Puawaitanga & Kotahitanga Award Winners 2018

This year the Angel Association New Zealand’s 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’.

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The Puawaitanga Award has been presented to Dexibit’s founder Angie Judge and investor-director, Dana McKenzie.

Dexibit analyzes visitor behavior and venue performance at the world’s visitor attraction institutions such as museums and galleries. Since Angie Judge founded Dexibit in 2015, the company has secured customers like the National Gallery in the UK and The Smithsonian in the USA and, here in New Zealand, the Auckland Art Gallery and Te Papa. Dexibit has won two prestigious High Tech Awards for Innovative Software and Best Technical Solution for the Creative Sector and been a finalist in a number of other categories. Dana McKenzie has Chaired the Board of Dexibit for the last three years and is a true champion for the company and its team, including Angie.

In making the award, Angel Association Chair, John O’Hara said Angie and Dana are great examples of what alignment and mutual support can achieve.

“No one scales value in a high-growth tech company on their own. To get traction both the founder and the investors need to be committed to the same end-point. This has clearly been the case with Dexibit. Dana and Angie have been working together to generate stunning progress in terms of revenue generation, customer acquisition and to secure capital to amplify that growth to support Dexibit to generate exponential returns for the investors and just as importantly, for the New Zealand economy,” he said.

The recipient of the Kotahitanga Award is Matu Managing Partner, Greg Sitters.

Greg has been involved with capital raising for early-stage deep-tech ventures in New Zealand for over a decade. He was an early employee at Sparkbox Ventures and then worked for its successor GD1, before setting up Matu. Matu was founded earlier this year to provide seed and early stage capital for disruptive scientific and IP rich startups. Greg has given countless hours of his time to literally hundreds of budding and early founders, including in his tenure as a long standing member of the Return on Science and Uniservices’ Investment Committees. Greg is a founding member of the Angel Association and served on the Council since its inception in 2008. In this role he has given freely of his time to dozens of professional development initiatives and to represent the early stage industry at events not only all over New Zealand but around the world.

“Greg exemplifies the generosity of spirit that imbues the New Zealand angel community. His depth of knowledge about what it takes to scale a deep tech venture is unsurpassed and has been invaluable to companies like HumbleBee, Lanaco, Objective Acuity and many more,” said John O’Hara.

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On track for another record year

First half year results show angels are investing at rates on a par with previous years. The upward trajectory continues. It’s likely the formal part of the market will hit $100m into high growth start-ups this year.

Reporting on the activity of its members tracked by the NZ Venture Investment Fund, Angel Association Chair John O’Hara said $30.8m dollars was invested in 46 deals in the first six months of the year compared to $20.2m into 29 deals in the same period last year.

More detail and deeper insights can be found at www.pwc.co.nz/startupmagazine in the second edition of Startup Investment New Zealand; a collaboration between Angel Assn and PwC.

Mr O’Hara noted there is always a substantial uplift in activity in the second half of the year, in part inspired by two of the country’s larger angel networks, Ice Angels and AngelHQ, holding their annual venture showcases in September.

“This year Ice Angels’ showcase attracted 1000 guests and that level of enthusiasm has been reflected in capital commitments to the ventures presenting. AngelHQ’s showcase attendance numbers were also up,” said Mr O’Hara.

“We are seeing increasing valuations and amounts raised, and in many cases, start-ups are now appearing to be fully valued. While this is positive it comes with some challenges,” said Mr O’Hara.

“Start-ups that are too well funded can lose their edge and correspondingly high valuations put pressure on founders to deliver the requisite valuation uplift to ensure the next funding round is successful,” he noted.

These sorts of issues were discussed at the Angel Association’s first ever event for founders and investor-directors held the day before the industry’s annual summit in Blenheim on Wednesday 31 October 2018. Called “The Runway”, the day-long event brought together over 35 founders of high growth ventures and the angels who have backed them. As well as building a cohort of like-minded founders who support each other as their ventures scale, the initiative began to build tighter alignment and awareness of what it takes to scale an angel backed company.

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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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Into the dragon’s den with New Zealand’s million-dollar investments

Hundreds of New Zealand’s wealthiest investors gathered for the 2018 Flux Demo Day last week for a night of wining, dining, and million-dollar business investments. Jihee Junn went along to watch this year’s plucky startups pitch it out.

“The first rule of investing is: don’t leave the table when the food’s being served!” a jolly looking man at my table exclaimed. We were halfway through the night’s events when platters of braised beef, roast potatoes and Akaroa salmon were brought out to the room’s 400 or so investors. As we dug into our family-style meals, passing along giant plates of food from left to right, I asked some of my fellow diners – all older, wealthier, and a lot more male than me – for their thoughts on the startups that had pitched so far. On the whole, their responses were akin to a placid shrug.

“They were okay,” said one man, who told me his day job was working at a private investment firm. Those sitting next to him nodded in agreement. “I’m not really here to invest tonight, but if I was, there probably hasn’t been anything yet to make me want to get out my wallet.”

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Comment: Five steps to stronger capital markets

If the New Zealand economy were a human body, then we can think of capital as the oxygen required to sustain life.

In a functioning capital market, those seeking capital are brought together with those who wish to deploy it. This lowers the cost of equity and debt, boosts the growth of funding and sparks wealth creation.

Is this economic oxygen flowing as it should? Most New Zealand companies listed on the stock exchange (NZX) have unrestricted access to capital, enjoy diverse and internationally-based registers, and are trading at fair to elevated multiples.

