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

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

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

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

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$1.75 million boost to new Kiwi company Thematic

Kiwi company Thematic has received additional $1.75 million in seed funding to add to its already impressive list of clients just six months after launching.

The company, which uses artificial intelligence to take the leg-work out of analysing survey data, was started by husband and wife team Alyona Medelyan and Nathan Holmberg.

They were recently accepted into one of the world’s most exclusive startup accelerator programmes, Y Combinator, where they had the opportunity to pitch their business plan to Silicon Valley’s biggest names.

The company today announced it had received $1.75m in seed funding, led by venture capital firm AirTree Ventures. The fledgling business also received an investment from Y Combinator as well as a number of individuals and San Francisco-based angel investors.

Thematic already has big-name customers in six countries including Vodafone, Air New Zealand, Stripe, Ableton and Manpower Group.

“The aim is to grow the business further globally. The business is investing in new engineering, sales and marketing staff to fuel its growth,” the company said in a statement.

The founders now want to set up an office in the United States and start hiring sales people.
Thematic specialises in analysis of “free text” responses to targeted questions, which are the hardest to analyse.

“Our technology helps businesses to understand what their customers are saying at scale. It’s one thing to collect an NPS [net promoter score], it’s a whole different ball game to deeply understand the specific issues and themes driving that score,” the statement said.

Thematic’s technology enables clients to take into account written customer feedback —
the part of the survey that actually told companies what they were doing right and wrong.

Medelyan has a PHD in natural language processing and machine learning, while her husband and business partner, Holmberg, quit his job as chief architect for leading music software company Serato once the couple realised the technology’s potential.

First published in NZ Herald – 29th November 2017

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Kiwi startup developing prospective musicians through gamification

New Zealand tech startup Melodics has raised US$1.2m in seed capital to take its instrument learning software to more aspiring musicians.

The company, founded by former Serato CEO Sam Gribben, has successfully closed its latest round of investment led by Berlin-based music firm Ableton AG, with support from US accelerator 500 Startups, New Zealand investment funds Tuhua Ventures and K1W1, and Alex Rigopulos, founder of music gaming studio Harmonix.

“Our innovative approach to music learning has already helped over 100,000 finger drummers around the world,” Gribben says.

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Marlborough entrepreneurs launch new investment group 

A new investment group collectively worth millions-of-dollars has been set up in Marlborough with the aim of pumping capital into early-stage businesses in the region.

The initiative has been heralded as a means of encouraging entrepreneurship, and making sure Marlborough businesses with winning ideas get off the ground.

Picton-based businessman Richard Coon, who has founded 10 companies, five in his native United Kingdom and five in New Zealand, set up the investment group.

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Startups are finally revealed for the 2016 Auckland Lightning Lab Programme

Today, New Zealand’s premier digital accelerator has announced the ten digital startups that will embark on the 2016 Lightning Lab Programme in Auckland.

Reyedr, Wireless Guard, Foodcourt Online, Sonnar Interactive, WayWiser, Pheonix Audio, SeekStock, Dexibit, Slick Software, and Rock.ai all made it through the extensive application process to be the ten teams to receive $20,000 seed funding, intense mentorship, and the opportunity to work on the business 24/7 through the four month long Lightning Lab programme.

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Angel Association attracts major global investors to NZ

Hosted by the Angel Association of New Zealand, the 2015 Asian Business Angel Forum takes place in Queenstown, New Zealand, 14 – 16 October 2015.

The event, an expertly curated, three day and completely investor-centric summit subsumes the AANZ’s annual summit this year.

It brings together leading investors from around the world to share their knowledge and join together in celebrating this small country’s big contribution to early stage investment.

The AANZ is pleased to have attracted a stellar line-up of international speakers who bring with them hundreds of investment experiences and personal involvement in the most significant international investment funds and angel groups.

Their combined portfolios include some of the biggest, most important and well known early-stage companies in the world.

Thought-leaders gathering to present at ABAF in New Zealand’s beautiful Queenstown’s include:

Jayesh Parekh – Jungle Ventures, 500 Startups and Mumbai Angels

David Chen – AngelVest

Sasha Mirchandani  – Kae Capital and Mumbai Angels

Nelson Gray – LINC Scotland, Firth Ventures and winner of the Queen’s Award for Enterprise Promotion for individuals who have played an important role in promoting enterprise skills and supporting entrepreneurs,

Bill Payne – ACA, Hans Severiens Memorial Award for Outstanding Contributions to Angel Investing and 2010 New Zealand Arch Angel Award for his impact on angel investing in New Zealand

Jon Medved – OurCrowd

Ian Sobieski – Band of Angels

Jamie Rhodes – ACA, Central Texas Angel Network (CTAN) and Texas into the Alliance of Texas Angel Networks

Marcia Dawood – ACA Board member, MD, Golden Seeds and Blue Tree

Allan May – Life Science Angels, Emergent Medical Partners

and Carolynn and Jon Levy – the legal team from the United States most successful incubator – Y Combinator, which has launched the likes of Airbnb, Dropbox and Stripe.

Register-now

To see the entire stream of social media as Angels actively connect New Zealand to the globe, the latest from international guests, hashtags and other social networks in one place click here.

Using twitter you can follow the Angel Association of New Zealand at @AngelAssn, and keep up to date with the Asian Business Angels Forum news and the event itself as it unfolds by using the hashtag #ABAFNZ15.

To meet and hear from New Zealand’s largest gathering of global investment thought leaders, along with a host of angels from New Zealand’s angel investment community in person secure your seat now.

There are only 30 places left at one the southern hemisphere’s largest and exclusive investor events Asian Business Angels Forum, Queenstown, New Zealand, October 14-15 2015.

 ABAF2015, NZ

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Snapchat gurus get big bucks for US mission

The power of the eco-system, including accelerators and angel investors is powerfully illustrated in Mish Guru’s story.

After one accelerator programme, a spell in a start-up incubator and a tonne of two minute noodles, digital venture Mish Guru has a springboard of nearly half a million dollars to break into the US market.

