Inside Wellington’s thriving startup scene

Rod Drury and Stefan Korn from Creative HQ promote Wellington as the place for startups, including a thriving angel community!

The land drives development

Wellington is surrounded by hills which limit urban sprawl and is built around a bay which is too cold to swim in most of the year. Rather than brave the icy wind which lashes the region, entrepreneurs instead prefer to build software indoors.

It’s a geography which Drury says smashes everyone together into a small area, creating a “petri dish” of talent and creativity.

Throw in a significant amount of buy-in from all levels of government and you’ve got yourself a tech community which can hold its own against some of the best in the world.
There are talent issues

However, it’s still a small city so recruiting talent, with the likes of Trade Me and Xero hoovering up all the bodies they can get their hands on, means the country is “shamelessly” recruiting Aussies to jump across the ditch and get involved, Wellington Councillor Jo Coughlin says.

Read more on www.businessinsider.com.au

 

More Cross Border Investment #ACAAngelSummit15

Angels Connect NZ Series, Brent Ogilvie from Pacific Channel reports from the International Exchange Workshop at the ACA Conference 2015

I last attended an ACA conference two years ago. This year there was clearly not only far greater interest in doing cross-border deals, but angel investors making it happen.

Panelists at the ACA’s International Exchange workshop were up beat about the quality and quantity of opportunities globally. Those on the panel included Audrey Jacobs from Our Crowd the equity crowd funders based in Israel, and Jeff Lynn from another equity crowd funding platform, Seedrs, based in London.

All of the panelists discussed their activity and structures openly to encourage more interest and engagement from investors around the world, whether in groups, networks or funds. They agreed that as an industry angels need to focus more on the outputs of their investment – creating high value jobs and exits.

Audrey Jacob’s view is that the current VC model is ‘broken’. She estimated there are only 100 VCs in the world investing in more than 3 deals per annum. Most general partners now only receive their annual 2% fees from funded capital (not on committed capital).

OurCrowd invests its fund alongside its equity crowd funding members who are all accredited business angels. The crowd funding investors participate as ‘limited partners’. Audrey Jacobs explained OurCrowd negotiate the deal terms and participate as a ‘general partner’. OurCrowd put in a minimum of $50k per deal and will contribute up to 10% of the round.

To date OurCrowd have invested $US110m in 64 companies. They are agnostic about the company’s stage, sector or country of origin and are currently reviewing deals from Brazil and Spain. (Editors note: OurCrowd have invested in Varigate, a NZ company, commercialising an irrigation technology).

Audrey Jacobs’ insights set the theme for the session with multiple examples of early stage investors pooling capital, allowing smaller investors in the ecosystem to participate in deals and securing similar returns to larger lead investors.

Backing up this increased interest in cross border deals Jeff Lynn sited a recent survey where 22% of British angels said they would invest outside the UK. In a later session on US angel investor preferences, more than half said they had no geographic preference. This compares to just six years ago when two thirds said they would only invest in deals no more than a two hour drive away.

Another example of international capital pooling came from Swiss based angel group, Go Beyond, which syndicates with angel groups in 7 countries and has the ability to “transfer shares” among the groups.

Go Beyond has invested in US ventures and put money into deals sourced in France, Spain and Switzerland. The group hold monthly virtual meetings to discuss deal flow. The lead angel in each deal takes a “free carry” and is responsible for quarterly reporting to shareholders.

Blake Witkin, the Chairman of Ontario’s Network of Angel Organizations outlined the problem pooling capital solves. He had found some local angel groups were missing out on deals because their investment processes were too slow. Establishing a fund offers a neat solution as it provides a pool of capital with a mandate to invest quickly and secure an option for its angel participants to invest in follow-on rounds.

Dreamfunded.com, formed by a San Francisco angel group, has 3,400 accredited investors who want more deal-flow. This group would also like to hear from angel groups internationally who have deals to syndicate.

The session bodes well for New Zealand’s focus on exporting knowledge and spreading kiwi innovation internationally.

Brent Ogilvie

For more highlights from attendees who attended the conference clik.vc/Angels_connectNZ

To meet and hear from international angels and leaders in New Zealand’s angel investment community secure your seat at one the southern hemisphere’s largest international exclusive investor events Asian Business Angels Forum, being held in Queenstown, New Zealand, October 14-15 2015.ABAF2015, NZ

 

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Icehouse Lightning Lab start-ups pitch to 300 investors

More wonderful ‘angel food’ being delivered by Lightning Lab. Congratulations to all those involved and best of luck to the companies for successful first rounds.

More than 300 investors are being offered the opportunity to invest in their choice of nine Auckland technology start-ups.

Auckland’s first Lightning Lab programme comes to a head at Spark’s headquarters on Thursday night as start-ups in a Dragon’s Den-style pitch their businesses to investors in the hope attracting funding.

The start-ups in the programme are Wearit, BrokerBetter.com, Justly, Roll, Designer Wardrobe, Logicore, Preno, Future Insight and Estimeet.

All up they were looking to raise a combined total of about $2 million, MacLeod- Smith said.

Lightning Lab gives selected start-ups $18,000 equity in exchange for an 8 per cent stake in the business.

The Lightening Lab is a digital accelerator programme run in partnership with incubation hub The Icehouse.

Founded by Wellington incubator Creative HQ, Lightning Lab mentors digital start-ups over 12 weeks, providing them with the skills and support to launch their businesses.

Auckland Lightning Lab programme organiser Mark MacLeod- Smith said each start-up was given eight minutes to stand up and sell their company, during which time investors were not able to ask questions.

After all the pitches had been presented the start-up owners networked with investors who then carry out due diligence over several weeks before deciding to invest in any of the companies, MacLeod- Smith said.

Read more on www.stuff.co.nz

 

Manuka Health mulls capital raising options

Former AANZ Chair Ray Thomson provides some insights on the next steps for angel-backed Manuka Health.

Manuka Health, the functional food and dietary supplement company, is reviewing capital-raising options to help fund a global roll-out of new products said to boost the antibacterial qualities of manuka honey and its pipeline of research and development.
The private company has ruled out a public listing at this stage but chief executive Kerry Paul said it was considering other options including new investors who bring more than just capital to the table.