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A cow-whispering fitbit

The big farming news of the year so far has been an outbreak of the Mycoplasma bovis disease in cows, which forced the Government to come up with an $886 million eradication plan last month. But as this month’s Fieldays event showed, it’s not all bad news in our farming sector. When it comes to farm technology – or “agritech” as it’s known – New Zealand is a global leader.

A new report by Callaghan Innovation claims that “New Zealand is seen as one of four locations to watch for agritech solutions alongside Silicon Valley, Boston, and Amsterdam.”

I reached out to several agritech experts to find out why New Zealand is so well regarded internationally. Okay, we have a deep history of agriculture in this country. But it requires more than a pair of gumboots and the clichéd “number 8 wire” attitude to create advanced farming technology.

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SwipedOn CEO explains how his Tauranga SaaS startup went global

SwipedOn is a fast-growing Software-as-a-Service (SaaS) that is used in more than 2000 cities worldwide, and it all started in the Bay of Plenty.

The company provides an iPad-based visitor management system that replaces visitor books, which has proven hugely popular in the UK and US, as well as Canada, Australia, and New Zealand.

According to CEO and founder Hadleigh Ford, there’s no reason why New Zealand can’t have its own Silicon Valley based right here in the Bay of Plenty.

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Third annual ‘Investor’s Guide to the NZ Technology Sector’

Rising domestic investment in New Zealand’s early-stage technology companies is creating more opportunities for follow-on investment from a growing number of international investors. This is according to the third annual Investor’s Guide to the New Zealand Technology Sector published jointly by the Ministry of Business, Innovation and Employment (MBIE) and theTechnology Investment Network (TIN).

The guide showcases New Zealand’s diverse range of high growth technology companies, innovation capabilities and supportive business environment, and presents a compelling case for investment in New Zealand’s technology sector.

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Get in quickly – AANZ Summit registrations open!

Diversity … making a difference and delivering outcomes

Last year we celebrated a decade of angel investing in New Zealand. And it was terrific to have that line up with some impressive success for angel backed companies with PowerbyProxi selling to Apple, Publons selling to Clarivate and ImeasureU selling to Oxford Metrics. Last year was also record year for ‘dollars into deals’ with a 26% increase on the previous year’s investment at $86m.

We are genuinely creating value for New Zealand and New Zealanders. At this year’s summit we will focus on amping up that value through the power of diversity. Why and how does a more feminine approach, both as founders and investors, add value? What values do different ethnicities bring to angel backed ventures to increase the prospect of success? Why is it important we include millennials in our ventures?

It’s all about making a difference… diversity and inclusion delivers higher value outcomes.

The 11th Annual NZ Angel Summit, 1/2 November, is being held at Marlborough Vintners, 10 minutes drive from Blenheim and in amongst the vineyards. We deliberately choose smaller intimate venues to ensure we create the right atmosphere for relaxed and rewarding conversations. Our last three summits have sold out as we prioritise places for those ‘doing deals’.

On the first morning we set the context for the two days by reviewing the year and have a session on the values that drive angel investors and how these impact on success. In the afternoon we apply these insights to the more practical aspects of angel investment with sessions on the new industry standard term sheet, how to ensure alignment with follow-on funding sources and dig into the government’s plans to support our endeavours, particularly with respect to tax reform. On Friday morning we focus on our own heroes and hear first-hand from some of our founders and investors who getting real traction offshore. All of this will be shot through with input from successful women and millennials in our community and deep engagement with Maori and our Asian investor migrant community.

Click here to register

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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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The network effect: NZ angel networks drive funding

Of the $86 million invested into young companies in 2017, over half ($49 million) came from angel investment networks, rather than individual funds or institutional investment.

“The strength of our angel investment networks in New Zealand is growing every day, which helps to explain why they’re responsible for a growing share of overall funding” says AANZ Chair John O’Hara.

“They’re responsible for over double the funding that’s coming through the next most-popular channel of angel funds.”

Raising funds from angel networks can take a little longer than other sources of early stage funding (such as mico-VCs and high networth individuals) given that sometimes over a dozen individual investors are collaborating to complete DD and gather the investment. Angel networks also tend to be run with a large component of voluntary input so founders and lead investors need to be committed project managers.

John notes that not only do networks tend to bring a larger pool of connections and expertise than single source funding options, they bring deeper reserves of connections for follow on funding.

“Angels are inveterate travellers and networkers and have connections in markets across the world which can be tapped for sales channels, in-market insights as well as follow on funding recommendations,” said John.

“Nothing beats getting on a plane with a line-up of carefully targeted meetings. New Zealand founders and investor directors need to spend more time in-market and be preparing for the founder to be based there,” John added.

He concluded by noting that lining up an in-market Board member was also an important component of scaling into offshore markets.

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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Kiwi tech company raises millions for expansion

Kiwi technology company Feijipiao is expanding across New Zealand and eyeing other markets after closing a multi-million dollar angel investment round.

The company, founded in 2016 by Peter Li, is a Chinese language online travel business, offering flight bookings across multiple airlines in Chinese.

The website offers competitive fares and multiple payment solutions, in either Chinese yuan or New Zealand dollars, through automated search, booking, and ticketing processes.

The investment was headed by The Icehouse and Chinese-led angel fund Eden Ventures – its first investment.

Led by Chinese venture capitalists and entrepreneurs, Eden Ventures focuses on high performing start-ups, with specific interest in serving Chinese in New Zealand or enabling New Zealand founders to launch into the Chinese market.

The funding values Feijipiao at between $5 million and $10m, and would be used to hire staff, open its first New Zealand office in Auckland and fund further growth, as well as prepare the business for expansion into Australia and other markets.

The company was already bringing in revenue of about $900,000 per month, with Li saying he expected this to hit $1m in the coming few months.