It’s the place to be for founder Tom Harding and his team, because their software is designed to help businesses get bang for their marketing buck on Snapchat. And a big chunk of Snapchat’s hip, young user base is in the US—by late last year, 14 percent of mobile internet users were active Snapchat users, matched only the UK.

With work for music festivals like Rhythm and Vines, sports teams like the Breakers, Bigpipe Broadband and the band Jupiter Project on the company’s CV, Harding’s moved to the Big Apple to seize the growth opportunity.

Read more on www.idealog.co.nz

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Hon. Stephen Joyce introduces #AANZSummit14

Angel Association New Zealand Summit 2014

In Auckland, New Zealand, October 2014, over 120 Angels, members of networks and funds across New Zealand, along with international guests from the United States, Australia and Singapore came together for 2 days of mind sharing, networking and collegiality.

The event was introduced by AANZ Chair Marcel van den Assum followed by Minister Stephen Joyce who gave an opening address acknowledging the special role angel investors play across the country. The work they do, by choice, contributing to building the confidence, capabilities and capacity of entrepreneurs, investing in them to achieve success was recognised as bringing significant benefit to New Zealand’s economy and its positioning as an innovative and future focused country.

To view this video on youtube click here

ABAF2015, NZ

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Auckland accelerator startups win seed funding

More great ‘angel-food’ in the hopper. Congratulations to all the Lightning Lab companies selected in this next cohort of inspirational startups who will be seeking investment in three months time.  A web business that helps guys get advice from girls on what clothes to buy is among nine Auckland startups that have won seed funding and free advice.

Wear it Her Way and the other winners were selected from 200 entrants to receive assistance from “digital accelerator” Lightning Lab.  The companies get $18,000 in seed funding and will join a three-month course that provides “intense mentoring”, culminating in the opportunity to pitch their business to 200 angel investors.

Read more from Stuff.co.nz

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Angels & equity crowdfunding

The oldest equity crowdfunding market in the world is the UK. That market began in 2011, and has grown with an average annual growth rate of 410%.

It took until 2013 for angels and VCs to take much notice of equity crowdfunding in the UK. Now it is commonplace to see co-investment. In the UK 43.3% of angels invested through equity crowdfunding in 2014. 30% of seed investment in the UK was sourced through equity crowdfunding platforms in 2014. That figure is estimated to be 50% in 2015.

We’ve seen the first publicly listed company raise funds through equity crowdfunding. Currently we’re watching the first offer from a company that intends to list immediately after the offer closes.

We’re keen to shortcut the time taken to get angel / VC buy-in to equity crowdfunding in New Zealand.

Here are my thoughts on how angels and equity crowdfunding can benefit from working together in 2015.

Inspiring new angels

The AANZ and angel networks across the country do a good job of shining a spotlight on funding early stage businesses. However general awareness is still low, and angel networks can appear exclusive or inaccessible to many investors eligible to participate.

Equity crowdfunding inspires new angels in a number of ways:

  • Accessibility: Investment opportunities are broadcast widely, reaching many who would otherwise not hear about these opportunities.
  • Small investments: Most equity crowdfunding offers have a small minimum investment amount, such as $500 or $1000. This enables people to start investing in this asset class earlier in their lives. You can easily diversify $10,000 across a range of investments.
  • Learning: One problem with growing the number of angel investors is education. People will be reluctant to invest if they don’t feel that they know enough about the space. Equity crowdfunding gives newbies access to the same offer information, Q&A, and commentary as experienced investors. So everyone is part of the same conversation about an opportunity.

Many future members of angel networks will first invest in unlisted equities through equity crowdfunding. Angel networks should look at this future state identifying ways to use equity crowdfunding platforms as a feeder for their membership.

Referrals

Equity crowdfunding is carving out its space in the funding ecosystem. It will never replace angel investment or the other funding sources. That’s because some businesses are simply better suited to private angel investment or other channels.

At Snowball Effect we’ve had expressions of interest in equity crowdfunding from nearly 600 Kiwi companies. We always ask ourselves what value the company should be trying to capture alongside the cash. If that value is deep domain expertise from experienced individuals, for example, we’ll discuss whether introductions to suitable angel investors is the better path.

Further, we believe that very early stage businesses are generally not suited to public offers. Companies best suited to funding through convertible notes are not right for equity crowdfunding (the regulations don’t permit offers of convertible securities).

Companies should be aware of the range of funding options, and they should pursue the option which provides most value to their business. We’re committed to referring companies elsewhere if appropriate, and hope angels acknowledge and understand the equity crowdfunding option and can provide the same guidance to companies.

Co-investment

Each offer through Snowball Effect has attracted multiple individual investments of $50,000 or more. Private investors are using this channel, and we’ll continue to build that part of the market.

2015 will be the year where we see the first official co-investment between equity crowdfunding investors and an angel group.

The benefits are clear:

  • For angel networks, it provides an efficient way to top up a funding round.
  • For equity crowdfunding investors, it provides comfort that sophisticated investors have assessed the opportunity and have committed.
  • For the company, it’s an opportunity to harness the benefits of wide brand exposure and shareholder advocates that come with a public offer.

We’d love to hear your feedback on these collaboration opportunities.

Please get in touch with any thoughts or comments at [email protected]

This is a guest post by Josh Daniell who blogs regularly here.

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Seed co-investing critical to early-stage environment

As NZVIF celebrates its 100th investment in early stage ventures through the SCIF fund, the government is casting a critical eye over its future.

In my view, SCIF contributes a lot more than capital.

It enables Angel investors and companies to go further.

Since its inception in 2006 it has been instrumental in establishing crucial, professional, early stage investment disciplines and process that added credibility to an evolving sector.

The 100 investments it has made to date have provided a goldmine of early-stage benchmarking data that otherwise would not have developed.

And, having SCIF as a shareholder investor has given additional credibility to New Zealand start-up deals because it only co-funds with certified angels (with established professional disciplines).