Manuka Health was founded in 2006 and exports 90-plus products based on propolis, royal jelly, bee pollen, and manuka honey to 45 countries. It has annual turnover of more than $50 million, 80 staff, and is owned by a number of private shareholders including Paul and family interests associated with chairman Ray Thomson, and institutional investors, Milford Asset Management and Waterman Capital.

Manuka Health holds the worldwide licence and pays royalties on sales to Kobe University of Medicine in Japan for the new technology, which combines encapsulated manuka honey with plant-derived cyclodextrin, “creating a free-flowing powder that can easily be added to foods and beverages for ease of delivery of health benefits,” according to a report on the company’s website.

Read more on www.scoop.co.nz

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

New blood a boost for biotech firm

Congrats to Breath Easy in securing a high profile Chairman, demonstrating the power of angel investment to provide critical connections and contacts.
Tech industry veteran Gary Pace appointed to lead board of Breathe Easy Therapeutics.

New Zealand’s Breathe Easy Therapeutics has made a high-profile addition to its board as it advances plans for medical trials of its cystic fibrosis therapy.  The company, which is in the middle of a Snowball Effect equity crowdfunding campaign, has appointed Gary Pace – a more than 40-year veteran of the technology world – as independent chairman.

Pace, a San Diego-based Australian, also sits on the board of ASX-listed medical device maker Resmed and Nasdaq-listed pharmaceutical firm Transition Therapeutics.  Breathe Easy’s Citramel therapy is administered via inhaler for the treatment of cystic fibrosis, a genetic illness that affects the lungs and digestive systems of about 75,000 people worldwide.  The drug is being positioned as a core therapy to improve lung function and potentially enhance the effectiveness of other therapies such as antibiotics.  Citramel’s potential market is estimated at US$1 billion ($1.33 billion).

The Snowball Effect campaign, which had successfully raised $374,818 by yesterday afternoon and closes on Monday, is part of a $2 million funding round.  In addition to the crowdfunding cash, more than $1 million has been raised from local angel investors, investment firm Pacific Channel, and the Government-backed New Zealand Venture Investment Fund.

“With that [$2 million] capital we should be able to demonstrate the clinical feasibility of the product,” Pace said.  “It would take it through the initial clinical trials [in New Zealand].”

Early signs of efficacy have been shown in a patient who has been on Citramel for close to two years.  Pace said it would cost at least $50 million to get Citramel to market.  “We’re designing the [clinical feasibility] study to make it attractive to potential larger groups that could fund it or buy it, such as a venture capital company or a mid to large-sized pharmaceutical company that’s active in the cystic fibrosis area.”

That next stage of investment would probably come from the United States, Pace said.  New Zealand was well placed to run clinical trials of locally developed therapies, but moving into the US market was key to success.  “There’s been a strong resurgence of investment in the biotech industries in the US with last year showing the highest levels of investment in 14 years,” Pace said.  “Kiwi companies are known globally for their ability to innovate and while they seem to understand that US commercialisation in life sciences is key to success, I haven’t seen many make any real impact in this space.”  He said the US biotech industry received US$8.6 billion in investment last year.

“It’s the US’ second biggest sector for investment so this market is key for any New Zealand firm with international aspirations,” Pace said.  “What Kiwis need is a clear US focus from a clinical, regulatory and business perspective, and for that you need people on the ground here with experience. Breathe Easy has that potential.”

Paul Tan, the former chief science and medical officer of ASX-listed Living Cell Technologies, has also joined Breathe Easy as chairman of its scientific advisory board.  Living Cell’s treatments for diseases including Parkinson’s involve transplanting pig cells into humans.

As published in NZ Herald 16 May 2015

Angels flock to networks

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AANZ Media release: 1 May 2015

The number of angel investors who have joined networks and funds has risen dramatically in the past two years, says the Angel Association of New Zealand Executive Director Suse Reynolds.

“While it’s not easy to be definitive about these numbers we estimate the number of eligible angel investors represented by our members has grown from around 370 to 730 in the past two years.  Interest in this asset class is showing growth worldwide and in New Zealand this has coincided with a campaign we have been running to attract new investors.

“We are thrilled with the impact this has had. New activity and networks are emerging from one end of the country to the other – in Northland, Bay of Plenty and Southland, in addition to the major metropolitan centres.

“This growth in investor numbers is helping to fuel the increase in investment activity.  This year angel networks and funds recorded their second consecutive year of more than $50 million of investment. The level of annual investment is almost triple what it was a decade ago.

“Having more angel investors participating in deals is good for the sector. It helps active angels diversify their portfolios reducing the risk associated with angel investment. If there are 10 angel investors contributing to a $250,000 investment in a start-up rather than five, then each investor’s contribution is smaller and they can spread their capital across wider portfolios, thereby increasing the potential for return on investment and giving them more capital to put in other startups.

Last year particularly was a fabulous year in early stage investment in New Zealand with some impressive statistics about the number of deals done and money invested, says Suse. “What’s really exciting is that across the country the dramatic increase in our capability and capacity in the last year means more high-growth, startup companies having a much better chance of accessing much needed capital.

“We are very aware our data does not tell the full story as it is only representative our members’ activity. We also applaud and champion the large number of early stage investors outside this community, such as those launching and investing through crowd funding platforms and others who prefer to operate more independently.

“One of the most inspiring aspects of angel investment is that studies show that the majority of net job growth in the economy comes from new companies. So angels are doing great things for the economic and social development of their communities.”

2015 is shaping up to be even bigger than last year, says Suse. “Canterbury Angels are now formally constituted and have held their first investment evening and. “Angels of the North” held their first event just before Christmas in Whangarei, which included a taste of what the region has to offer in early stage investment.

“Our aim is to grow numbers to more than 1000 angels and we’re well on the way to doing that, making New Zealand a really exciting place to be an entrepreneur or an early stage investor.”