Icehouse fund manager Jason Wang said both groups had invested based on Feijipiao’s growth in the five months since it launched, as well as the potential they saw for it.

“In three months, feijipiao.co.nz have transacted millions of dollars without a physical office, it’s all in the cloud.

“The results speak for themselves – this is a group of the right people doing the right thing in the right market.”

The company’s success had been helped by millennials influencing the purchasing behaviours of their parents, who tended to use more traditional travel agents Li said.

The investment would enable the company to continue its expansion as well as providing strategic value for the firm.

“Our team has built a strong foundation in New Zealand to prepare ourselves for expansion into global markets with established Chinese communities, and international students from China.

“By partnering with Eden Ventures and The Icehouse, we can tap into their expertise of forming long-term growth strategies for global expansion, and supporting technology driven companies.”

First published on nzherald.co.nz on 15 Sept 2017

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2017 Angel Summit focuses on next 10 years

The tenth Annual New Zealand Angel Summit will be held at Cable Bay Winery – Waiheke Island from 1 – 3 November 2017. It’s theme; “Doubling down on success… the next ten years!”

New Zealand is now decade in to formal angel investing in New Zealand and has amassed some impressive statistics for a nation of our size. Over $500m into nearly 1000 deals in the more formal part of our market. Ten years ago there were 4 clubs and 100 or so angels. Today there are 10 clubs and over 650 angels. All this activity has delivered hundreds of jobs and tens of millions of revenue. It’s this value creation we want to continue to accelerate.

Ten years ago there were 4 clubs and 100 or so angels. Today there are 10 clubs and over 650 angels. All this activity has delivered hundreds of jobs and tens of millions of revenue. It’s this value creation we want to continue to accelerate.

The 10th Annual NZ Angel Summit is being held back where it all started at Cable Bay Winery on Waiheke Island. The choice of the small intimate venue continues the deliberate approach by the Angel Association to ensure it creates the right atmosphere for relaxed and informal conversations between active angel investors. The last two summits have sold out and it unapologetically prioritises attendance for those who are ‘doing deals’.

On the first morning the Summit will celebrate our community of investors and founders and their achievements in the past decade. There is so much to be proud of. The rest of the event will be spent digging into what we need to do to double down on our successes based on stories and insights from New Zealand’s heroes. International speakers, carefully vetted for their ability to both understand New Zealand’s unique circumstances and our aspiration for outcomes and success are flying in to present.

Showcasing Angel Investor Backed Ventures

The Showcase event which kicks off the event will include up to 10 venture in three tiers; seed, first formal round, last raise with a clear exit path. Each group of ventures will be introduced by an experienced angel investor who will talk about the investment opportunity, the return profile, valuations and potential acquirers.

New Zealand Investor Keynotes

Key Note sessions will include deep insight into what we can be proud of and what’s next. Stalwart investors will share memories of getting started – what was their vision and what inspired them, their challenges and what we need to do in the next decade to ensure value is delivered. These sessions will explore why our environment looked as it did 10 years ago, how far we’ve come and how we build on what we’ve created and set the vision for the next 10 years.

International Angel Investors

International special guests include Justin Milano (Good Startups, San Francisco, USA) who will explore the role of fear in the early-stage space. A veteran of Silicon Valley, Mr Milano has worked with angels and entrepreneurs to use cutting edge psychology and neuroscience, including emotional intelligence skills to help entrepreneurs and angels create break-throughs and unlock potential. Ron Wiessman (Band of Angels, San Francisco, US) will deliver a dose of reality exploring the critical the role of capital strategy and how tough it can be to source and entice an acquirers.

Actionable Insights

The extensive programme includes gritty content which covers; building strategic value, actively managing your portfolio for returns, Government’s role – identifying the right policy levers, the role of NZ corporate venture, and deep dives into term sheets – how have they have evolved and what role do they play in venture success lead by AANZ Expert Partner, Avid Legal’s Bruno Bordignon. Insight into which industries and technologies are going to irrevocably disrupt markets in the coming decades and make the best investment opportunities round out the valuable programme.

Finally, the event will also include the presentation of Arch Angel Award and two inaugural awards “Contribution to the industry” and “Lead angel and best venture award” – celebrating a great angel/founder collaboration.

To book your seat (preference is given to active angel investors) click here.

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Kiwi startup Hydroxsys could help clean up NZ’s waterways

Hydroxsys is a clean-tech company founded on unique water extraction technologies aimed at mining, dairy and other industries requiring water extraction or remediation.

The company has acquired an experienced management team focused on developing the company’s IP and bringing revolutionary products to market.

NZ food network has thrown in their lot with Hydroxsys and is helping the company develop their revolutionary technologies.

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Capital Markets Report: Face the fear of missing out