It is too early in the life of SCIF to draw any RoI conclusions from current performance, which is indicative of any portfolio of high risk / high reward companies. Another 3-5 years of sustainability is critical to enable the portfolio to achieve its full potential. SCIF has extended the capital angels could put into deals, and like the members of the Angel Asociation’s groups and funds, being consistent with its support will help it realise greater returns.

Further more, growing the number of NZ angels requires certainty in terms of government policy levers. Our’s is an environment that by its very nature is dynamic, the support SCIF has provided thus far has helped New Zealand’s early-stage investment community to flourish.

I applaud the recent media profile through articles in Business Day by Andrew Duff and Fiona Rotherham in support of the significant value SCIF has generated for the NZ start up eco-system.

I look forward to reading more from the members of AANZ groups and funds providing their views.

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SCIF crucial to co-invest with Angels

A seed fund that has proved critical for co-investing with angel groups in promising Kiwi start-ups is close to running out of money and is asking for a government top-up until it becomes self-sustaining.

Already the New Zealand Venture Investment Fund’s (NZVIF) Seed Co-Investment Fund is facing constraints in who it now partners, given it has only enough cash to last less than another two years if it continues investing at its current level of $5.4 million a year.

NVIF established the seed fund (SCIF) in 2006 to support the development of formal angel investment – the next step beyond family, friends and high-net-worth individuals – in New Zealand. The way it works is angel groups apply to partner with SCIF and any private capital investment is then matched dollar for dollar by the government-funded SCIF, up to a half-million-dollar limit per company.

The fund has invested in 116 companies and spent a total of $29.93m of the Government’s $40m establishment capital.

Returns to date from the five companies it has exited – which include HaloIPT and Green Button – have brought in $3.6m. Although the fund is allowed to recycle those returns into new investments, it’s not likely to generate enough in the next two years to keep going without a further capital injection or a government underwrite.

NZVIF chief executive Franceska Banga said they were talking to the government now about further funding of about $20 million to $25m by 2016.

The fund should be on track to become sustainable from its returns by 2018 or 2019, said fund investment manager Chris Twiss.

“We have to get some certainty around the funding as we’re hamstrung at the moment in forming new partnerships and it’s impacting on our operations,” Twiss said.

The seed fund’s portfolio ranges from hi-tech robotics to healthcare, agri-tech to paint tinting technology and more than 40 per cent of investments are software related.

Banga said it was too early to predict overall investment performance as most of the companies were still at an early stage – averaging three years of investment. It takes on average seven to eight years for returns to come through.

As of last year the fund had about 20 per cent of companies that had failed or were no longer having additional funding by its investors, which is in line with the experience of overseas seed funds. Twiss said about 10 had been liquidated and a further 20 had just gone dormant, with investors deciding not to throw good money after bad.

These funds are inherently high risk, although the seed fund’s risk is lower through being diversified among its partners. Banga said the common thread among the non-performers included technology failing to live up to its initial promise, poor alignment between the founder and investors on the company’s future direction, not having the right capabilities within the company to make it grow, and being too slow to come to market ahead of competitors.

Although the fund kicked off in 2007, it took a while to establish partnerships with angel groups and make investments. It has partnered with 15 angel groups since its establishment…

Read more on Stuff.co.nz

 

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Angel investors prefer web companies

Investors in start up companies prefer web based software and services according to a recent survey by Angel Association New Zealand.

Angel investor’s preference for software companies is followed closely by technology hardware and equipment, then biotech and life-sciences.

Angel Association Chair, Phil McCaw said “around half of angel investors invest more than $30,000 on each deal, with twenty percent having up to $100,000 to spend.”

“Thirty percent of angels preferred deals involving $250,000 to $500,000 in the first round of funding being sought by a company. Investing in deals at concept stage with the product and market still needing validation was least popular. Investors prefer companies with a proven business model and some sales.”

“Angel investors bring expertise with their capital. Over a third of investors are prepared to roll up their sleeves and get deeply involved in preparing a venture for investment.

The Angel Association surveyed its members including those running seed funds and individuals who are members of formal networks. New Zealand has half a dozen managed funds investing in early stage ventures and approximately 200 angels belonging to networks based in Otago, Christchurch, Nelson, Wellington, the Manawatu, Tauranga and Auckland. A quarter of the members responded to the survey. Industry publication Young Company Finance reported the survey results in the March 2012 issue.

Angel investors have cumulatively invested $220 million into high-growth companies since 2006, in an average deal size of $540,000.

Contacts

Colin McKinnon, Executive Director, Angel Association New Zealand Incorporated
+64276406400
[email protected]

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Crowdfunding door opens for NZ corporates

First published in New Zealand Herald Wednesday April 2, 2014

New rules enable firms to raise up to $2m a year without having to issue a prospectus.

Around a dozen companies have indicated interest in setting up crowd-funding or peer-to-peer lending platforms as new rules come into force making it easier for businesses to raise capital. The first regulations in an overhaul of capital markets law came into effect yesterday, opening the door for these new platforms to be set up. Equity crowd-funding involves members of the public providing capital to businesses in exchange for shares.

The new regulations introduced by the mammoth Financial Markets Conduct Bill, which came into force yesterday, enable companies to raise up to $2 million a year in crowd-funding without having to issue a prospectus. Peer-to-peer lending, which allows businesses or individuals to borrow funds from the public, usually through an online platform, is also covered by this new regime. Both equity crowd-funding platforms and peer-to-peer lenders need to be licensed by the Financial Markets Authority.

The FMA has already received around a dozen “expressions of interests” for these licences, which companies could apply for from yesterday, a spokeswoman said. “While applications will not be processed overnight the process is expected to take a matter of weeks rather than months. However, this will also depend on the quality of information provided by applicants,” she said.