 Media contact:

Angel Association: Suse Reynolds  021 490 974 [email protected]

Download media release pdf

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Angel messages from America

Angel Association members from all over New Zealand have been crossing paths in Air New Zealand Koru lounges on their way to the US this week for the annual ACA Summit in San Diego.

An important event on the calendar of kiwi investors, the ACA Summit is an opportunity to tell great New Zealand stories, connect with international angels, funds, VC’s and meet potential market-entry and acquisition partners from all over the world.

New Zealand’s Angel messengers, carrying kiwi success stories overseas include Marcel van den Assum, Chair and Suse Reynolds, Executive Director of AANZ and Michelle Cole from Angel HQ along with; Bill Murphy and James Beale from Enterprise Angels; Rudi Bublitz from Flying Kiwi Angels; Brent Ogilvy from Pacific Channel; Darryl Lundy, David Russel, Robbie Paul, Cecillia Tarrent from IceAngels; Chris Twiss from NZVIF and Karen Chang from NZTE/LAX to name just a few.

Learning and networking as they go, the Kiwi contingents key collective mission is two fold.

First, entice ‘overseas friends of New Zealands angels’ (affectionately known as OFONZ’s) to ABAF in Queenstown from Wednesday 14 October to Friday 16 October to meet their investee’s in person, experience the energy of New Zealand’s angel community and learn about the benefits of doing business with and in New Zealand. 

Second mission, sharing the skinny! To ensure as many of the learning and insights our Angel-team glean are shared with the early-stage community at large we are expecting to receive posts and tweets from many of the team during the conference.

As they listen to keynote serial-entrepreneur and Lean Startup founder Steve Blank tell you how he changed the course of the startup industry through customer development – we’ll get the highlights as they happen and share reflections.

As serial entrepreneur and profilic angel Gil Penchina, the most active syndicator on AngelList talks about his experience and shares his mental models, we’ll get the benefit of their attendance.

Look out for tweets #ACA15NZ. This hash tag will tell a story about angels from NZ at ACA – who they are, what they think, who they think is worth listening to, words of wisdom they hear, insights they gain, things they find out that those back home should know about the US and the rest of the world… and people they’ve met who are coming to the ABAF2015 in NZ!

A start-up founder’s biggest blunder?

This timely article from the BBC summarises some of the key points from the AANZ’s Governance Course very neatly.  It includes “no friends on the board”!!

With a nod and a wink, a well-known venture capitalist said something that made my blood run cold.

I was at this closed-door meeting for founders of high octane new technology ventures to give a talk about the importance of establishing company boards. It was there that this renowned investor said smugly, “You should not have anyone on your board who isn’t an investor or a friend.”

He went on to say that only people who funded the start-up “will care enough” to help founders achieve their goals, whether it be acquisition, fast growth or becoming a public company. He added that only a friend “can side with you in a board fight if you really need it”.

Read more on www.bbc.com

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

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Andy Hamilton: Kiwi companies need to think bigger

In this article Ice House CEO and former AANZ Chair, Andy Hamilton challenges us all to think bigger and be more focused in our aspirations for economic growth and specifically the ventures angels are supporting.

Everything is fine in New Zealand is it not? The country has experienced a great few years. We have ridden the commodity boom and other countries’ misfortunes.

Things have changed for the better, while many things have not. What could be wrong?

My view is the current Government has a definitive optimistic plan for our economy and it should be complimented for its focus, clarity and execution.

At the same time, I wonder whether it has an indefinite optimistic approach to the hidden challenge that exists, and that is dangerous for our long-term prospects.

To me, the Government lacks a plan to enable our economy to be truly competitive longer-term.

Just riding out the macro factors will not be enough to win.

We have always, it seems, produced great people and some teams which are world beaters, but we have not and are not creating great companies on a global scale fast enough.

A key metric: How many companies in New Zealand employ more than 100 people? The answer is 2318, with an average employee number of 430, representing 48 per cent of all employed persons in our country. Do you think this is a small or big number?

Actually, the relative result is very similar to comparable countries, but the hidden metric, the big and scary difference, is the quantum size of our big companies vis-a-vis these other countries.

Our big are way, way smaller.

This has implications for our long-term prospects and I believe this needs to change for us to improve the nature of our economy and ultimately GDP per capita for our people.
We lack a supply of entrepreneurs who can turn ideas into global companies like the Israelis or Americans or a supply of talented executives in fast-growing industries such as technology that can do the coding, do the tech work.
Without this wealth we will not be able to look after our people and the increased stratification that is occurring between the rich and poor all over the world will also be in NZ. That leads to discontent and worse.

We know we produce good talent, whether that is as sportspeople or executives in large organisations. We know we can make stuff, like milk and more recently technology.

But can we build big companies that ultimately benefit and help us create a better future for New Zealand? Big question.

Our Government knows this is the problem. Even though it may be harsh to say its position is as an indefinite optimist, I contend that it lacks a plan and the confidence to attack this issue, and maybe even it has not prioritised this as far up the job list as it should.

One company the size of Fonterra is not going to cut it, it is like what we call “key person risk”.

My solution: Only one thing matters and that is talent, but talent specifically in building big and bigger companies.

Let’s take the pulse for that.

We have a great bunch of expats and Kiwiphiles, and arguably an over-supply in the demand for their skills, experience and networks.

We are seeing emerging technology and new age leaders, aspirational millennials who don’t want to work for the “person”. An emerging group of early stage investors, angels and venture capitalists who are learning fast how to support and enable our companies to succeed. And an emerging global group of believers, Peter Thiel of Founders Fund and Vinod Khosla of Khosla Ventures to name just two.

On the other hand, we don’t have senior executives in our big companies who are built to succeed in the world, nor board members of our big companies with diverse perspectives and experience from key markets such as Asia and America.

We lack a supply of entrepreneurs who can turn ideas into global companies like the Israelis or Americans or a supply of talented executives in fast-growing industries such as technology that can do the coding, do the tech work. And finally, we lack a set of investment bankers who can help build global capital pools to support our companies’ global aspirations.

There is much work to do, and the only thing to do when faced with a big challenge is to start biting it off one chunk at a time.