New Zealand companies often have to look offshore to access the funds and networks they need to scale internationally. Two of them, Booktrack and Vend, have attracted much-needed capital. James Penn asked their founders about the state of international investment for high-growth Kiwi companies.
Aucklander Paul Cameron founded Booktrack along with his brother Mark Cameron in 2011. Booktrack’s technology allows soundtracks to be added to e-books to create an immersive reading experience.
Since launching they have secured investment from some of Silicon Valley’s most high profile figures, including PayPal co-founder Peter Thiel, and Mark D’Arcy, a Vice-President at Facebook.
Vaughan Rowsell is the founder of Vend, a rapidly-growing retail software company. Thiel has also invested in Rowsell’s company, and in December Vend raised $13 million in capital to fund their international growth. That raising included investors such as Square Peg Capital, Movac, and Sam Morgan’s Jasmine Investments.
Herald: When you sought capital investment in the United States, what were the drivers of that decision?
Paul Cameron: To help build networks in our target market.
Local investors opened up their networks to us and this enabled Booktrack to accelerate our business in the United States.
Vaughan Rowsell: As a SaaS (software as a service) company with a global footprint, we looked to the United States for capital, in particular Silicon Valley, because there is a deep capital pool looking to fund exactly our profile of business. We spoke to many Silicon Valley venture capitalists and ended up being funded by the overseas investment arm of one of the great Valley investors, Valar Ventures, which actively looked for New Zealand businesses to fund.
Herald: What challenges have you faced when raising capital in the United States as a New Zealand company?
Vaughan Rowsell: The biggest challenge is that United States venture capitalists (VCs) are not used to working with the risk profile of New Zealand companies — we are a 12-hour flight away, speak differently, have a non-American culture towards sales and marketing, and an alien legal structure to the companies they are used to investing in.
United States-based VCs rarely deviate from their hypothesis on what a great business for funding looks like, which is formed with United States-based companies in mind. When you have geography, culture, a new legal system and other things in the mix, and it comes down to comparing apples with apples, New Zealand companies have a bigger hill to climb.
I don’t mean to say it doesn’t happen or won’t happen, it’s just a system that is harder for us.
If you are willing to be United States headquartered or have a United States executive team, I am sure it would be different. For us, staying Kiwi has always been important so we have secured investment from outside of the United States.
Paul Cameron: Investing in a New Zealand entity can be challenging for a United States investor as New Zealand is not only geographically a long way away, but they also do not understand the foreign tax implications. Having a friendly capital gains structure in New Zealand helps with the tax issue (but still needs some explaining), and setting up your business in the United States and being there all the time provides assurance on the geographic issue.
Herald: What strategies have enabled you to be so successful in attracting capital from high-profile United States investors?
Paul Cameron: Being there, all the time. We only attracted investment from United States investors after spending a long time in the market building networks and understanding the local market. The Kiwi Expats Association (Kea) was a great resource to connect us with New Zealanders in the United States who had great networks. It is important that New Zealand entrepreneurs remember that our cultures are different even though we both speak English and watch the same TV shows. I once observed a New Zealand entrepreneur in the United States mistake a conversation on the Warriors to be about the New Zealand rugby league team and not the Golden State Warriors basketball team. New Zealand entrepreneurs need to think, act, and be local if they are going to attract US capital. That takes a lot of time and commitment.
We need to put more energy into making local investment dollars work for our tech sector versus cows, anti-personnel mines and property. We need to be able to tell dozens of high profile New Zealand success stories.
Vaughan Rowsell
Vaughan Rowsell: A few years ago we secured funding from Valar Ventures which is Peter Thiel’s vehicle to fund non-American businesses, and that immediately overcame the hurdles for us that you get with most other United States investors. They had the great idea that some of the world’s best companies will come from outside the States, and we are honoured to have been picked.
Herald: In your opinion, should more New Zealand companies be looking to the United States when embarking on seed and Series A capital raises?
Paul Cameron: The first question any New Zealand start-up trying to raise funds in the United States will be asked is “how much have you raised in New Zealand?” And then “why are you raising this round here and not in New Zealand?” New Zealand companies need really good answers to these questions if they have any chance of raising US capital. We New Zealanders sound and look funny to US investors, and while it might be cute, it is a super-competitive market for capital in the United States. New Zealand companies, especially at the seed stage, should always be raising in New Zealand unless they are already established in the United States, and have a good strategic reason to be seeking funds in the United States over New Zealand. Series A is a more likely stage to be approaching US investors for capital, but I would still try in New Zealand first as there are great funds like Sparkbox Ventures always on the look out for good deals.
Vaughan Rowsell: My advice to younger companies looking for capital is to look local, or at least over the Ditch. There is an emerging Australian Angel/VC base growing and a few New Zealand companies are finding success with them which is really exciting. Companies can also consider Singapore, but the further you need to fly the greater the pull will be to base yourself closer to the venture capitalist’s postcode. There are always exceptions to any rule, and for us that is Point Nine Capital, based out of Berlin, who again deviate from the usual profile of venture capital. They actively seek investment in world-class SaaS companies all over the globe, and have been very successful at that. It is my hope that more US investors start to follow Valar and Point Nine’s footsteps when they try and answer their own question, “Why are there so many damn world-beaters coming out of New Zealand?”
Herald: Is there more that our public and private financial sectors should be doing to ensure New Zealand companies can access US capital?
Paul Cameron: They already do a lot more than most people realise. Our Seed, Angel, Venture Capital and Private Equity funds and groups are well networked in the United States and leverage those networks for their investee companies. The Government, through NZTE, (NZ Trade and Enterprise), Mfat (Ministry of Foreign Affairs and Trade), Callaghan Innovation and Ateed (Auckland Tourist, Events and Economic Development) have vast investment networks that are working everyday to connect New Zealand companies with US capital.
Vaughan Rowsell: We attract attention by being awesome. It’s all a numbers game. If United States VCs feel like they are going to miss out on opportunities to invest in great companies that originate from New Zealand, then they will come here and invest.
In the meantime, we shouldn’t just wait and hope that happens. We should be doing all we can to help the current and future cohorts of amazing New Zealand businesses going global to make a dent and get noticed. The more successes we have as a nation in creating world-beating companies, the more attention we will get from the United States VCs and the rest of the world.
Herald: How do we do that?
Vaughan Rowsell: It’s a 15-year strategy. There is no silver bullet. Firstly, success in the industry begets success, so we need to do what we can locally to support the next Xero, Vend, Orion or Trade Me. We need to put more energy into making local investment dollars work for our tech sector versus cows, anti-personnel mines and property.
We need to be able to tell dozens of high profile New Zealand success stories. The importance of these stories are to inspire new people into starting businesses because they see how others have done it, and can literally sit down with the founders of companies making it and get advice. The stories also inspire future talent to go into technology careers and create the talent pool.
Herald: Are there any other important messages we should be sending regarding US capital investment in New Zealand?
Paul Cameron: There is plenty of capital in both New Zealand and United States for good Kiwi companies. For US investment, it really just comes down to the company strength, having great people involved, and a commitment to the United States market. Simple.
Vaughan Rowsell: Really simplistically, there are two choices: match the profile that United States investors look for in US companies, which often means becoming one and talking American; or decide you are a Kiwi-based enterprise and look to impress people who understand what awesome Kiwi-based businesses look like. In time, I hope FOMO [fear of missing out] brings more US capital to our shores, but in the meantime let’s create the FOMO.
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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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Kristen Lunman: Taking a chance on financial technology