As well as paving the way for equity crowd-funding, the new regulations also allow for companies to raise up to $2 million from 20 investors in a year without needing to issue a prospectus or investment statement. New Zealand Private Equity & Venture Capital Association executive director Colin McKinnon said this “small offer” provision would make the capital raising process easier and mean there aren’t as many hoops to jump through. The Icehouse chief executive Andy Hamilton said the provision would save the likes of the Ice Angels investment network “a substantial” amount of time. McKinnon said the capital-raising sections of the law would contribute “to a vibrant capital market from angels [networks] through to private ownership to the public market”.

Law firm Simpson Grierson said both the crowd-funding provisions and the small offer provisions were “particularly relevant to start-ups” and would provide them with more options to raise money without having to go through the “expense of full disclosure”. While he called parts of the new regime exciting, Hamilton said it was unclear what sort of crowd-funding deals would be successful. “Is it going to be consumer-facing companies trying to take advantage of their band of loyal followers who might put in a few hundred dollars each or is it actually going to be a platform where you see bigger investment rounds being done?”

Market watchdog gets sharper teeth: expert New Zealand’s market watchdog now has an “immensely powerful, proactive toolbox” to stamp out misleading behaviour before people are harmed as new regulations kick in today, says Chapman Tripp partner Roger Wallis. A centrepiece of the new capital markets rules is a section banning misleading and deceptive conduct and Wallis said this part was “immensely powerful”. “Particularly when it goes hand in hand with the new tools which the FMA [Financial Markets Authority] have,” he added. If the FMA believes something has been misrepresented, rather than prosecuting someone five years after the fact it can stop the relevant material from being distributed. “So, for example, if they don’t like something they can basically put out a notice saying stop doing it … let’s say there’s a backdoor listing out there. They [the FMA] don’t think the disclosure’s up to scratch, they could issue a notice requiring people to correct their disclosure or provide additional information,” Wallis said. “They could stop distribution of materials until the materials are brought up to scratch.”

Read the original article from New Zealand Herald

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Movac powers up PowerbyProxi

PowerbyProxi is a capital-hungry hard-tech start up. So what convinced Movac this one was a good bet?

Apart from his electric toothbrush, David Beard says he knew nothing about charging wireless devices. But when he and his partners at angel and growth capital investment firm Movac encountered PowerbyProxi in 2008, they quickly recognised the commercial applications for wireless charging and realised they’d remained unexploited for too long.

When you’re working in the field you can’t drape cables everywhere to power machinery or connect wirelessly, as you can to the internet, to power your devices. So PowerbyProxi’s founders set about finding ways for devices to be unplugged from their source of power in hostile industrial environments, without resorting to unreliable cables, using a process called electromagnetic induction.

The brains behind PowerbyProxi is Fady Mishriki, who studied wireless power at the University of Auckland. Initially his focus was on miniaturising the technology for consumer electronics. But after meeting serial entrepreneur Greg Cross through the University’s business incubator, The Icehouse, this changed when the two discovered the amount of capital required and the number of potential competitors trying to do something similar.

“He was dead-set on building a technology company based on the University’s heritage in wireless power research,” says Cross of his co-founder. “Over the past 30 years the university has done more research on wireless power than any other organisation in the world. The IP portfolio and availability of world-class engineers provides us with what I refer to as unfair competitive advantage on the global stage.”

After a lot of market research Cross and Mishriki decided to join forces in 2007 and focus on the less competitive industrial market. But to get the company off the ground and up and running quickly, Cross and Mishriki needed investment, so Cross approached Movac.

“We took a reasonable amount of convincing that this technology was able to solve a large number of industrial and consumer problems,” Beard admits of Movac’s first meetings with Cross and Mishriki. “It was really more about execution than that the technology might be useful.”

Cross’s involvement certainly helped; Movac’s partners had met him at the entrepreneurs’ conference Morgo and had dealt with him on a previous venture he’d sought to fund. But Beard and Phil McCaw, Movac’s managing partner, recognised PowerbyProxi wasn’t just a technology startup; it was a ‘hard-tech’ – hardware products, not just software – startup. “Hard-tech companies require at least $5 million to $10 million to make them successful on the world stage,” says McCaw. That meant PowerbyProxi wasn’t suited to a typical angel investment scenario and was going to require significant support upfront and for the long haul. There just aren’t that many individual investors in New Zealand who’d invest such a large sum in a single, high-risk venture, says Beard.

What intrigued McCaw and Beard in their early conversations with Mishriki and Cross, however, was the discovery that Auckland University’s School of Electrical Engineering was a world-leader in wireless power technologies. “They realised the University of Auckland research, led by Professor John Boys over the last 20 years, gave us a hard competitive edge on the global stage,” says Cross.

Movac backs PowerbyProxi

Movac began backing start-up opportunities in 1998, funding its way with the help of cash generated from its founding partners’ day jobs in management consulting. Its first big success story was Trade Me, which allowed McCaw and his partners to turn their part-time passion into a full-time venture.

In 2005 Movac began putting together their second seed investment fund and used this to invest in PowerbyProxi. “We made about 16 investments out of that fund,” says McCaw.

Since then Movac’s participated in a further three investment rounds in PowerbyProxi from its third, later stage, growth capital fund, Fund 3, giving it both a seed fund interest and a venture fund interest in PowerbyProxi. For companies to succeed, ideally they need to raise more capital than they need at each capital raising, says Beard. “It stops you having to put your business in ‘minimum burn’ mode while you rattle the cup around again. That’s terribly distracting to a company and its growth aspirations.”

Movac began backing start-up opportunities in 1998, funding its way with the help of cash generated from its founding partners’ day jobs in management consulting. Its first big success story was Trade Me, which allowed McCaw and his partners to turn their part-time passion into a full-time venture.

In 2005 Movac began putting together their second seed investment fund and used this to invest in PowerbyProxi. “We made about 16 investments out of that fund,” says McCaw.

Since then Movac’s participated in a further three investment rounds in PowerbyProxi from its third, later stage, growth capital fund, Fund 3, giving it both a seed fund interest and a venture fund interest in PowerbyProxi. For companies to succeed, ideally they need to raise more capital than they need at each capital raising, says Beard. “It stops you having to put your business in ‘minimum burn’ mode while you rattle the cup around again. That’s terribly distracting to a company and its growth aspirations.”