We must do something, we must engage. If you live overseas then nominate yourself to go on the boards of Kiwi companies to give them an outside-in perspective. Do like Bridget Coates, Derek Handley, Phil Veal and Claudia Batten and find a way on to the boards.
The director pool in New Zealand is a blue-rinse club, both men and women, and it was very challenging for these people to break through, but they did, and so should you because it does and will make a difference.
The director pool in New Zealand is a blue-rinse club, both men and women, and it was very challenging for these people to break through, but they did, and so should you because it does and will make a difference.

If you are from the tech industry, and you know how to hire and train more people to get into the tech industry, we need you in New Zealand, because our fast-growing tech companies are sucking up all the available talent and not investing enough to fill the gap of what is likely 10,000 jobs right now.

Maybe instead of going from 500 to 700 focus firms for the Government’s NZTE, they should have gone to 300 firms and really enabled their scaling, or were they worried about the value they create for these firms?

Now, despite the challenges and hurdles, there are some signs that are good. There is a shift happening in NZ, it is just that you need to look for it.

Look at the number of listings over the past few years alongside the performance of the NZX itself, which has ranged from 15-28 per cent year on year for the past three.

There have been exits too, Greenbutton’s sale to Microsoft generated a significant return for the founders and investors, Sutton Group and Gardians were sold to Danone showing it is not just tech where value can be created.

There is also an emerging pack that includes Lanaztech, Rocket Lab, PowerbyProxi, Nexus6, Vend and Shuttle Rock and others regularly coming out like STQRY, Puteko, Parrot Analytics, Drikolor, 1-Above, Harmoney, Varigate, Texus Fibre and iMeasureu.

All of this activity is healthy, it fuels and stokes the pipe, but we need to remember that we must see scale being achieved from this. How many companies sit alongside Fonterra and are actually delivering year-on-year sustainable returns? Wouldn’t it be great to have the top 10, top 50 globally relevant and scaled businesses owned out of New Zealand?

Things are good in New Zealand, but we should not be fooled. In my view we must address our lack of ability to build scaled and relevant global corporations from New Zealand and we must get on to it now.

I encourage others to positively address this challenge by finding ways to make a difference to create globally scaled and relevant firms from New Zealand.

Andy Hamilton is chief executive of business incubator The Icehouse.

First published in NZ Herald 12 March 2015

Kiwi tech start-up spearheads global smart textile market

Congrats to Pacific Channel for the amazing work they have done to champion this fantastic angel backed company.  Another great illustration of the power of kiwi inspired innovation.

Kiwi tech start-up spearheads global smart textile market with major licensing deal
New Zealand smart fabric technology start-up, Footfalls & Heartbeats announced today the signing of an exclusive ongoing licensing deal with one of the world’s largest medical compression therapy companies, securing its foothold as a key emerging player in the smart textiles market.

The deal ensures significant ongoing funding for growth for the Kiwi company.

Read more on www.scoop.co.nz

 

Put social ‘good’ on agenda, firms told

Internationally renowned Kiwi entrepreneur and social responsibility advocate Derek Handley sees Tauranga as well placed to embrace an evolving new business model in which doing good is as important as doing well.

The key theme of Mr Handley’s presentation and his discussions in Tauranga was the growing global trend to try and build business models where the product or service models created a significant social impact. That represented an evolution of the older corporate social responsibility model of using a portion of business profit to do good in the community or elsewhere, he said.

Mr Handley’s presentation received a warm welcome from more than 350 people at the ASB Arena last Friday. The event was sponsored by Priority One, whose chief executive Andrew Coker had been working on securing Mr Handley’s visit since seeing him speak in 2011. Mr Handley also attended a private dinner with about 20 major stakeholders in the Tauranga business community.
“There are a lot of interesting things happening here and they seem to be picking up pace,” Mr Handley told the Bay of Plenty Times. He pointed to the Enterprise Angels investor network, projects such as the WNT Ventures business incubator, which had attracted government matching funds, and the growth of co-working spaces, amongst other developments.

Mr Handley said he came to Tauranga to understand what was going on in the local entrepreneurial sector. He also learned about the various communities working on initiatives to create great communities and lifestyles in the region without compromising the things that made it special.

“I think we’re at the beginning of a new wave of trying to do things in the world and how businesses and entrepreneurs see the purpose of their organisations, and moving that from a purely financial to a much more socially or environmentally aware viewpoint,” he said.

The new mindset would co-exist alongside traditional models of philanthropy, he said.

“We are also entering a renaissance of philanthropy with things like the Givealittle pledges, with more and more billionaires planning to give away half or more of their wealth, and a really fast-rising proportion of people starting to give significantly when they are very young.”

Holland Becket partner Bill Holland, who chairs Community Foundations of New Zealand, attended the private dinner. He said the interesting part of the concept was about building the concept of philanthropy into a business from the start.

“It’s not just a matter of people being successful and then deciding to be philanthropic,” he said.

“The philanthropic side is incorporated in the business plan and it’s quite interesting how that in itself can help make the business successful … there’s no question people are looking at the bigger picture. Environmental and sustainability concerns are important not only to business, but to their customers.”

How business can give back to society

A private dinner brought Derek Handley together with some 20 Tauranga leaders in business excellence, academia, entrepreneurship, philanthropy, iwi fund management, early-stage investment, government and social enterprise.

It was hosted by Nicki Wilkins, general manager of the Acorn Foundation, and her lawyer husband Marcus, and arranged by Tina Jennen, who works with Enterprise Angels and local entrepreneurs.

The Acorn Foundation encourages people to consider leaving a gift either in their will or during their lifetime to benefit the local community and Ms Wilkins said the dinner provided an opportunity to hear more about what was happening in the business sector in terms of philanthropy. She is a board member of Community Foundations of New Zealand.

“The desire for people to give is growing significantly,” she said. “I can see real benefits in Derek’s desire to help people in business to give in a way they know they are truly making a difference.”

Tina Jennen said Tauranga had the capability to become a national – and global – leader in the new and more socially responsible way of doing business.

“When you bring disparate people together a powerful cross-pollination of ideas can occur,” she said. “We wanted a diverse group of key community leaders to hear Derek’s plans so we can get ready to take action.”