In a little under three weeks, Kristen Lunman will know if her hard work supporting seven technology start-ups has paid off.
All seven are financial technology ventures – “fintechs” in the jargon – and the immediate challenge is to get them to the point where they are ready to seek investment.
As the programme director for New Zealand’s first fintech-focused business accelerator programme, the pressure is on in the countdown to demo day. That’s when the teams will pitch their business plans and – they hope – attract the crucial dollars that will enable them to forge ahead.
Lunman is no stranger to taking big chances.
The 39-year-old expat Canadian moved to Wellington six years ago with her husband and two pre-school children after falling in love with the country when the couple honeymooned here.
So when the kids were two and three we packed our suitcases up and moved,” she says.
They chose Wellington because it suited both her and her husband’s career ambitions.
“Ironically, my husband is in banking and I am in fintech.
“I have always been entrepreneurial-spirited and my husband is risk-averse.”
But together they make a good team, she says.
With a background in marketing, Lunman initially worked for property data company CoreLogic before shifting to online video review start-up Wipster.
Lunman says it was the time she spent there that enabled her to understand this country’s start-up sector.
“I got really got entrenched in the New Zealand start-up ecosystem,” she says.
Then the role with business incubator Creative HQ came up, to co-ordinate Kiwibank’s Fintech Accelerator programme ,and she jumped at the chance.
She says it’s about “being part of the movement … taking an entire sector looking at financial problems and looking at ways to solve it.
“It is not just about the three-month journey – the vision for the programme is actually as a catalyst to bring the financial ecosystem together.”
Lunman moved into the role in December, before the programme’s launch, and helped whittle down the more than 70 teams which auditioned for a place.
Nine teams made the final cut but already two have dropped out – one early on because of a family bereavement, and the other just last week after it became clear their idea was not going to be viable to take to market.
She says losing teams along the way is a normal part of the process, and “it’s better to do so before they get funding.”
Out of the seven teams, two are corporate – working on ideas put forward by Kiwibank and Xero – while the other five are what she calls organic.
The 12- to15-week programme is based on an American system which has been tailored to New Zealand and provides intensive mentoring.
The teams have to live in Wellington and commit fully to the experience during the three months.
I got really entrenched in the New Zealand start-up ecosystem.
Kristen Lunman, programme director for Kiwibank FinTech Accelerator
The ideas range from a team who want to make it easier and cheaper to transfer money to the Pacific Islands, to a wealth management team called Sharesies who want to make it simpler for anyone to invest with as little as $50.
Another team wants to work with property managers to improve their rental experience, while a fourth is proposing to offer businesses “robo-advice” on insurance.
Another hopes to take real accounting data from businesses and present it to students to help them get real-life experience of managing businesses, before they head out to get a job.
Lunman’s job is to focus on what the teams need in order to accelerate their good ideas into the market. That typically involves a pilot test which allows them to work on gaps and problems.
She says one of the unique challenges for fintechs is that the sector is highly regulated, so not only do their business concepts have to work, they also have to meet the regulations.
“We have been working very closely with the FMA (Financial Markets Authority) and MBIE (Ministry for Business, Innovation and Employment).”
Lunman hopes that at the minimum, half of the teams will be at an investable stage by May 19, but ideally they would all be there.
Initial investments for start-ups are typically in the $500,000-$700,000 range and will come from a variety of sources including angel investors – individuals who are sufficiently well-off to take a punt on a start-up venture.
Lunman says the key ingredients for a promising start-up include having a passionate team that wants to solve a problem, and a market to take the solution to. But even then it can be hard to get a new venture over the line.
“It is not an easy road. Timing, ownership – all sorts of things have to come together.”
She doesn’t believe that having a financial background is necessary for start-up fintechs, and says some people have been successful without it.
“It’s just everyday Kiwis and businesses that have access to technology. I’m not convinced it has to come from the banking environment.”
She points to Apple Pay as an example, where technology has provided a money solution.
So far there hasn’t been a lot of disruption in New Zealand’s fintech sector.
Online crowd-funding platforms have opened up alternatives for both businesses and individuals to raise money, but they remain tiny in comparison with the major banks. And robo-advice – low-cost online financial advice based on algorithms – will be allowable here next year, after a law change that is now in the pipeline.
But Lunman says disruption is near-impossible in New Zealand.
“Banks have all the money and the customers,” she points out.
Instead, she believes there will be more of a move towards collaboration.
“Banks certainly recognise the need to innovate,” she says, but their silo approach and size make it hard for them to move quickly and introduce innovations.
“I think banks are looking to fintechs and recognising they do need to work with them.”
In Australia, Lunman says three major banks have already set up fintech hubs to work with and there are 15 fintech accelorator programmes.
Here, Kiwibank has been the first to back a fintech programme, but Lunman says others are talking about it.
This isn’t a 9 to 5 commitment. We live and breathe what we are doing.
Kristen Lunman
“I think we have got some work to do in terms of engaging some of the major players – other banks/insurance players.
“They are starting to discuss it but it will take some time.”
Despite the slow start, she believes collaboration will take off over the next five years. Regardless of the challenges, Lunman believes New Zealand has the opportunity to become a fintech hub.
New Zealanders are much more open than many people to using technology to help with their finances, she says, and points to our past as early adopters of eftpos technology.
“In North America they were still using cheques when I left.”
She says being in New Zealand presents no greater challenge for fintech start-ups than being in any other part of the world.
“I don’t think there is a greater challenge – it’s just different. A start-up is hard in any ecosystem.”
She points to Finland and Denmark – smaller countries which have thriving tech start-up sectors.
“They are small so they had to go global first.”
While those countries have Europe at their door, New Zealand has Asia, Australia and the US. “They are just different challenges really.”
As for what will happen to her after the programme, she doesn’t know yet but is confident she wants to keep working with start-ups.
“For myself personally that is to be determined. I know I want to stay in the start-up space. I would love it to be fintech.”
And while the programme is the first to focus on fintechs she doesn’t believe it will be the last.
“I don’t believe this is a one off.”
Kristen Lunman
• Job: Programme director for the Kiwibank Fintech Accelerator
• Age: 39
• Originally from: Canada
• Education: Bachelor of Commerce degree majoring in marketing and international business from the University of Northern British Columbia
• Family: Married to Kyle and has two children: Adelyn 10, Grayson 9
• Last movie watched: The Lego Batman Movie
• Last book read: Americanah by Chimamanda Ngozi Adichie and The Undoing Project by Michael Lewis
• Last overseas trip: To Vietnam in 2016 as part of a New Zealand tech delegation to explore the tech scene in South East Asia.
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NZ start-ups strong in foreign markets, survey shows

