NZVIF Annual Report 2008

The New Zealand Venture Investment Fund (NZVIF) published their 2008 Annual Report today.  It’s an interesting read, and provides a good bird’s-eye view of the sector from the point if view of a publicly accountable organisation that has to “walk the talk”.

According to the numbers, the walk has been a relatively pleasant one amidst considerable turbulence, although the outlook is uncertain.  The good news is that the aggregate value of their investments has increased by $3.42M, compared to the SOI forecast of $1.67M.  Given that at the end of the day valuations are very subjective, this might or might not mean much, but it’s nice to see it written on paper.  After all, this is the NZ Government speaking, not Enron.

Other items that leaped off the page:

With respect to VIF,

• They haven’t invested in any new VIF funds in the last 12 months, and are now willing to talk to anyone about potential fund investment at any time without a rigorous EOI process.
• VIF-backed funds made eight new investments in the last 12 months.
• Most of the existing funds are now nearly fully invested; only two funds are seeking new invesment opportunities.
• Software and biotech combined account for 50% of the invested capital.
• To date, a total of $175M of combined NZVIF and private capital has been invested in 45 different portfolio companies.

SCIF has been an area of activity and growth, and this is really positive for the angel space:

• There are now eight SCIF partners, compared to four at the beginning of the year
• NZVIF’s focus for the next year is growing the number of angel investment partners and investments
• SCIF invested $5M between 18 investments (that’s an average of $277K per investment by SCIF)

So, all up it’s quite a good story for the low-end, but shows signs of coming trouble at the top.  Given current economic conditions, without NZVIF-backed funds sloshing more cash around in the VC-space, will there be enough expansion funding to get NZ companies offshore?  It looks like we’ll have to rely increasingly on organic growth, outstanding value propositions, private equity, and overseas sourced capital.  C’est la vie – let’s keep growing our Angel-backed businesses, so that when the market turns we’ll be ready for prime time.