Derek Handley said the dinner had been a great opportunity to have more in-depth discussions.

“As small as New Zealand is, you don’t get a chance to meet these people that often,” he said. “It’s fascinating what’s going on here in Tauranga and it was really interesting and inspiring for me.”

Tauranga was also beautiful, said Mr Handley, who stayed on for the weekend. He noted one of the roles of business and entrepreneurship in society was to enable people to have a fulfilling balance of holistic lifestyle for people. “In a city like this you can almost feel it being 21st century holistic living, but able to build interesting ventures that mean something. That’s a great place to be.”

First published on nzherald.co.nz 17 February 2015

SmartShow app to enhance CeBIT

CeBIT, Australasia’s largest technology expo – taking place 05 – 07 May 2015 at Sydney Olympic Park – has contracted New Zealand-based SmartShow to provide its event apps via flagship product ShowGizmo.

“We’ve had event apps in previous years, but mobile technology is constantly evolving and the ShowGizmo app is an international market leader with an impressive feature set,” said Jan-Peter Lauchart, chief operating officer of Deutsche Messe, organisers of CeBIT Australia.

Read more on www.impactpub.com.au

Jones to head tech incubator

Former Seed Co-Investment Fund team member, Carl Jones is profiled in this story as he takes up the CEO role at WNT Tech Incubator in Tauranga putting the Enterprise Angels in the front seat to receive some high quality ‘angel food’ in the near future.

Carl Jones, a former Tauranga local with a strong track record in government-led venture capital investment, has relocated back from Auckland to take on the role of chief executive with new local technology business incubator WNT Ventures.

Mr Jones, who began his career with Craigs Investment Partners, was previously investment manager for the Government’s New Zealand Venture Investment Fund (NZVIF). He also played a leading role in NZVIF’s Seed Co-investment Fund (SCIF), which provides matched investment alongside selected partners, including Tauranga early-stage investment group Enterprise Angels.

“Our partners are extremely important,” said Mr Jones, who took up his new role late last year. He noted WNT Ventures was a collaboration bringing together virtually all of the key early stage and technology investment entities in the region.

“The WNT Ventures structure is unusual, but the real selling point for me is to be able to walk into a Crown research institute or university and say, I have this really deep and wide network of not only people and capability, but experience and capital.
That’s really attractive to them.”

WNT Ventures was one of only three new technology incubators announced by the Government last year. It will access a repayable grant programme from Callaghan Innovation for start-up businesses based on locally developed intellectual property and novel technologies.

“There is a gap in the market I call where angels fear to tread, between post-research and where the angel investors get involved.”

While angel investors may like the look of a new technology, they usually required a degree of incubation to prepare it for commercialisation, he said. “We can leverage our internal funding and our Callaghan funding and take on the risk to help the people with the technology to get to the next stage where angels want to invest.”

He added WNT Venture’s ability to help new companies was greatly enhanced by the experience of its partners, as well as Enterprise Angels’ 150-plus members, who have invested almost $12 million in 37 early-stage deals to date.

The incubator had a goal of investing in four early stage technologies a year.

First published on nzherald.co.nz 12 February 2015

More wonderful validation for angel-backed ShowGizmo rocking the event app space

A Wellington company’s “virtual goody bag” will be part of the actual goody bag at Australasia’s largest technology expo in May this year.

With more than 20,000 visitors from 30 countries expected to attend CeBIT in Sydney, SmartShow is gearing up for the next phase of expansion.

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Web design aid catapults students from Dunedin to Silicon Valley

George Phillips and Mike Neumegen were a couple of Dunedin uni students when their part-time work as freelance web designers led them to hit on a business idea.

Less than two years later that idea has taken them to Silicon Valley, garnered them customers in Europe and the US and been backed by big-name Kiwi investors like Trade Me founder Sam Morgan.

It’s been a wild ride for the pair behind Cloud Cannon, a software company whose solution is aimed at making life simpler for web designers by automating some of their backend work.

“I still have moments where I’ll sit back and listen to one of my team talking about why we should be doing something, and how it fits with the company’s philosophies, and I’m like, ‘Holy crap, this isn’t two guys just making something in their bedroom anymore’,” Neumegen says.

Phillips and Neumegen were computer science students at Otago University and freelancing for local companies in their spare time when they first hit the pain point their company Cloud Cannon aims to soothe.
As designers their brief was to come up with a web design for clients, get sign-off on it, then create the site itself. At that point clients were thinking the job was done, but in reality the designers then had to spend hours on back-end coding and other work that would then allow the client to edit the site themselves.

The pair began spending their evenings working on a solution. Their initial project looked at solving the core issue, but also aimed to address a whole host of web designers’ needs. But the solution ended up being bloated and unusable, says Neumegen.

They scrapped all their code and started over.

The pair launched a pared-back and far more defined solution. After a handful of people started using it, they got a lucky break, featuring in tech industry blog TechCrunch.

“Startup entrepreneurs would chew their own arm off to get on TechCrunch and we just randomly happened to get covered by it,” Neumegen says. “Out of that we got a lot of traction, and a few months later we put in a business model, started charging and found people were willing to pay for it.” Early last year, Cloud Cannon was among the companies accepted into the Lightning Lab digital accelerator in Wellington. While there the pair met John Holt, managing director of the Kiwi Landing Pad – the government-funded base for Kiwi tech companies in the US. Holt sensed their potential and organised funding through New Zealand Trade and Enterprise to put Neumegen on a plane to Silicon Valley to fast-track networking.

Neumegen returned to New Zealand in time to prepare for Demo Day – the penultimate event in each Lightning Lab intake where companies pitch for investment. Cloud Cannon ended up gaining $650,000 from 16 investors including Sam Morgan, Datacom deputy chairman Simon Holdsworth and early stage investment company Movac’s managing partner Phil McCaw.

Among the investors was Laura Reitel, the former manager of the more well-known TechStars digital accelerator in Boulder Colorado, who later mentored Neumegen and Phillips at Lightning Lab.