New Zealand start-ups have the highest percentage of overseas customers when measured against their counterparts from 50 other “ecosystems” including New York, Moscow, Beijing and London, according to the Compass Start-up Genome’s Ecosystem Ranking Survey.

The Compass Start-up Genome project team is based in San Francisco and benchmarks so-called start-up ecosystems from around the world. More than 100 Kiwi start-ups took part in the 2016 survey, according to the Angel Association of NZ. In New Zealand, the survey was led by the Angel Association with support from NZX, NZ Trade and Enterprise, the NZ Venture Investment Fund, Ministry of Business, Innovation and Employment and Callaghan Innovation.

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Robotic apple packing developed by NZ company Robotics Plus ready to go offshore

A Tauranga company is ready to take its apple packing robotics offshore and help remove the headache of finding staff to do mundane work.

The automated apple packing machines place apples in trays “colour up” with the stems aligned, using sensors, software and electromechanical technology, and are expected to remove some of the monotonous work that apple packhouses find difficult to staff.

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Bay of Plenty investors take control of Rockit apple company

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

What happens when your hobby and passion become your business? And what happens when business booms?

The incredible growth of craft beer in the past decade has created a difficult dilemma for many of the nation’s craft brewers, who suddenly find themselves running multimillion-dollar operations.

The craft beer boom has transformed the industry.

Statistics released today show total beer consumption is growing again for the first time in years.

The high alcohol category – which tends to reflect the craft beer end of the market – has doubled in the past five years and rose 17 per cent last year.

But some breweries have been growing much faster.

Take a look at the Deloitte Fast 50 index – which tracks New Zealand’s fastest growing companies.

Panhead – which has been snapped up by Lion for $25 million – was fourth on that list in 2016 with revenue growth of 925 per cent.

Tuatara, which was purchased early this month by DB for an undisclosed sum, made the list for three years in a row from 2009 to 2011.

In 2015 Garage Project topped the list with 664 per cent growth and fellow Wellington brewer ParrotDog saw 263 per cent growth that year.

It’s reminiscent of the tech boom – although beer brewing is one of the oldest of industries.

It also has much more onerous capital requirements. And relatively low margins.

“It is very difficult,” says Tuatara founder and brewer Carl Vasta. “Especially if you are doing it yourself. You run out of stainless steel tanks pretty quickly.”

“When you are producing a high quality beer that requires expensive ingredients, it’s not just the hardware, if you’ve got to buy a million worth of hops for next season and you have to pay for that today.”

Vasta made headlines this month with the sale to DB, a move that will have disappointed some purist independent craft beer fanatics.

“We looked at a few options,” says Vasta, who will stay on with Tuatara and is excited about putting his focus back on the beer making.

Those included crowd-funding, more private equity (Tuatara already had some investment from PE fund Rangatira) and even a stock market listing.

“We talked about it with the private equity company when they came in. That we could grow the business and then look at listing.”

But after doing some research, he decided the costs of listing were too daunting.

“We’d still have been running the company too … so if we were looking for help in running the company then listing didn’t really help.”

The corporate side of the business, let alone private equity, exit strategies and the rest doesn’t sit naturally with many brewers.

It is an industry that has been built largely on passionate beer lovers scaling up their home brew operations.

Matt Stevens at ParrotDog – which completed New Zealand’s most successful crowdfunding round last year – was a chartered accountant in his previous life.

But despite some experience on the financial side, he says he has never really considered what the exit strategy might be.

“We get asked all the time and none of us really have any idea what the end game looks like,” he says. “We’re just passionate about being in the moment. We get to turn up to work with our mates every day and make beer … which is one of the funnest industries to be in.”

