliant by improving the fieldstaff services from regulatory agencies. Find out about the other teams and what they’re working on.

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.

Ask the expert: pitching to investors

OPINION Q: “We’re looking for investment for our company but none of us have any experience pitching to investors or even know where, or how, to begin. What are your key tips for approaching investors?”

A: The first action is to just start pitching and to do so at every opportunity. Practice with your grandma, your four year old, and ideally a few contacts that won’t just nod and tell you it’s great.

The more you share your vision, the better you will become at enunciating key points. Most investors feed off of enthusiasm and energy and that is more likely to come through if your pitch is well tuned.

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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

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

Chicken chunks made from peas bring in investors

A start up company that makes peas into chicken chunks has already attracted $1.2 million from international angel investors.

Kiwi investors were given the same opportunity after Sunfed Meats founder and chief executive Shama Lee pitched her plant-based chicken product to them at the New Zealand Agribusiness Investment Showcase near Palmerston North. The chicken is made from yellow peas imported from Canada in a process undisclosed for commercial reasons,  and tastes and looks like chicken.

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NZVIF Investment Report

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

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

Closing Remarks #ABAF15NZ and intro to #ABAF16Korea

#ABAF15NZ: Closing Remarks and intro to #ABAF16Korea

Wrap up of #ABAF15NZ from #Marcel Van den Assum (Angel Association New Zealand)

Introduction to # John Choy (Korean Angel Association) who invites international visitors to #ABAF16Korea

Click here to view video on youtube

Building an International Portfolio #ABAF15NZ

#ABAF15NZ: Building an Internation Portfolio

Getting real on the likely hood of cross-border deal syndication – the risks, the restrictions and the potential. Is it possible to build an international portfolio? What are the pros and cons?

Moderator – # Nelson Gray (Scottish Angel Capital Association, SCT)

# Ashley Krongold (Our Crowd, AUS)

# Raiyo Nariman (Malaysian Business Angel Network)

# Bob Kelly (Microsoft, US)

Click here to view video on youtube

Welcome to #ABAF15NZ with Angel Association NZ

#ABAF15NZ: Welcome to ABAF with Angel Association NZ

#Marcel Van Den Assum (Chairman, Angel Association NZ) introduces the Asian Business Angel Forum. Hosted by the Angel Association of New Zealand, the 2015 Forum offers the opportunity for international and local investors to join together in celebrating this small country’s big contribution to early stage investment.

Leading angels agree that New Zealand punches above its weight.

“The AANZ has become one of the TOP angel summits in the WORLD,” – Bill Payne, US Angel Capital Association Hans Severiens Award Winner.

Click here to view on youtube

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

Angel advice for Tauranga’s entrepreneurs

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

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

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

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

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

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

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

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

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

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

The Seven Secrets Of Top Angel Investors

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

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

Read more on www.forbes.com

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]

The Angel Evangelist

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

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

 

But to what end, exactly?

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

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

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

So you wanted to come here to build connections?

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

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

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

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

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

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

Why is that so important?

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

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

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

Doesn’t it depend on the angel they get?

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

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

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

Should angel investors always have representative on the board?

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

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

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

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

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

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

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

What’s the most common thing angels do wrong?

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

Why do you love this area so much?

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

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

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

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

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

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

We tend to talk to ourselves far too much.

By Lesley Springall

KPMG: Make migrants take a risk

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See KPMG paper here

First published on nzherald.co.nz 14 Sept 2015

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