“The funny thing is I’ve never made an investment before,” Reitel says. “But I found myself thinking, ‘If I’m ever going to bet on any team it’s a team like theirs’. I’ve seen a lot of investment activity and I’ve seen a lot of teams, and you always bet on people who you know you can work with and who really pour their heart and soul and energy into a venture.” Reitel says the ever-increasing number of websites being created annually means Cloud Cannon is in a fast-growing market.

“And there’s real demand for tools that help make websites more beautiful and easy and intuitive to use.” The investment has allowed the company to grow to a team of four and for Neumegen to spend six months in the company’s primary markets of Europe and the US.

Growing the number of freelance web designers using its software has been the main focus of the company in recent months. Connecting with those prospects has been made easier because web designers tend to be well-connected and vocal in online communities, Neumegen says.

Another opportunity the company is now pursuing is the enterprise market, and they’re currently talking to some large organisations about how they might use Cloud Cannon’s solution.

“Enterprises have a lot of websites they’re managing and they need non-technical teams to be able to update those websites. That’s not something we had really thought of, but once we started looking at it we realised we could solve some big problems for some very big companies,” Neumegen says. “And that’s a great feeling.”

First published on nzherald.co.nz 22 January 2015

Excellent outcome for New Zealand Angels

The successful sale of cloud-computing company GreenButton to Microsoft is a win for everyone involved in the venture’s journey from a one-man startup to a globally competitive, international company. It illustrates just why angels like me find investing in high growth startup companies so rewarding.

This transaction is an excellent outcome for New Zealand. It’s something we can all be proud of. Another team of smart Kiwis have shown they can create a terrific piece of software which will be used by potentially millions of people.

Its worth pointing out almost all the capital required to create the company came from New Zealand’s angel and venture investment community, reflecting the degree to which this community syndicates deals and supports each other.

Over 20 individual angels from three networks contributed – Angel HQ in Wellington, Enterprise Angels in Tauranga and Ice Angels in Auckland – as did early stage venture funds Movac, Sparkbox and Evander. Almost all the investors have indicated they will reinvest the returns straight back into their startup communities.

Its also important to acknowledge the support the company has had from the Government, including the NZ Venture Investment Fund, Callaghan Innovation and New Zealand Trade and Enterprise.

These entities were all instrumental in the company’s success and I am delighted this transaction represents a significantly positive return on the Government’s investment.

– Marcel van den Assum

 

Investment success story keeps staff in New Zealand

Microsoft has bought a Wellington cloud computing business that can trace its origin to the Lord of the Rings movies.

The software giant has snapped up GreenButton, which has 18 staff, for an undisclosed amount. Microsoft would keep all of GreenButton’s operations in New Zealand and all staff would be retained.

GreenButton, whose clients include the National Aeronautics and Space Administration, Boeing and animated-movie producer Pixar, will be added to the Microsoft Azure cloud computing platform.

Using GreenButton’s solutions, applications can be cloud-enabled quickly without recoding existing software – and without a PhD in computer science.

Investment in GreenButton came from the government’s Venture Investment Fund, Movac founder Phil McCaw, and Datacom founder John Holdsworth. Former Sun Microsystems executive Mark Canepa is a shareholder and sits alongside Mr van den Assum and chief executive Scott Houston – once head of technology at Weta Digital – on the board of directors. Microsoft had not acquired any equity in GreenButton as part of its deal.

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Software & IT largest investments for New Zealand Angels

Angel investors pumped a record $53.2 million into 116 high-growth businesses last year as confidence returned to the technology sector.

New Zealand Venture Investment Fund chief executive Franceska Banga believed 2014 had started in a similar vein, saying the environment for young technology firms seeking funding was probably the best it had been in 15 years.

A form of hybrid investment that combined equity crowdfunding and angel investment might soon make it possible for non-professional investors to invest in startups alongside experienced “angels” and on the same terms, she said.

The investment by angel investors was up 80 per cent on a lacklustre 2012 and the highest since NZVIF began polling angel groups in 2006. The market had been boosted by the strong performance of companies such as Xero, SLI Systems, Orion Health and Vend, Banga said.

Angel Association executive director Suse Reynolds estimated there were about 500 individuals in New Zealand who could be classed as angels. Networks included a new one especially for female investors, Arc Angels, which has 17 members and has just made its first investment.

Angel investment grew 80 per cent to a record $53.2m last year.

There are believed to be about 500 angel investors in New Zealand. Software and IT services firm attracted almost half of the money invested.

About 80 per cent of angel investment last year was “follow-on” investment and 20 per cent were completely new investments.

The average deal size was just under $500,000.

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Kiwinet Commercialisation Award Finalists Announced

Finalists have been selected for the second annual KiwiNet Research Commercialisation Awards designed to celebrate success within New Zealand’s universities and Crown Research Institutes.

Innovationsfrom finalists include the Springfree™ trampoline, a rare pharmaceutical ingredient generating major export returns, titanium technologiesincluding 3D printed animal implants, pasture meters, artificial muscle technologies, precision seafood harvesting, eradicating bovine tuberculosis, controlling insects with sex, new vanilla products, and a wireless network partnership.

“The Awards celebrate the tremendous work of research organisations turning clever science into commercial value. Our 2014 finalists are some of the best at this, developing a new wave of exciting innovation that will create new companies, products and servicesto grow our economy,” says KiwiNet General Manager Dr Bram Smith.

“Many exciting stories of research commercialisation success are not well known. By putting the spotlight on the people and research organisations changing the commercialisation landscape in New Zealand, KiwiNet aims to inspire others to similar success,” says Smith.

