Entries from February 2009 ↓

The ICEHOUSE announced today that Greg Cross is replacing David Irving as Chairperson.  As a serial entrepreneur, seasoned investor, and the Chair of NZTE’s Beachheads programme, Greg should bring quite a lot to the position.  We wish you well, Greg, and look forward to seeing more great companies come out of the ICEHOUSE stable.

The New Zealand Venture Capital Association in partnership with Investment New Zealand will be hosting networking events next month in Auckland and Wellington on the development of the Venture Capital Industry in Israel.

Israel has one of the most successful Venture Capital industries in the world, and the speakers will discuss the Israeli experience in achieving that success.

Speakers

Ami Samuels
Senior Director, Private Equity at Poalim Capital Markets, a wholly owned subsidiary of Bank Hapoalim.

From 2004 to 2006, Mr. Samuels was a Partner at Star Ventures, an international venture capital fund. From 2001 to 2003, he served as Senior Vice President and Chief Financial Officer of Satlynx, a company specializing in two-way satellite broadband services. From 1998 to 2001, he was Vice President for broadband networks at Gilat Satellite Networks, and from 1989 to 1998, he worked as an investment banker at Lehman Brothers. He holds a BA degree from Haifa University and a MA degree in Management from Yale University.

Oren Monhite Yahav
Senior Vice President, Private Equity & Alternative Investments Hapoalim Securities, a wholly owned subsidiary of Bank Hapoalim.

Mr. Monhite Yahav has an impressive private equity and general business background. Prior to joining Hapoalim Securities, Mr. Monhite Yahav was a Vice President of Pacific Corporate Group (PCG), one of the world’s leading private equity investment advisors. At Pacific Corporate Group, he helped manage the relationships with and develops private equity strategies for the most sophisticated public pension plans in the world. While at PCG, Oren headed the Small/Middle US Corporate Finance (Buyouts) and Secondaries investment groups and led the identification, selection and due diligence of private equity investments. Previously, he was an attorney with Weksler, Bregman & Co., where he advised clients on mergers and acquisitions, private equity investments, and securities issues. Mr. Monhite Yahav is Chairman and Co-Founder of Dbursa Capital Ltd. Mr. Monhite Yahav holds an LL.B from the Radziner Law School in Israel. He received his MBA in Finance from the Yale School of Management.

Date and Times
Tuesday 24th March, Auckland from 5.30pm to 7.30pm, and
Thursday 26th March, Wellington from 5.30pm to 7.30pm

Both functions will be held at the offices of Chapman Tripp.

Cost

$25 (including GST) Members of NZVCA or INZ
$40 (including GST) Non-members

For more information, contact Linda Taylor, NZVCA on 09 309 1090 or support@nzvca.co.nz

Direct Capital and ABN AMRO Craigs have launched their Pohutukawa II fund.  They’re aiming for a fund size of NZD 250M which will invest in companies valued between NZD 20M – 150M.  Minimum investment is NZD 25K, to be drawn down over 3-5 years.

The New Zealand Institute has issued its second installment of its series of papers on the implications of the global financial crisis for New Zealand, following on from its “End of the Golden Weather” paper released late last year.

The Emporor Has No Clothes: New Zealand’s vulnerability in the face of the global financial crisis argues that New Zealand’s recent prosperity is based on credit-fuelled rising property values driving consumer spending, and export growth in the agriculture and tourism sectors.

Their key point is that New Zealand is very vulnerable to impacts through the credit channel on business activity and investment. The policy response required entails focus on maintaining the availability and stability of credit, rather than compensating for sluggish demand.

There is also a significant (but not large) risk that there will be an abrupt withdrawl of credit from overseas lenders, however this risk is mitigated by the relatively strong position of local banks compared to their overseas counterparts.

The institute also published a presentation outlining suggested remidies for this situation entitled Heavy Mountain Weather: Funding risks for New Zealand and proposed solutions, which concludes:

• New Zealand is being impacted through the growth channel (especially commodity prices, tourism and other export markets). But it is the credit channel where the greatest risks remain.
• New Zealand is different to the rest of the world. We have some advantages (a stronger banking system) but different vulnerabilities (dependence on offshore funding). New Zealand faces tighter fiscal constraints that limit options that involve increased government spending.
• New Zealand’s response must include an ability to support strategic New Zealand businesses, should they face funding difficulties that threaten their viability or makes them vulnerable to foreign take-overs.
• The response should leverage the Government balance sheet and create a conduit for Government strategic investment in companies, should this be required. The response should also include leveraging private sector investment through a government underwriting function and measures to attract overseas funds to invest in high return projects.
• A range of options should be considered; including the creation of a New Zealand growth fund that would leverage SOE assets, invest in other companies and run on a clear commercial basis with transparent governance.
• The rest of the response should contribute to a long term game plan for the country: to position New Zealand ahead of other countries in seizing opportunities as the world emerges from the global recession.
• The long term game plan should also correct the policy mistakes that have left a legacy of very high indebtedness to the rest of the world and increased New Zealand‘s vulnerability in the present crisis.

Both papers are well worth a read.

You can also listen to or download the author Benedikte Jensen discussing the papers in a segment from this morning’s Morning Report programme on National Radio.

In cased you missed her, Jenny Morel was talking about the local Venture Capital scene on Katheryn Ryan’s Nine to Noon programme on National Radio this morning.