McCaw says Movac is committed to PowerbyProxi “for the long haul” and it will need that tenacity: Cross’s vision for PowerbyProxi is to build a company that puts wireless power on every surface in every room of every home and office.

“Export or die,” the words of Waikato businessman and founder of Trigon Packaging Bill Foreman resonate with the PowerbyProxi co-founder. “

Cross and Movac’s considered and ambitious risk-taking in PowerbyProxi is already starting to pay off, with listed US electronics firm TE Connectivity announcing it was taking a near 11% stake in the company in April as part of a $5 million capital raising to help the company accelerate sales. TE Connectivity’s industrial division in Germany has already helped PowerbyProxi take its ARISO contactless connectivity platform to Market.

“Entrepreneurs not bureaucrats are the one who will unlock the commercial potential of New Zealand’s top researchers,” says Cross.

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Lasers solve dairy sperm problem

The director of the University of Auckland’s Photon Factory, a high-tech laser research hub, was more interested in ultrafast lasers when she first met angel investors from tech investment firm Pacific Channel.

“They basically told me there were five big problems facing our dairy industry and asked if I could help with any of them,” says Simpson.

“I didn’t know anything about sperm sorting when I met them. I didn’t even know it was a problem. But that was the challenge that seemed most amenable to a physical, rather than a biological solution.”

It took three years, but Simpson and her team have gone from neophytes to solving one of agriculture’s most nagging problems. Their research – conducted under a new spinoff company, Engender Technologies, has led to a provisional patent on a technology that should be able to sort sperm cells by sex, quickly, inexpensively and without any loss of function.

The only currently available sex sorting method, flow cytometry, uses an electric field to separate male and female sperm in the field.

However, the stress of the process often results in underperforming sperm, thus negating the benefits of sex selection.

Engender’s technology is a direct result of The Photon Factory team’s deep knowledge of photonics – the study and use of light for energy – and what lasers can do when they flash in short, extremely rapid bursts.

The factory’s $1.7 million high-tech laser research equipment includes a femtosecond laser that can emit light pulses lasting in the order of millionths of a billionth of a second.

Engender was formed with co-funding from the University of Auckland’s technology commercialisation arm, UniServices, and Pacific Channel.

Pacific Channel managing director Brent Ogilvie says he and his colleagues originally approached Simpson with their “five problems” because of her reputation.

“The key to early-stage investing is listening carefully to markets and backing talent.

“There are pockets of genius all about the country, so you can’t be too prescriptive about picking sectors, but clearly dairy is something we do very well.”

Ogilvie says the trillion dollar livestock market is dominated by eight or nine artificial breeding providers worldwide.

Pacific Channel provides a bridge between New Zealand’s “world-class science” and the realisation of commercial value, he says.

“What we’re doing is applying our problem analysis abilities and the ability of clever people to do cutting edge research in their own area of expertise at the same time,” says Simpson.

“There is no doubt that advanced, high-tech science and engineering can add power to the New Zealand economy. We find it very rewarding to be part of that effort.”

Produced in conjunction with the Angel Association of New Zealand.

First published in the New Zealand Herald on Thursday March 20 2014

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Talent before ideas: incubator boss

First published in New Zealand Herald Thursday March 6, 2014

A blueprint for the next WhatsApp – sold to Facebook for a cool US$19 billion ($22.6 million) last month – would be a good start. A business plan for another Trade Me or Xero might be a beginning.

But according to entrepreneur-turned-investor Stefan Korn, a tech startup won’t get very far on an idea alone, however innovative that idea might be.

“Ideas are overrated,” he says. “Yes, you need a point of difference, but what you are really looking for is talent.”

Korn has been in the business of picking winning tech investments for a while now. Before taking over as chief executive of Wellington-based tech incubator Creative HQ last September, he founded several startups through WebFund, a private incubator he set up in 2007.

Incubators such as Creative HQ and WebFund provide startups with all the ingredients they need to grow – finance, expertise, contacts and resources – in exchange for a stake in the business and, less often, some heavily reduced advisory fees.

Increasingly popular, however, are accelerators, which work on a similar principle but over a far, far shorter timeframe and normally have a gaggle of angel, or early stage, investors who co-invest alongside the organisation once the startup’s been put through its paces and graduates.

New Zealand has one – Creative HQ’s Lightning Lab, which provides up to $18,000 in seed funding and aims to get a startup functioning and off on its own within three months in return for a stake of about 8 per cent.

The country needs incubators, accelerators, angel investors and venture capital firms to work together because that’s how the world’s tech hotspots such as Silicon Valley got where they are today, Korn says.

“They reinvest funds from earlier projects into new start-ups. Eventually it becomes a self-feeding mechanism, but it might take place over several decades. You have to take a long-term view.”

Since it was established in 2003, Creative HQ has helped more than 100 ventures, Korn says, but it turns away a lot more applicants than it takes on.

Potential candidates are assessed against an “evaluation matrix” with more than 20 different criteria. Innovation or the strength of the idea is just one aspect, Korn says.

“What’s more important are the background skills a team has. What insights into their business area or industry they bring, what networks they belong to and whether they can sell.”

The strength of the team is vital because at some point every startup will reach a critical point where it has to choose a way forward, change direction or focus on a particular area, Korn says.

“The team has to be able to make that decision when it happens. Otherwise all you’re left with is a great idea but not a viable business.”

According to Korn the investment climate in New Zealand compares well with other countries but sometimes the vision of local investors leaves something to be desired.

“New Zealand investors have usually made their money with traditional business models. They tend to have come from primary industries or property development so they don’t often ‘get’ how tech startups work.

“Traditional investors tend to look for indicators which make sense in their world. They might focus on the startup’s location or physical assets for example, which are irrelevant in our world.”

While New Zealand’s incubators and Lightening Lab accelerator educate eager startups, Korn hopes Creative HQ’s new investor boot camps, which are expected to start this year, will go a long way towards educating investors.

