Waiheke Angel Summit Reflections

The best things about this year’s angel summit…

The annual summit always reinforces why angel investment is my thing.

Angel investors are unapologetically optimistic, creative, generous and ambitious. And our community cares… to their bone marrow, those involved in early stage investment care! These people are ambitious for the success of the founders and ventures they are working with and they are genuinely ambitious for New Zealand.

Kiwi early stage investors want to see the incredibly cool stuff we do in New Zealand get out to the world, they want to help create fabulous jobs in New Zealand, they want to contribute to raising our living standards and to the creation of role models for our budding entrepreneurs.

I came away super-chuffed about the real pride in our New Zealand-ness which imbued this year’s event. It really feels like we are at the tipping point of cracking serious success. New Zealand innovators and founders are absolutely worth backing.

And guess what? At the same time as we begin to acknowledge the real value of being kiwi, we get a bunch of proof points that kiwi founders and innovation really does deliver. The ventures angel investors have been helping to scale are becoming more and more appealing to others. This year Apple bought PowerbyProxi, US-based Clarivate bought Publons and UK-based Oxford Metrics bought IMeasureU.

Key themes at the summit which will help us continue to amp up the appeal and success of angel backed companies include:
• genuinely put the founder first – be empathetic, be accessible and be truly aligned;
• start with the end in mind and work unrelentingly towards it – together;
• know what it’s going to take to achieve liquidity – deeply understand your capital strategy and potential acquirers;
• actively manage your portfolio; and
• at all times focus on adding value.

In a future post I want to dig deeper into how angels best support founders to deliver the dreams they have to change the world. But to augment the take-outs from this year’s event I’ve extracted couple of quotes and insights from some of our keynote speakers.

Ian Taylor – Animation Research Limited
• Bugger the boxing, pour the concrete anyway
• Well it wasn’t a failure… it just didn’t work

Deb Hall – New Zealand ‘angeling’
• By the end of 2006, NZVIF recorded 55 deals and $30m of investment. By the end of 2016 nearly 1000 deals have been done, with $484m invested in nearly 200 companies.
• Over half the angel community spend more than a day week mentoring and supporting founders.

Phil McCaw and Andy Hamilton – what’s next
• Phil – “I see a bright future. As a country and a world we are going through a process of massive social change. The capitalist model is going to reshape and be reborn”
• Andy – “New Zealand will be way better off, the more angels we have.”

Bruno Bordignon – term sheets
• Context is everything. Always ask ‘how does this term or will this term apply to me/the stage of my venture/the sector it’s in/the growth plan I have/the liquidity plan I have.

Justin Milano – exponential mindsets and the triangle of founder expansion
• Shift anxiety and the need to control uncontrollable outcomes to selfless service and generosity. How am I being asked to serve today? There is always something you can do to add value.
• Shift from beating yourself up to a growth mind-set. Be kind to yourself. It’s all about learning, growing and embracing challenges.
• Shift from a head space of “I am my company” [or investment] and free yourself from self- importance. Acknowledge you are not your company [or investment] and instead accept that “this mission is bigger than me” and adopt a sense of humility.

Ron Weissman – the importance of capital strategy
• Don’t ignore the boring stuff like capital models and capital risks. These are the key to success.
• Key capital risks include: capital inefficiency, no follow-on investors, misaligned investors, larger liquidation preference shares, management carve outs.
• Only 15% of angel backed companies achieve an exit of greater than $US50m.

Dan Bernstein – building exit value
• Mistakes made when ventures are being bought: having only one buyer, there is internal company conflict, poor due diligence preparation, poor qualification and management of buyers, ego, greed and arrogance, maximising profit and minimising growth.

Richard Dellabarca – managing your portfolio for returns
• A lack of exits is unsustainable for the ecosystem. Capital needs to be recycled.
• SCIF2.0 will focus on returns, opportunities with a global thesis, reserving capital for those getting traction, up to $1.5m for top performers (vs $500k under SCIF1.0).
• Since 1 July 2017, SCIF2.0 has approved 59% of deals presented, with a higher approval rate for follow on deals and declines being notified within 2 weeks.

Sam Stubbs – more capital is coming
• Kiwisaver is a $42bn saving pool which will grow to $200bn by 2030.
• Kiwisaver providers want to invest in early stage but are not currently being provided with the right products and mechanisms to be able to do so.
• Bigger follow-on cheques are coming.

Arama Kukutai – corporate venture capital
• Agtech activity has more than doubled by value and volume since 2014.
• US venture capital accounts for 47% of world-wide capital invested in agtech startups.
• In the agtech sector, corporate venturing and collaboration with VCs is becoming increasingly common and more sophisticated to generate win/win outcomes.

Randy Komisar – why do this? investment motivations and M.O
• Is this the deal, are these founders and is this cause… worth failing for?
• Investing in startups is about people and value creation, not about buying low and selling high.
• Don’t emulate any other place on the planet, do your thing. Protect and promote what you have as New Zealanders.
• If you can plot success for a company, it’s probably wrong or not worth doing.
• Fighting for crumbs on the table is no way to get cake – a reference to niggling over terms.

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