Join us as we celebrate the launch of the 2017 Investor’s Guide to the New Zealand Technology Sector by exploring investor/investee relationships.
This year’s report presents the case for international investment by mapping the New Zealand tech story and outlining our country’s competitive advantages. The Guide, developed in partnership with the Ministry of Business, Innovation & Employment (MBIE), will be launched as part of Techweek AKL 2017. The event will feature a unique panel discussion with investors and their portfolio NZ companies sharing insight into capital raising, strategic alignment and managing relationships.
A new survey suggests wealthy angel investors are not taking as close a look as they should into some of their investments.
Research by Massey University management master’s student Hattaf Ansari shows that only 75 per cent of the 88 active investors surveyed had done their own due diligence for all their previous investments.
That left a quarter who did not, suggesting that they had invested in ventures before by relying primarily on others’ opinion – or doing no due diligence.
And that’s active investors, not the large swathe of “passive” angels keeping an eye on the industry.
Ansari said the survey also indicated that Kiwi investors were cautious and liked a second opinion.
Only 46 per cent relied on their own abilities, when asked who they preferred to rely on for conducting due diligence.
Ansari said the implication was that Kiwi investors frequently invested in ventures they did not have “adequate knowledge or expertise in” and hence relied on others to confirm their decision.
“It is a way for them to minimise the risk of investing in ventures they do not have experience in. ”
A major investment announced by Huawei today will support our efforts to build an innovative, world leading economy, Economic Development Minister Simon Bridges and Science and Innovation Minister Paul Goldsmith say.
Chinese telecommunications equipment manufacturer, Huawei, has announced it will commit up to $400 million over five years to research and development and digital innovation in New Zealand.
Highlights of the investment include:
- $250 million in procurement from New Zealand companies
- Working with local partners to build a New Zealand Cloud Data Centre
- Opening an Innovation Lab at Victoria University of Wellington in 2017
- Building an Innovation Lab in Christchurch
- Expand the Seeds for the Future University Student Programme to 100 ICT students
“The depth of the investment will touch many areas of the economy and open up global opportunities for New Zealand. The initiatives that Huawei is committing to will also help strengthen our research and development activity and capability building in the digital and technological world,” says Mr Bridges.
“International connections are important if we are to be productive and competitive in the global market place. Having access to the resources and technology lifts our ability to be innovative, agile and productive. We have identified this as a priority in the Business Growth Agenda,” says Mr Bridges.
“We must attract quality international investment to get the growth we need to deliver more highly-paid jobs for New Zealanders,” says Mr Bridges.
“New Zealand’s hi-tech sector is one of our fastest growing sectors. The Government is investing in the sector through the $411 million Innovative New Zealand package, in order to lift total government investment in science and innovation to $1.6 billion by 2020,” says Mr Goldsmith.
“The establishment of another New Zealand-based Cloud Data Centre will be a step forward for local companies and institutions looking to test new innovations on a locally-based platform, while the expansion of the “Seeds for the Future” programme will give 100 of New Zealand’s brightest ICT and engineering undergraduates the opportunity to learn offshore and bring those skills home,” says Mr Goldsmith.
ArcAngels – the women-led angel investment group focused on women entrepreneurs – and the New Zealand Venture Investment Fund (NZVIF) are partnering to invest into women-led start-up companies. ArcAngels chair Cecilia Tarrant said the group hopes to replicate the success of the New York-based, women-led angel group, Golden Seeds. One of the leading success stories in angel investment in the US Since 2005, Golden Seeds has invested over US$80 million in more than 76 women-led companies.
This is the seventeenth partnership NZVIF has entered into through its Seed Co-Investment Fund. To date, NZVIF and its angel partners have co-invested around $142 million into over 150 companies. NZVIF investment director Bridget Unsworth said “the partnership is expected to invest into around 10 to 15 young companies during the first 12 to 18 months. With NZVIF committing on a matching 1:1 basis, it doubles the capital available to a company than would be the case if we did not have the partnership.“
Are you an entrepreneur that is frustrated and baffled by what investors are really looking for in your pitches? Have you read one too many articles online and taken advice from everyone you can possibly think of on how to maximize effectiveness in your fund raising campaigns? Have you had promising pitches with potential investors who walked out the door and you never heard from again? It is important for startups to not only secure investment but get the right investors onboard. A bad investor will just provide you with investment, a good investor will also share with you knowledge, expertise and networks to help grow and expand your venture on top of providing you with investment. It is therefore very important to align your interests with your investor’s interests to maximize your chances of securing funding and getting the best investor for your venture on board.
The New Zealand Venture Investment Fund is partnering with the newly formed Canterbury Angels to invest into start-up companies.
The Christchurch-based angel investor group was formed in 2015 and now has 35 members, most of whom are experienced investors or have been involved in establishing businesses previously. Its leadership includes chair Ben Reid, who chaired the Canterbury Software Cluster, Shane Wakelin, Joan McSweeney, Ria Chapman, Mark Cathro, Raphael Nolden, Ian Douthwaite, and SLI Systems co-founder Geoff Brash.