The 2014 KiwiNet Research Commercialisation Awards finalists are:
AJ Park Commercialisation Collaboration Award
– Eradicating bovine tuberculosis with TBfree New Zealand, (Landcare Research and TBfree)
– Titanium Technologies New Zealand (TiTeNZ), (University of Waikato, Callaghan Innovation, GNS Science, University of Auckland, the Titanium Industry Development Association (TIDA) and a number of industry partners)

Researcher Entrepreneur Award
– Associate Professor Iain Anderson, StretchSense – entered by UniServices, University of Auckland
– Alistair Jerrett, Seafood Technologies, Plant & Food Research Minter Ellison Rudd Watts Research and Business Partnership Award
– Heilala Vanilla, entered by Massey University
– Controlling Insects with Sex, entered by Plant & Food Research
– Precision SeafoodHarvesting, entered by Plant & Food Research
– Wireless Network Partnership (University of Canterbury and Tait Communications), entered by

University of Canterbury Commercial Deal Award

– Springfree™ Trampoline, entered by University of Canterbury
– Kifunensine, entered by Glycosyn, Callaghan Innovation
– C-Dax Pasture Meter and Massey University’s Centre for Precision Agriculture, entered by Massey University

The BNZ Supreme Award will be presented to the entry which demonstrates overall excellence in all core areas of research commercialisation.

The KiwiNet Awards judging panel comprises Dr Andrew Kelly, Executive Director at BioPacificVentures, Sharon Hunter, one of New Zealand’s best-known business women and Director of Hunter Powell Investment Partners, professional director and ex-Angel Association Chairman Dr Ray Thomson, and director and executive advisor Helen Robinson, the founding CEO of TZ1.Lead judge Dr Andrew Kelly says, “It’s great to see another strong new set of applicants this year,
demonstrating that innovation is continuous in this country. These innovations are important as the next generation of the science and technology successes our economy is now seeing like Xero, A2 and Pacific
Edge.”

Kelly adds that the bigger pool of entries has been stimulated by the expansion of KiwiNet, ‘which is now the driving force in research commercialisation in New Zealand.’

Paul Stocks, Deputy Chief Executive of MBIE’s Science, Skills and Innovation Group, says MBIE supports KiwiNet’s collaborative approach to commercialising innovative research. “Research commercialisation is vitally important for New Zealand, as it can be a major driver of economic growth. KiwiNet is helping to
create greater commercial outcomes from our publicly-funded research, which will benefit all New Zealanders.”

The Kiwi Innovation Network (KiwiNet) (www.kiwinet.org.nz), is a consortium of 13 universities, Crown Research Institutes and a Crown Entity established to boost commercial outcomes from publicly funded research. KiwiNet partner organisations include WaikatoLink, Plant & Food Research, Otago Innovation Ltd, Lincoln University, AUT Enterprises, AgResearch, University of Canterbury, Callaghan Innovation, Viclink, Landcare Research, Cawthron Institute, ESR and NIWA. Principal support is provided by the Ministry of Business, Innovation & Employment (MBIE).

The Awards are the pinnacle of KiwiNet activities designed to build awareness and inspire research commercialisation success. Sponsorship support is provided by BNZ, Minter Ellison Rudd Watts, AJ Park, MBIE and Sciencelens photography.

BNZ director – value chain Jason Lewthwaite says New Zealand is increasingly recognised for its innovation, design and engineering which creates a huge opportunity for boutique products and services in overseas markets.

“The early stage innovation commercialisation that KiwiNet fosters combined with market contacts and experienced business partners such as banks and business organisations will allow New Zealand businesses to bring valuable new products and services to niche markets internationally.”All finalists will deliver a presentation in the final stage of judging on 11 June in Auckland. Winners will be announced at a reception that evening.

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NZ Technology aims high with business software, not social

Tags: technology

Reuters reports that New Zealand technology firms are rolling into global markets, selling software to businesses that locks down mundane tasks like accounting and expenses, rather than developing slick social media apps that consumers download free of charge.

Led by Wellington-based Xero Ltd and its self-styled “beautiful accounting software”, the South Pacific island nation’s blossoming cloud-based tech industry is now the country’s third-biggest export earner behind dairy and tourism.

The practical New Zealand approach diverges from the mass consumer offerings developed by some counterparts in the United States, like messaging service WhatsApp or photo sharing site Instagram. 

Read more from Reuters

ACA Report 2: John Huston on exit strategy “Driving lucrative exits is not a quick flip…”

John Huston led a session at the 2014 ACA conference (www.angelcapitalassociation.org/2014summit/) in Washington, DC, on “Driving Lucrative Investments from the Board room”.  His focus on exit strategy was clear and loud.

John, ex-Chairman of the Angel Capital Association & the Angel Resource Institute, is quite literally a walking wikipedia of Angel intel and an energetic presenter. He founded his Angel investment group, Ohio TechAngels, in 2004 after retiring from a 30 year banking career and is currently investing out of their third fund focused solely on Ohio-based technology start-ups. At 282 members it is one of the largest groups in North America.

We will be welcoming John Huston to New Zealand in October 2014 at the #AANZ Summit14 at Orakei Bay, Auckland. Register for the Summit today to hear from John in person, places are limited so be quick.

John started his ACA 2014 presentation advising “great exits start with exit-goal congruence, and therefore it is important to give founders the heads up this is where you are heading from the get go. You are both going to be building financial and entrepreneurial wealth.”

“Your message regarding exit-strategy to founders: if you want $3-5m in your pocket in about 5 years and you’ll be working 80 hour weeks. Minimum wage!”

As their angel investor you want them to see their baby grow up and be successful.

He then asked the question Angels should all ask themselves: Are you growing your “ABC” (angel backed company) to attract financial or strategic buyers? Financial exits which are 6-8x and based on ebita take too long. This is NOT what you are after. Strategic exits is about building real value.

Are VCs required for the exit? He had no good or bad answer. But noted that VC’s goals are rarely aligned with angels. They are required to balance their duty to LPs against ABC shareholders and will generally want all ABC directors off the board. And always ask is the VC director you are getting the one that PERSONALLY drove the last exit. Chances are he didn’t. VC’s are motivated by raising the next fund… and what metrics they need to demonstrate to do this.

Publicly owned companies also have very different goals from an ABC. Maxing shareholder value etc not selling the company. Share performance vs sector performance etc, ie: not big multiples.

Angels buy and sell our shares at a negotiated price and do the following:

  • Raise follow on rounds
  • Help recruit team
  • Replace CEO
  • Build strategic value
  • Drive lucrative exits (which are NOT the same as ‘quick flip’ strategies)

Other gems of Angel wisdom from John included:

Dilution kills you. So be as capital efficient as possible.

