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!
Tuesday, 20 October, 17:30 – 20:00
Boardroom, Level 1 Duncan Cotterill Plaza,
Nelson Gray’s UK – well, Scottish actually – story of reinvesting capital and capability locally to promote the regional economy will no doubt resonate with Canterbury Angels. American Bill Payne’s connection to angel investment in New Zealand is so strong that not only has he received an award for it, he even has one named after him!
In addition we will have a line-up of investment pitches from a range of companies. Those of you who attended the session in May when a number of companies pitched to Silicon Valley visitors Bill and Adiba will recall how interesting it is to hear diverse perspectives from offshore-based investors.
Breathe Easy completed its funding round and is now in Phase I trials of its Citramel therapeutic treatement for cystic fibrosis sufferers.
Geozone was in the news recently with its safety videos for drivers now being screened on Air New Zealand flights. Meanwhile use of its enabling Campermate app continues to grow significantly and launching in Australia is imminent.
Kitset Assembly Services is also on track to expand into the Auckland market. Some key distribution agreements have been reached and franchising operations are likely to begin next year.
Wearit is currently in the process of getting indications of commitments from investors. Their due diligence summary is available from email@example.com.
Menumate has a new CTO and VP Sales on board. Software license sales are up 9.9% from the previous quarter. Negotiations nearing completion for a new franchise in Hong Kong ahead of the timing in the strategic plan. $650,000 new capital raised to date, including $350,000 from Christchurch investors. Subscriptions still available, contact firstname.lastname@example.org for the IM.
DebtorDaddy is one of the companies in the current Christchurch Lightning Lab programme.
Marcel van den Assum spoke at an event at the newly-opened Greenhouse on Lichfield St. Marcel gave a presentation of two halves – firstly speaking about the state of angel investing in New Zealand from his position as Chair of the AANZ. Currently investment volumes have recovered back to levels seen back in 2008 and there is a healthy number of deals being closed through various angel groups up and down the country.
Marcel went on to give in-depth insights on his experience as an early investor and executive chairman of Greenbutton – leading to the successful acquisition by Microsoft in 2014, delivering a 10X return for the early investors. It was fascinating to hear first hand the techniques used to grow the business, maintain competitive tension between potential buyers and raising profile with senior Microsoft executives including Steve Ballmer and new CEO Satya Nadella. The other key takeaway was to be ready for exit – always maintain a full collection of up to date due diligence documentation ready to be used at any time, to speed the investment negotiations.
GreenButton was also the focus of Dan Khan’s recent presentation. Dan – a tech entrepreneur, investor and former director of New Zealand’s first tech company accelerator, Lightning Lab, has undertaken extensive research and in-depth interviews to explore the story behind the headlines. Last month, Dan presented his findings to a group of 40 entrepreneurs and investors at EPIC. You can download Dan’s personal Reflections on a successful exit here and in the in-depth GreenButton Story here. One of the take-home messages for Canterbury Angels was the huge role that GreenButton’s investors and board (particularly Marcel) played in pulling in trusting allies, prior co-workers, and team members to fill out the missing governance and operational roles to help Scott make GreenButton a success.
Lightning Lab kicked off in Christchurch on August 17. You may have seen the initial story in the Press, and you can follow the latest updates here.
The programmes capstone event, Demo Day, is scheduled for some time in November and we are working with the Lightning Lab team to see how Canterbury Angels can be involved with that event.
Some benefits of New Zealand Inc’s approach to fostering investment in early-stage companies are illustrated by the timely release of NZVIF’s Portfolio Investment Snapshots Report. (full report – summary press release here).
Not only does it show how efficient the Government’s investment has been in leveraging $9 in private capital for every public dollar invested, but also its dataset of nearly 200 companies provides some real intelligence around the risk/reward dynamics of early-stage investment in New Zealand, beyond the usual “1 in 10 (or 20)” rules of thumb of angel investment.
There are probably few surprises in the main lessons from the report. Early-stage investment continues to be risky business and its rewards may often be more intangible than tangible. There are encouraging success stories but investors need to be prepared for tough times, illiquidity, and losses too. Importantly, investors need to consider a portfolio approach and be prepared for making sustained follow-on investments.