Canterbury Angels chair Ben Reid said the partnership will bring more investment into innovative companies in the Canterbury region and around New Zealand.
“The new investment partnership with NZVIF means that when Canterbury Angels invests into a new company, NZVIF will match investments dollar-for-dollar giving both investors and entrepreneurs confidence that the investment round will be successfully completed.
“Our focus will be on new companies emerging in Christchurch and nearby. But our members will also invest in syndicated opportunities throughout New Zealand to ensure we have a broad portfolio of companies. “Based on our experience to date, we expect to see a healthy deal flow. There are a lot of innovative ideas in Christchurch that are seeking capital. We have two universities which produce high quality research. We work closely with other parts of the innovation ecosystem in Christchurch, such as EPIC, Lightning Lab, Greenhouse and the newly-opened Vodafone Xone. As new startups emerge from the ecosystem, this partnership will help to provide some of the early stage capital to meet their needs.
“Our expectation is that the partnership will run for around four to five years, investing into around 10 to 15 young companies during the first 12 to 18 months. With NZVIF committing on a matching 1:1 basis with Canterbury Angels investors, it doubles the capital available to a company than would be the case if we did not have the partnership.”
This is the sixteenth partnership NZVIF has entered into through its Seed Co-Investment Fund and the second in Christchurch, having previously partnered with Powerhouse Ventures. To date, NZVIF and its angel partners have co-invested around $142 million into over 150 companies.
NZVIF investment director Bridget Unsworth said that the new partnership is needed to keep up the momentum in the angel investment sector.
“The past year has seen continued healthy investment activity across New Zealand with over $60 million invested by angel funds and groups. Christchurch sees around 10 percent of angel investment activity. With Canterbury Angels now actively investing alongside other early stage investors, it provides another source of capital for entrepreneurs in Canterbury.
“There is a healthy level of syndication of investments between different angel groups meaning they are likely to invest in opportunities throughout New Zealand. This allows groups like Canterbury Angels to diversify their portfolios beyond just the local opportunities. Early stage investing is a high risk investment class and so diversification is important.
“Current investment activity is healthy and there is a good pipeline of young technology companies needing investment capital to develop. Since NZVIF began collecting the data in 2006, angel groups have invested over $400 million into young technology companies.”
Canterbury Angels is a new angel network and was established in 2015. It aims to be a broad-based network drawing in investors from throughout Canterbury. It currently has 35 members and has made four investments in its first year.
NZVIF’s Seed Co-Investment Fund
NZVIF is involved with angel investors through its Seed Co-investment Fund (known as SCIF). SCIF was established in 2005 to catalyse the growth of angel investment and has now invested into over 150 companies. Its portfolio includes Christchurch companies like Hydroworks, Crop Logic and Invert Robotics.
Canterbury Angel Investors Incorporated
Notice of Annual Meeting
Notice is hereby given that the annual meeting of the Society will be held at The GreenHouse, 146A Lichfield St, Christchurch on the 28th day of July 2016 at 6pm, with the following business to be considered:
- Annual Report of the Chair for the year ended 31 March 2016.
- Annual Financial Statements for the year ended 31 March 2016.
- Special business.
- General business.
By order of the Board
Ben Reid, Chairperson
Dated this 8th day of July 2016
Last time we mentioned that the Angel Association of NZ (AANZ)has been working on some general guidance with respect to the interpretation under the new FMCA about what constitutes ‘eligibility’. You can read it here.
AANZ also weighed in last week to support calls from IceHouse and KPMG for changes to migrant investment policies to encourage newcomers to New Zealand to invest in early-stage ventures. While many in the angel investment community expressed support, some investors, migrants and even Steven Joyce expressed reservations that changes might have a deterrent effect on investor migration. What do you think?
Dave Moskovitz’s new initiative NZ Startup of the Week this week (week 3) features Wearit who are about to close out their funding round.
As New Zealand celebrates a successful first year of equity crowd-funding, Australia finally looks set to catch up with no less a champion than new PM Malcolm Turnbull an early adopter. Meanwhile the number of equity crowd-funding platforms in NZ continues to grow, sparking some concern about quality and the potential for a shake-out.
Australia’s take on BBC’s Dragons’ Den, Shark Tank, ended a short run on TV3 this week but still available on demand. Nice to see some more familiar-looking and sounding founders and investors. Also interesting to note some surprisingly modest valuations, as well as the usual outrageous ones.
Dave Allison from Angel HQ gave a very informative workshop to a group of angels recently. After introducing the general terminology needed he spoke about the three metrics which are most commonly used to evaluate the value of an early stage company: VC Board, Berkus Method and Scorecard Method. He explained how each can be applied and discussed the advantages and limitations of each method. The examples he used will make it much easier to value the companies angels want to invest in.
Dave went on later that day to give the same talk to the founders in the Lightning Lab programme. Come Demo Day it will be interesting to see whether investors or founders were the better students!