Listen to or download the podcast from National Radio’s web site:

Key points:

• High growth companies are more likely to be successful getting investment if they have:
  • The potential to be a large global business
  • Access to a very large market
  • A Sustainable advantage in that market, eg patented technology
• Whatever we do in NZ, we’re slower to execute than in California.  We just don’t have access to the same resource pool here.
• Technology investment is great because it can lead to rapid returns for investors
• Entrepreneurs with deep industry knowledge are most likely to succeed
• There’s a huge shortage of money in NZ for taking businesses global; we always underfund them
• Great businesses need great teams behind them, and that costs money
• There’s a lack of people with a track record of success in high-growth industry – many of them end up overseas because of the lack of opportunity here
• There’s a lack of large pension funds – the government’s super fund is the “gorilla in the room”
• Idea behind VC is to actively manage risk in investments while retaining revenue and growth opportunities.
• Now is a great time to start up a business because there will be fewer competitors starting.

Greenfields Network, the new angel club based in Hamilton, launched this week, and issued the following media release.  Welcome to the scene, Greenfields, and we look forward to syndicating deals with you!

Venture capitalists and angel investors gathered companies in Hamilton this week to hear investment pitches from four companies at the first of the Greenfields Network’s investment meetings.

Entrepreneurs seeking capital investment presented their groundbreaking products and technologies to members of the new angel investment group. Feedback from the investors was positive, with follow up meetings planned in order to shape specific deals.

“We are pleased with the response from the investment community to this new initiative” said Michael Spaans, the Chairperson of Greenfields. “Investors are understandably wary in the current business environment, but there are still some great business opportunities needing capital to go forward. The Greenfields Network is well placed to connect new business with investors”.

Angel investment groups like the Greenfields Network typically operate in the seed and early stage investment zones. Greenfields provides investors with a preliminary assessment of these high risk ventures and then choose a selection to pitch to its member investors. “A bit like dragon’s den, but without the showmanship from investors” explains Peter Maxwell, the Greenfields Manager. “Investors get a feel for the person behind the company, and can co-invest with a group to gain a stake in exciting, often high-risk and high-reward, ventures”.

The Greenfields Network is cautious about its plans, accepting that investor appetites have dulled in past months. It will continue to recruit experienced and successful entrepreneurs and corporates as members, and will present deal opportunities as they arrive. Based in the Waikato, there will be strong support for agribusiness initiatives, but Greenfields will consider high growth initiatives from around the country, and across a range of sectors.

Strong support from the local business community, and seed funding from both NZ Trade and Enterprise and Hamilton City Council, prove the genuine desire of Waikato investors to support the early stage finance sector. But deals and membership aren’t limited to a regional focus. The Greenfields Network is a member of both the Angel Association of NZ and the NZ Venture Capital Association which will deliver syndicated deal opportunities from around the country.

TV and print may be oh-so-last-century, but it still feels pretty good when one of your investments gets positive traditional media coverage.  One of the companies that WebFund has invested in, DIYFather.com, has just published its first book: Call Me Dad.

Here’s TVNZ’s Close Up story on the book:

TVNZ Close Up story on DIYFather.com Call Me Dad

We’re having a book launch party at Dymocks Books in Lambton Quay in Wellington on Wednesday 18 February at 6pm.  Consider this an invitation to come along and help us celebrate the success of a book, a company, the startup ecosystem, and … fatherhood!

Start-Up Magazine have announced their Top 10 Startups for 2008:

• eBUS (Advertising/Media collaboration)
• Mindscape (Application development tools)
• PocketSmith (Personal finance forecasting)
• Celsias (Climate change portal)
• OffTheBack (E-tail)
• Bookhabit (E-books)
• endemicworld (Online design store)
• Polar Bear Farm (iPhone application development)
• Koordinates (GIS)
• Unimarket (SaaS E-procurement)

It’s nice to see local companies getting recognition for their hard work in an challenging environment!  Many of these companies are backed by angel investment, including Bookhabit and Celsias in which which I have indirect interests.  Go Team!

It’s time to share some love – I’ve added a blogroll block to the right column of the nzangels.com website.  The sites listed will provide visitors with useful links to angel groups, blogs, and other organisations that support the angel and start-up ecosystem in New Zealand.  I would be glad to include additional links, so long as I consider them to be generally aligned to the interests of angel investors in NZ.  If you do have a site you’d like me to include, just drop me a line.

Idealog Magazine this month provides an entrepreneur’s perspective on VC and angel investment, headlining with “New Zealand venture capital desperately needs a hit—an investment that pays back, big time. Without it, our venture capitalists struggle to fund creative Kiwi companies. Mike Booker discovers why we’re sadly used to hearing ‘no’”.

Um.  Guys, we need more than one hit … otherwise we start looking like the NZ cricket team from the 1980’s – you know, Richard Hadlee and Everyone Else.

The article describes the bind that VC firms are in since the original NZVIF series A funds were fully committed, and the implications of the dearth of local institutional investment.

NZVCA’s Colin McKinnon is right on the money, when he asserts

… the most important ingredient for the future health of the VC industry in New Zealand will be its people.  The industry needs funds managers who will inspire investor confidence through the quality of their investment choices and ability to nurture young companies through to a successful exit from their funds. These managers should be part of a vibrant network that includes capital markets, serial entrepreneurs, serial institutional investors and a financially literate public.

The industry is improving, albeit slowly, but that’s only natural given the level of resources at New Zealand’s disposal.  Our investment ecosystem is developing, both in breadth and depth, as well as connectedness and transparency.  So good on Idealog and its interviewees for being so open about the state of play.

But don’t take it from me, read the full Idealog article …