“The bootcamps will explain to investors what to look for in digital startups.

“We’ll cover things like what is involved in the due diligence process of early stage, high-growth ventures and what happens after the investment has been made; how to find out how the startup is doing, for example.”

Produced in conjunction with the Angel Association of New Zealand.

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Algae find sets firm on road to success

It makes salmon and cooked shellfish red. It’s in demand from marathon runners, performance athletes and the sports recovery market as a food supplement and its antioxidant qualities mean it may be beneficial in treating cardiovascular, immune and neurodegenerative diseases.

Auckland businessman and angel (or early stage company) investor Ray Thomson also stumbled across astaxanthin and Dowd’s fledgling astaxanthin company Supreme Biotech while at the Natural Products Conference in Nelson in 2010.

Traditionally New Zealand angel investors have been reticent about biotech but the sector’s image has been boosted recently by the outstanding performance of cancer diagnostics company Pacific Edge, says Thomson, who’s also chairman of the NZ Angel Association.

With revenue now at about $1 million a year, Thomson predicts Supreme Biotech is about six months away from breaking even and unlikely to need another angel funding round.

Angel investing is fundamental to New Zealand’s future wealth, says Thomson, and using the knowledge and experience of successful executives to mentor early-stage entrepreneurs as angels do is crucial in whether a new company succeeds or not. “[It] isn’t just about money. It’s about giving these entrepreneurs some real leadership and help along the way, that’s why it’s so exciting.”

Full story first published in the New Zealand Herald on Thursday February 13 2014

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Angel investment in two firms backs new particle analysis technology

The technology aims to make it easier and quicker to test and treat animals in the field. Photo / Tania Webb

Greg Mirams’ initial foray into the investment world didn’t go so well. The founder of animal parasite diagnostics company Techion Group was no stranger to capital raising, having set up, sold and bought back Techion. But when he tried to get investment for a new technology that could transform his business he was left out in the cold despite an intensive six-month courtship.

“It was crushing,” he says.

Mirams was seeking $300,000 for Menixis, a start-up company he co-founded with nano-scientist and director of Otago University’s applied science programme Stephen Sowerby.

Menixis holds the intellectual property to a new particle analysis technology developed over more than two years by Sowerby and Mirams. It could transform particle analysis in the field, replacing the need for microscopes or the skills to use microscopes to accurately identify and count particles, such as the number and type of parasitic eggs in a sample of animal faecal matter.

Mirams developed the technology to update Techion’s internationally popular parasitic diagnostic tool Fecpak to make it easier and quicker for farmers to test and treat their animals in the field.

It will also bolster Techion’s revenue by increasing its own monitoring and advisory capacities.

To Mirams the whole deal was a no-brainer. Why wouldn’t you invest in a new technology that already had a customer not only willing but keen to sell it to its significant local and international customer base, built up over more than 20 years?

Fortunately Mirams had been introduced to angel investor Bill Murphy, who decided to champion Mirams’ cause in his Bay of Plenty Enterprise Angel group.

“I just passionately believed we shouldn’t let this opportunity to invest in some significant new primary industry technology pass us by,” says Murphy.

Mirams pitched again, but was thrown when told the Angels liked the product, but wanted to roll Menixis’ technology into Techion and then invest in Techion. “We wanted to secure the connect between the IP and the market,” explains Murphy.

But that didn’t work for Mirams.

He argued that first, Techion had multiple business activities, complex operations and an established shareholder structure; second, Menixis co-founders Sowerby and Otago Innovation would end up with a relatively small shareholding in Techion, which wouldn’t give them as much incentive to continue to develop the technology; and third, the technology itself had far more potential than just animal parasitology (Techion’s focus).

“There are potential applications for this technology in the area of microscopic analysis of any small particle including algal blooms, pollen analysis and in the petrochemical and forensic evidence industries, none of which I know anything about, so Techion just isn’t the right vehicle for that. There’s also this massive opportunity for improving the speed of human parasite diagnostics.”

Murphy and his 13 co-investors at Enterprise Angels agreed and a novel deal was struck to invest in both Menixis and Techion to give Mirams the capital he needed to turn the technology into a commercially saleable product.

Mirams and Murphy say this deal could have implications for investors and companies. Both get the security of investing in growing existing revenue streams, plus the upside of investing in new and potentially even bigger revenue streams.

“My hope is this deal becomes a kind of blueprint for a new New Zealand growth model,” says Mirams.

Produced in conjunction with Angel Association of New Zealand

First published in the New Zealand Thursday November 21 2013

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Firm uses cell network, cloud for surveillance work

Imagine you’re charged with managing a number of rural properties from a distance. Private landfill sites or parks and forestry land, for example. How would you protect against fly-tippers (illegal dumping), vandals or arsonists?

Video surveillance is expensive and technically difficult, especially when your locations are far from your base. Transferring your surveillance footage from one place to another needs a high-capacity broadband connection, which isn’t available in many remote locations.

Husband and wife entrepreneurs Helen and Scott Wattie founded their business Mi5 Security with business partner and director Nick Mooyman and decided to target this untapped potential market.

“Technology’s solving a problem where once only a human response was possible,” Helen says.

Mi5 uses the cellular network and its proprietary cloud computing platform, iDefigo, to keep tabs on remote locations.

This simplifies surveillance and monitoring of remote environments, even where power and Wi-Fi aren’t readily available.

Surveillance footage can be transferred using only modest amounts of bandwidth.

The business is based on four interwoven revenue streams – video surveillance as a service subscription via the cloud, mobile data services, platform licensing fees and hardware sales.

But the Watties soon realised having a product on the market and their business processes and structures in place weren’t enough if they wanted to develop the business quickly. They approached angel investor and entrepreneur Scott Gilmour for advice on raising capital to fuel their expansion plans.

They’d first met Gilmour through the Software Association. Initially, it was not their intention for him to invest in the business – they simply wanted his advice on where to look for investment, says Helen.