Growth was initially debt funded by the founding shareholders, but they were keen to leverage their popularity and needed a new, bigger brewery.

“A large buyout was not really something we were interested in, stock exchange was too big … so it [crowdfunding] was kind of between.”

ParrotDog raised the maximum legal amount for a crowdfunding initiative, $2 million, in just 48 hours last August.

It is one of three breweries to go down this path, including Yeastie Boys and Renaissance.

The success of the crowdfunding round “was a flattering affirmation”, Stevens says.

But it did mean that ParrotDog suddenly gained 792 new shareholders. It now runs its own share register, including a platform to facilitate share transactions.

ParrotDog went to the public with a nominal valuation of just under$10 million. That was based on an earnings multiple they felt was in the middle of the range for comparable businesses.

But that valuation might have been squeezed down by the market if it had been a full public offer, he says.

As it turned out, the strong demand meant they achieved a post-crowdfunding valuation of more than $11 million, even though shareholders were offered no prospect of dividends in the immediate future.

Vasta’s not sure how much weight investors were putting on that valuation anyway.

“I like to think they all understood what they were buying but if you had the institutions scrutinising you, you just need that much more data about the business which is just more work than we wanted to go through … less time making beer.”

That beer-first philosophy is very much shared by Garage Project’s Jos Ruffell.

Despite huge demand for its beers, which regularly sell out, Ruffell says he has resisted the temptation to dramatically expand production.

“We’ve had times where we’ve expanded and we’ve known that the expansion is not enough to sate the demand,” he says. “When you are doubling and quadrupling in size, to say ‘we need to go tenfold’ is a pretty scary proposition.”

Chasing volume has never been a focus, he says. Instead, Garage Project produces a huge variety of experimental beers.

It started out with just a 50 litre brewing system and produced 24 different beers in 24 weeks.

Those beers were a hit and proved there was a business model, says Ruffell.

So they did an angel investment round which included friends, family and some mentors who had been advising them.

Garage Project has since produced hundreds of beer varieties and has been able to fund further expansion with operating earnings, including a big move, just underway, to start producing at a new brewery in the Hawke’s Bay.

Even that expansion is about creating the opportunity to do more experimental things, Ruffell says.

“Then if our customers respond to that, it creates a virtuous cycle and allows us to grow,” he says. “We have beers that have become very popular and the traditional wisdom would be for us to devote 60 or 70 per cent of our capacity to them. But we’re not willing to do that, we want to keep doing the things that people love about us.”

But the fiercely independent approach doesn’t necessarily mean a lack of ambition for the business.

Ruffell cites family business Whittaker’s (whose chocolate Garage Project uses for some of its specialty beers) as a role model for the kind of business he’d like to create.

Eventually, a stock market listing could potentially be an exciting path to take, but that is a long way off, he says.

“If we got to a point where our fans and drinkers could come along for the ride, that would be really rewarding.”

For now, though, New Zealand has just one publically listed brewer – Moa.

Chief executive Geoff Ross is a share market veteran, having successfully listed and sold vodka company 42 Below last decade.

“Years ago, both Lion and DB were listed here in NZ … now we’re the only opportunity for local investors,” he says.

He can see why market listing is daunting to many brewers.

“There are pros and cons. There is access to capital. But the cons are a huge amount of compliance and a market which doesn’t like variability and change. When you are in a growth business it’s never a straight line.”

Ross says he’d like to see the New Zealand stock market more open to growth companies.

But he’s not sure the problem lies with the market itself. The challenge is with the broking and advisory community, he says.

“The KiwiSaver and a lot of the bigger funds just don’t look at early stage or high growth businesses. I think it should be a component, even just 5 per cent. I think it should be more than that.”

Ross says being listed works for Moa because it has big aspirations. It is seeking to challenge the distribution stranglehold Lion and DB have on the market.

“So we don’t have a plan to exit now. We have a horizon which is much greater than that.”

He can foresee a time when Moa will look to acquire smaller, more specialist beer brands to leverage its distribution network. He already has a distribution partnership with ParrotDog.

He remains upbeat about the outlook for the craft beer sector even though he can see risks of “gold rush fever” setting in.

“There will be a bit of a shakeout. There’s a lot of brands but there is a lot of growth … the next two to three years will see some consolidation for sure.”

There will eventually be two tiers of brands, he says.

“There will be those that have made a conscious step to capitalise and get capacity and scale up … and those who have chosen a more organic path.”

And you could argue that depending on your aspirations, either route is a good one to take.

Clarification

Garage Project will be the foundation brewer in the new bStudio brewery in Napier. It is not building the brewey itself.

First published – NZ Herald 26 Feb 2016

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First rocket ready to rumble

Rocket Lab’s first Electron vehicle has arrived at its launch site south of Gisborne in what the New Zealand company says is an important milestone for the space industry.

The historic test launch will take place in ”the coming months”, dependent on equipment testing and weather on the Mahia Peninsula.

Pre-flight checks would now start on the 17m tall rocket – with a call sign chosen by staff: ”It’s a Test.”

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Callaghan Innovation Stakeholder Advisory Group reappointments

Science and Innovation Minister Paul Goldsmith has today announced the reappointment of Claire Robinson, Brett Hewlett, and Suse Reynolds to the Callaghan Innovation Stakeholder Advisory Group.

“The reappointment of Ms Robinson, Mr Hewlett, and Ms Reynolds recognises the valuable skills and insights they all contribute to the advisory group, as well as their work to ensure that Callaghan is connected and engaged with its stakeholders,” says Mr Goldsmith.