Angel Investor directors need tools training and aligned expectations.

Build a capital access plan. If you need VCs you are adding another layer of risk. You will have to increase the price and value enormously to outweigh the dilution.

Know the difference between an IRR and multiples.

Take an inventory – your strategic assets (what you own) and capability (what you do).

Identify potential acquirers. Prioritize a maximum of 5 identified by their ability to pay $50m for the company and their willingness to bid. Then work on their willingness. Can you sell anything to them and then identify the customers that will impress them? Not every customer will have the same value to the acquirer.

Track TSB (targeted strategic buyer) and attract their attention.

Engage a banker. If needed.

Have all directors take more of a role in the sale of the business so that CEO can keep driving the sales.

Alternative strategy is “build a great company and they will come!” which is not an exit strategy that has any more chance of success than build a great product and they will come.

John concluded with a bunch of questions Ohio Tech Angels have identified to ask founders, with number one on the list being the need for them to answer: Why would an acquirer want to buy your company?

– Suse Reynolds, from Washington, DC, USA

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]

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.

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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Fuel50’s US expansion with Ice Angels support

An Auckland company whose software helps businesses and workers communicate about career development plans to expand into America and open an office in San Francisco with help from the Ice Angels investment network.

Career Engagement Group’s cloud-based software, Fuel50, is used by about 40 organisations worldwide and locally, including Westpac, Frucor, Zed, Fisher & Paykel Finance, and Fonterra.

The software is designed to help workers with career development within an organisation.

The company was launched two years ago and had five staff at the end of December but expected to double in size by March, Fulton said.

It has recently secured more than $1 million of funding from the Ice Angels investment network and plans to open an office in San Francisco early this year.

Full story first published in New Zealand Herald Thursday Janaury 30 2014

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Tech veteran joins project to help NZ firms access US

First published in New Zealand Herald on Monday January 27, 2014

Craig Elliott says the plan is to make the process simpler for New Zealand entrepreneurs who want to sell to the US.

It’s no surprise, really, that US tech entrepreneur Craig Elliott has been appointed a director of the Kiwi Landing Pad, the San Francisco-based hub for high-growth NZ tech businesses wanting to establish their businesses in the States.

Elliott was there in the beginning when KLP was just a twinkle in the eye of Sam Morgan, who set it up with Wellington entrepreneur John Holt and the support of the Ministry of Business, Innovation and Employment in 2011.

Morgan and Elliott met in Wanaka, where they both have property. They agreed that New Zealand businesses needed help to make it past the first hurdle in the complex and competitive US market.

Elliott is a strong believer in the talent New Zealand has to offer the rest of the world.

“The amount of entrepreneurialism and inventiveness in New Zealand is evident.

If we, at KLP, can provide opportunities for Kiwis to have access to markets so they get to compete on the global stage and export their ingenuity in bigger volumes, then we are doing something worthwhile.”

The American is based in Los Gatos in Silicon Valley and visits New Zealand regularly with his family.

He has been on the board of Xero for the past 16 months, is a strategic adviser to New Zealand Trade and Enterprise and has invested in some New Zealand tech companies.

Elliott’s network of contacts in the US is extensive.

With over 25 years of experience in networking and communications, he is now running the Silicon Valley tech start-up Pertino, which he co-founded. His aim is to reinvent networking for the cloud era. He was previously chief executive of Packateer, another IT start-up which he took from a three-person company to 200, going public in 1999 and taking it to a market valuation of over $2 billion.

Elliott’s career began at Apple. He caught Steve Jobs’ eye in the mid-80s when, as a science student from Iowa with aspirations to be a vet, he started selling Macs part-time. He became a top seller for Apple and Jobs rewarded him with a visit to San Francisco, dinner and a Porsche.

Elliott spent 10 years with the company, launching online services in 80 countries and taking on a number of senior roles, including international general manager of internet and online services.

His relationship with New Zealand started when he was working for Apple where part of his area of responsibility was the Pacific Rim. Apple would experiment with new products in New Zealand.

“We would try some things out – that’s how I got to know a number of folks in New Zealand.”

Elliott was taking a break here when he was lured back to Silicon Valley for his latest start-up business, Pertino (an abbreviation of Cupertino, the Californian town where the Apple HQ is) by former Packateer colleague Scott Hankins.

Packateer built networking products, but for large companies. Elliott and his team want to help small businesses use cloud technology to stay connected.

“Your typical small businesses need to buy a lot of hardware and deal with lots of complicated configuration to connect employees, provide security and so on.

“We take a lot of that same technology and with no big up-front cost and with a SaaS model, you can use our service to provide that connectivity, with no hardware and no configuration, for a low monthlycost.

“If you are travelling on the road on business, your laptop looks the same as it does in the office, it is a virtual office that is no different when you are in the coffee shop … these days everyone’s always mobile. We do it all in the cloud.”

The Xero board director admits it is something Xero could be involved in at some stage.

“I’ve had a few conversations with Rod Drury,” he says.

Despite Pertino stepping up a notch this year, Elliott has remained committed to New Zealand.

As a director at KLP, Elliott says his contribution will include making local introductions and “simple stuff” such as recommending the best lawyer.

“The plan should be to make KLP as efficient as possible in helping Kiwi entrepreneurs to access the US, to help them to understand the structures here,” he says.

“We want to make the process simpler for New Zealand entrepreneurs who want to make and sell things.”

Elliott is also organising paid Kiwi internships at his business over the New Zealand summer. He has set up a pilot scheme called InterNZ.

With an apartment ready and furnished and social security numbers organised, he has welcomed three computer science majors and computer engineers from the University of Auckland and Victoria University to spend until the end of February at Pertino.

It’s a win-win situation – Elliott has some new talent and the students get to go back to New Zealand with a good idea of how an American tech start-up works.

Elliott has other “Silicon Valley friends” watching to see how this goes and keen to take it on too if it is successful.

“We are going to kick it off, we have got all the visas sorted, and there is interest from Cisco and Apple to tell them how to do this.”

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