“Scott quickly introduced us to the possibility of gaining angel investment at a critical growth stage of our business.”

Gilmour, meanwhile, was an established angel investor, having worked at Intel for more than 12 years and was founder of the “I have a Dream” charitable trust in ths country.

Mi5 security was an interesting-sounding investment opportunity, he says, but he was initially more attracted by the founders’ commitment to the company.

“I got to know them and the company and I just thought they were good people, which is my prime requirement for getting involved.”

Gilmour is a founding member of the Ice Angels, the largest group of angel investors with more than 100 members. With a decade of Ice Angels experience, as well as seven years on the advisory board of Trade and Enterprise’s Beachheads Initiative (which connects companies to a network of private sector advisers), Gilmour says between 30 and 40 companies present their business plans to him every year, but few grab his attention like Mi5 did.

Gilmour became chairman of Mi5 Security in July last year and has since raised more than $1 million in two finance rounds, helping pave the way for the company’s expansion into Britain.

From their earliest discussions Gilmour understood Mi5’s proposition, Helen says, and having such a good and committed chairman has been instrumental in helping the company to grow quickly.

“Without Scott as the communication gateway between ourselves and our investors, we’d find ourselves crippled by paperwork and frustrated by the time spent educating people on our business and justifying our decisions.”

Like many high-tech start-ups Mi5 isn’t profitable yet as it’s reinvesting for growth, but it already has many customers here and in Australia and channel partners, as well as a growing UK and mainland European presence.

But it faces the same challenges all Kiwi tech companies do, says Gilmour: access to capital, management capabilities and distance from market. So the Watties are now based in London.

Produced in conjunction with the Angel Association of New Zealand.

First published in New Zealand Herald on Thursday November 7 2013

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Rehab firm needs more to take the next step

Elliott Kernohan, chief executive of rehabilitation technology company IM-Able, embarked on a $1.25 million capital raising round at the 2012 Angel Association of New Zealand Summit in Wellington.

Before the summit he’d had $640,000 pledged from Cure Kids Ventures, which is interested in the company’s technology for children with cerebral palsy, so the end was in sight. But no end came.

The company managed to attract only another $200,000. Not enough to close the round, take the money and put it to work, says Kernohan. “we’ve moved away from the angel networks to focus on investors who have experience in the healthcare sector. So the conversations we’ve been having have been a lot more successful.”

Kernohan echoes Polybatics head Tracy Thompson when he says capital raising is difficult in New Zealand for budding healthcare companies. He also suspects IM-Able (pronounced “I’m able”) was a little too far down the track for angel investors, requiring perhaps a little too much money for their comfort. The trouble is, to take these projects any further requires capital, says Kernohan. The grand scheme to translate its technology to the web, to give clinicians the ability to develop large-scale rehabilitation programmes for stroke victims and others who suffer from neurological problems, is also on hold until the round closes.

First published in the New Zealand Herald on Friday October 11 2013

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Bread man uses his loaf to beat crate conundrum

Steve Haythorne says his Mobot can save firms thousands.

In his past life as a supply chain manager, entrepreneur Steve Haythorne would send 30,000 loaves of bread from Auckland to Whangarei each night. But he noticed a problem – each of the three trucks it took to do the job was only 60 per cent full.

Haythorne’s conundrum stemmed from a baking industry convention: standard loaf crates were stacked in piles of 12 or 13, which was as high as they could be stacked to allow the delivery guys to heft them around on a handbarrow and reach the top to unload.

The stacks were too low to fill up the trucks, but still heavy and dangerous, Haythorne said.

“It’s a very labour-intensive job that involves a lot of man-handling as well as creating a dangerous environment … I thought there has to be a better way.”

After searching for some handling machinery that could do the job better drew a blank, Haythorne set about creating his own.

The result is Mobot – an all-electric, stand-on, zero-turn device designed to move items that are too small for forklifts but too heavy to be safely moved by the ubiquitous handbarrow.

A Mobot is manoeuvrable enough to work within the confines of a delivery truck.

It is capable of lifting a stack of 10 crates and then putting another 10 on top, so it can fill a delivery truck to its full height, Haythorne said.

“That results in a massive financial payback. A Mobot could save that Whangarei bread run $700,000 annually, because it can now be made by two trucks instead of three.”

The machines will also vastly improve health and safety conditions, increasing workplace productivity and reducing ACC costs, he said.

After receiving some early expressions of interest in a concept vehicle he built more than 18 months ago from his then-employer, Goodman Fielder, as well as Fonterra and bread maker Tip Top, Haythorne quit his job to work full-time on his new company, Mobotech.

“I sold my house, all my shares and went into hock on everything and just poured it all into getting a prototype vehicle together.”

A year ago Haythorne showed that prototype to the guys at angel investment firm Sparkbox Ventures. They liked what they saw and invested seed capital of $200,000 from the Global from Day One fund – a joint venture between Sparkbox and Auckland business incubator The Icehouse, with half the funding matched from the Government’s New Zealand Venture Investment Fund.

A further boost was given to the fledgling company with a $112,000 grant from Callaghan Innovation.

Sparkbox venture principal Mark Robotham said Mobots had great market potential.

“The niche market in the bread and milk sectors is enough to make the business very successful, but there are other opportunities to extend it to wider markets,” he said.

“What we’re trying to do with companies like this is get engaged very early on to ensure they reach global markets as quick as they possibly can … it’s all based on the rationale of grow fast [or] fail fast.”

Haythorne has used his seed funding to create a final prototype, which he plans to show at a world baking expo in Las Vegas this month.

He’s also about to embark on a second investment round to help fund Mobot’s manufacture and initiate sales in the US. Already having a track record with funders will make that process a lot easier, he said.

“I’m just very appreciative that the angels elected to get in behind the idea because it never would have gone anywhere without them.”

Produced in association with the Angel Association of New Zealand.

First published in the Herald on Thursday October 10 2013

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BioLumic raises GD1 funding for offshore growth

Plant science company BioLumic has successfully completed a new investment round with backing from the Global from Day One programme (GD1). The investment will finance customer trials and a foray into international markets.