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Wool a way forward in filter technology

Not-so woolly thinking has gone into developing technology touted as having the ability to improve global health.

Auckland-based Texus Fibre recently signed an investment and distribution agreement with another Auckland company, Healthy Breath Ltd, which would have the wool-based Helix Filter from Texus used in a new generation of urban masks marketed to Asian consumers.

Specifically-bred sheep, developed by Wanaka man Andy Ramsden, would be used to provide the wool.

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Facebook billionaire NZ citizen, owns Wanaka property

Controversial American billionaire, Trump donor and venture capitalist Peter Thiel has taken New Zealand citizenship and quietly acquired a Wanaka lakefront estate.

Property records show that Mr Thiels’ New Zealand-registered company Second Star bought a 193ha Glendhu Bay farm in 2015 described as a vacant lifestyle block.

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NZ mission to the moon ready for blast off

New Zealand is ready to join the space race, with Kiwi start-up Rocket Lab on the brink of launching a rocket to the moon.

After signing a partnership with United States outfit Moon Express in 2015 on a deal to send three rockets to the moon, Peter Beck – who founded Rocket Lab in 2006, said the last major technical questions had now been answered.

Beck said the ambitious project was almost ready to go and test launches were slated for the coming months from the Mahia Peninsula, on the east coast of the North Island between Napier and Gisborne.

“We recently qualified the first stage of the vehicle – this was the last major technical milestone ahead of the first test flight. We’re currently completing various final checks and working through international launch licensing,” Beck told the Herald from the US, where he is on a routine working visit meeting customers and other industry professionals.

“Rocket Lab has three test launches planned in the coming months followed by several commercial missions – Moon Express is not the first commercial mission. We’ll be making further announcements about this once the test flight phase is complete.

“Dates of the commercial launches will be announced following the completion of the test flight programme.”

Moon Express, a Silicone Valley-backed company which has completed a $28 million funding drive, wants to mine valuable resources on the moon, where it is believed there could be trillions of dollars-worth of precious metals and gases.

The San Francisco outfit is also chasing the extremely lucrative Google Lunar XPRIZE – a competition to land a privately funded spacecraft on the moon, travel 500 metres and transmit high-definition video and images back to Earth.

The competition involves 16 teams from all over the world battling for a $40 million prize purse.

“Moon Express have achieved several significant milestones in the last year. Notably, they have gained permission to be the first private company to travel beyond Earth’s orbit – this enables them, and others, to focus on space exploration – particularly of the moon, asteroids and Mars,” he said.

“Our team is heavily focused on the test flight programme – we have a comprehensive qualification process that each vehicle goes through ahead of a launch. Once that is complete, we’ll look to moving the first vehicle down to Mahia for the test flight.

“It’s certainly an exciting time for not only Rocket Lab but also the growing New Zealand space industry.”

FLY ME TO THE MOON:

• The moon is 384,403km from Earth.
• Rocket Lab’s Electron rocket has a range of 500,000km.
• Electron costs $6.8m.
• The components of Electron’s engine are all 3D printed.
• The world-first, battery-powered rocket engine is named the “Rutherford” engine – named after iconic Kiwi physicist Ernest Rutherford.

First published NZ Herald – 19th January 2017

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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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Hawkes Bay Angel Summit deemed a success for national and international attendees

The Angel Association of New Zealand’s annual Angel Summit in Hawke’s Bay last week was “brilliant” in every way, says executive director Suse Reynolds.
“The weather was gorgeous, the food was gorgeous and the people were wonderful,” she said.
She said it was a very productive two days for the 120 delegates, with some of the key issues being collaboration, the importance of New Zealand Inc and balancing investment with return – the conflicting need for return on investment with wider economic/social goals.
She said the Black Barn venue helped foster good relations between attendees.
“Business is all about people and it is important to build the foundations of trust.”
Angels flew in from throughout New Zealand and overseas.
“The New Zealand Angel Summit has a reputation for being the world’s best angel conference destination. Last year when we had it in Queenstown we had 50 international visitors from a dozen different countries. We didn’t quite manage it this time around because last year’s was the Asian business angels forum and this year we were back to our New Zealand Angel Summit, but we still had Australian’s Chinese, Americans, Canadians and one Skyped-in from Zurich.”
Summit activities included an address from Economic Development Minister Steven Joyce, a visit to Rockit Apples’ packing shed and a dozen investment-related presentations.
One of New Zealand’s most prolific angel investors, Trevor Dickinson, was awarded the prestigious Arch Angel Award in Hawke’s Bay, which recognises individuals who have “steadfastly championed the cause of angel investment and investors”.
He has made more than 50 investments in early-stage and startup companies – the vast majority of which are angel-backed firms from throughout the country. He is on the board of Wellington-based angel investor network Angel HQ, and received the organisation’s first lifetime membership based on the value of his investments made through the group.
Angel HQ manager Dave Allison said his contribution to the angel investment community was marked.
“The energy and enthusiasm he brings is extraordinary, whether it’s on the boards of companies, or advising entrepreneurs, or making deals happen by bringing people together,” he said.
The English-born former geologist worked in the UK oil and gas industry before mortgaging his house to develop state-of-the-art measurement-while-drilling technology.
GeoLink success allowed him to retire to New Zealand where he was a founding investor in startups including Lightning Lab, Wipster, HydroWorks, Nyriad, Cloud Cannon, 8i, Flick Electric and Times-7.
Former Arch Angel winners also include The Warehouse founder and long-time angel investor Sir Stephen Tindall and Andy Hamilton, chief executive of Auckland-based incubator and business educator The Icehouse.
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Lead Partners

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AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”