BioLumic is a Palmerston North company which is commercialising ultra violet light technology developed to improve crop growth within large scale horticultural systems. Its proprietary UV and ‘Smart Array’technology is able to control plant size, growth, stress tolerance and a range of consumer quality attributes in a way that has never beforebeen commercially achievable. “BioLumic is a very attractive investment proposition due to the significant potential of its technology to increase returns for high volume vegetable and algae growers internationally,” says GD1 chief executive Greg Sitters.

“The company is still at an early stage of developing technology that has massive worldwide applicability. The technology will revolutionise the way plants are grown. This kind of early stage investment in companies with immediate global potential is precisely the sort of opportunity which GD1 is very interested in backing.”

“BioLumic is fortunate to have the backing of a GD1 investment to follow our initial fundraising through the MIG Angels’ Fund 1 and the New Zealand Venture Investment Fund’s SCIF fund,” says Warren Bebb, BioLumic general manager.

“This latest investment enables us to conduct extra customer trials and engage more with potential international partners and markets. As a result of this funding, we will be in a strong position to have our first product in market by the end of 2014.”

The science behind BioLumic was developed by Dr Jason Wargent, an applied plant physiologist at Massey University. The company was founded in November 2012. Palmerston North-based BCC has to date managed the commercialisation process, and the company has also received a Callaghan Innovation Project Grant and a loan from the Central Energy Trust.

“The MIG Angels identified BioLumic as a company with high potential and invested in it through MIG Fund 1,” says Mike Creed, who represents MIG Fund 1 on the BioLumic board. “We are happy with the progress the company has made so far and absolutely welcome the investment by GD1. Increasing the cash on hand will give the company a bit more breathing space as it works towards its milestones.”

Bebb says BioLumic will soon begin customer trials at two sites in the North Island; the company will start small-scale customer trials later this month, and larger scale customer trials are scheduled to begin in November.

BioLumic has recently completed filing its PCT patent in New Zealand and, over the next year, says Bebb, the company will determine in which other countries to file. He expects the first commercial prototype to be available for testing by the end of 2013 and the second prototype, incorporating modifications of the first, is planned for trials in mid-2014. The company expects to be in production towards the end of 2014.

BioLumic (www.BioLumic.com)

BioLumic is a plant science company based on science developed at Massey University. Through manipulating exposure to doses of UV light, BioLumic’s IP has been shown to optimise plant growth for desired effects including yield, disease control, colour and flavour. Current applications of the technology are being developed that include treatments for transplant crop seedling quality; growth and quality regulation of fully indoor produced leafy vegetables and high-value salad herbs; and pathogenic disease treatments for a range of horticultural crops. The company is also investigating other applications of the technology such as manipulation of desired characteristics in the biological material for nutraceuticals, pharmaceuticals and algae.

Global from Day One (www.globaldayone.com)

GD1 is a seed investment fund which has up to $4.6 million available for investment – having raised $2.3 million from private investors and with access to matching co-investment from the New Zealand Venture Investment Fund. It aims to invest into around 25 start-up companies with international ambitions over the next four years. Nationally-focused early stage investor Sparkbox Ventures is managing the fund.

MIG Fund 1 (www.thebcc.co.nz/cms/page.php?view=mig)

Established in 2007, MIG Fund 1 targets potential investments at the seed and start-up phase of emerging businesses. Potential investments can be in any sector and come from across New Zealand, although MIG Angels are particularly interested in potential investments from the wider Manawatu region. With the fund nearly fully-subscribed, the MIG Angels are planning to launch MIG Fund 2 in 2014.

BCC (www.thebcc.co.nz)

Based in Palmerston North, BCC turns innovative ideas into thriving new businesses. It secures investment funding to grow technology businesses, offers management support and mentoring for start-ups, and facilitates the journey from concept to commercialization.

Media contact
Warren Bebb
General Manager
BioLumic Ltd.
DDI +64 6 352 0102 M +64 21 799 257
[email protected]

For GD1, contact David Lewis 021-976 119

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Pigment firm’s founder impresses investor

First published in the New Zealand Herald on Thursday August 22, 2013

Angel investor and promoter Brent Ogilvie is tickled pink about his latest investment, colour company D’Arcy Polychrome.

The startup – which has come up with a way to encapsulate and deliver colour through dry pigments to colour paint, concrete and plaster – has a disruptive technology, solid IP position and large and multiple potential markets on its hands.

But ask Brent Ogilvie, angel investor and director of science and technology investment firm Pacific Channel, what attracted him to back the Auckland-based company and he’ll tell you first and foremost it was the person behind the venture, founder Rachel Lacy.

“She has an enormous amount of energy, as well as experience in the paint industry,” Ogilvie explains. “Her mother had a chain of upmarket paint stores in New Zealand and her father is an architect, so she literally grew up in that paint and decorative industry.

“So when she said she had identified a niche you’re more likely to believe that and it’s easier to get the data to validate that.”

Pacific Channel was also impressed by overwhelming expressions of interest in the technology from the paint and concrete industries.

The incumbent technology to tint paint involves dispersing a limited range of liquid colourants through a tinting wheel at your local paint shop. But changing the form in which colour comes – from liquid to dry – opens up a world of new possibilities, including the ability to buy colour separately from a base paint, to distribute it directly online, or develop whole unique colour palettes for high profile designers.

The company now has its first customer, Sto, a billion-euro turnover premium paint company, which is using D’Arcy’s “drikolor” system in Australasia.

The company closed a second round of investment in May, bringing in more than $500,000.

Pacific Channel focuses on companies in the clean-tech and material and life sciences sectors. The firm looks for proprietary technology, a substantial marketplace, and people with deep expertise and passion for their field who they can work with, says Ogilvie says.

As an angel Ogilvie says he tries to focus his efforts on what he can he execute at the micro level; helping to develop the D’Arcy Polychromes of our country, for example.

Produced in association with the Angel Association New Zealand.

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