Manawatu Investment Group (MIG) has successfully led an investment in excess of $1 million into functional food business Speirs Nutritionals Partners LP. Speirs Nutritionals is commercialising Massey University developed technology that allows very high loadings of beneficial Omega 3 oils to be included in every day food items, with no impact on the product’s smell or taste.
In March 2009 Speirs Nutritionals signed a world-wide distribution deal with Croda International, a United Kingdom based publically listed company. Through Croda’s international market channels Speirs Nutritionals’ Omega 3 technology is marketed under the brand Omelife.
Dean Tilyard, Chief Executive of Manawatu Investment Group described the investment as a significant capital raising for an early stage New Zealand technology business. Tilyard says ”the climate for early stage capital raising remains tight and this investment reflects the strong technology underpinning Speirs Nutritionals and the significant progress the business has made in establishing a global marketing channel”.
Speirs Nutritionals Chairman Rodney Wong welcomed the involvement of the new investors adding that the new capital comes at a time when the business is transitioning from a focus on technology development to one supporting sales activity through its international partner.
Bill Payne is one of the USA’s most decorated Angel investors. In 25 years, he has invested in more than 50 companies, mentored hundreds, and foundedfourangelnetworks. In recognition of his contributions, Mr. Payne was awarded the 2009 Hans Serveriens Award, the US Angel Capital Association’s highest honour.
Thanks to BNZ, the Foundation for Research, Science and Technology, The ICEHOUSE, and many other organisations, Bill will be spending six months here in New Zealand as the BNZ University of Auckland Business School Entrepreneur-in-Residence at The ICEHOUSE, working on a variety of projects including running seminars for angel investors, mentoring startups, providing advice to government, working with tertiary education institutions on commercialising their intellectual property, and hopefully building some international syndication opportunities.
He has a busy schedule and will be visiting many regional centres round the country, but is keen to meet with a wide variety of people while he’s here. Bill is a very personable, approachable, and straight-talking guy, and we caught up with him over a Skype call to find out more about how we can get the most out of him while he’s here.
In the podcast, Bill talks about his own investment interests, how to put together a deal that satisfies everyone, how the “first-to-market advantage” is vastly overrated, and obtaining follow-on investment offshore.
The Halo Fund – a joint venture between seven angel investor groups and the New Zealand Venture Investment Fund – is being redesigned, having closed its fund-raising short of its $5 million target.
Halo Investment Management chairman John McDonald said the fund received strong interest from investors but the investment climate meant it received commitments of $2 million.
“The concept was extremely well received, but unfortunately, in the current environment, we were not able to translate that into sufficient firm commitments to proceed with the Fund.
“There was considerable interest from investors in gaining access to the companies in the angel and venture capital pipeline. We will look at some redesign of the fund and then consider re-launching it, possibly next year, when investment conditions improve.
The Halo Fund was aimed at investors interested in partnering with New Zealand’s most experienced angel investors to invest in new technology, high growth companies in dynamic sectors.
It aimed to invest into 30 plus companies over a two to three year period at the seed and start-up phase in sectors like software, bio-technology, and medical diagnostics.
New Zealand and Singapore angel investors have signed a land-mark partnership between the Angel Association of New Zealand and the Business Angel Network (South East Asia) which will assist both countries in the development of globally successful exporting companies.
Angel Association Chair Andrew Hamilton says the partnership is highly valuable for New Zealand as it will open up networks into South East Asia for our emerging global companies, both in terms of networks for investment and market access.
“With our trading links to South East Asia expanding with the signing of the free trade agreement with Asean, it is the right time to be expanding our investment links.
“Angel investment is a key asset class in economies, with European research showing that angel backed companies today, will represent 50% of the new jobs in 10 years time. The angel industry has developed significantly over the last few years world-wide and this partnership is further evidence of the growth of the industry.”
Joe Rouse, Director of Bansea, said: “We are delighted to form this relationship with New Zealand. We have seen a fantastic angel industry developed around the incubators and Universities in New Zealand and are looking forward to helping many of the companies funded from New Zealand using Singapore as a base to grow their Asian operations.”
Shout it from the rooftops – there’s going to be an IPO! It would appear that rumours of the death of the IPO have been greatly exaggerated.
The last start-up IPOs in New Zealand were in the class of 2007 – Xero, Burgerfuel, and NZ Farming Systems Uruguay; I’d argue that Burgerfuel probably didn’t belong in that class, and that NZFSU was more of a property play than an intellectual property play. Xero is the standout, and have deservedly done well after a hard slog.
Biovittoria’s IPO offers angel investors a lot of hope that it’s still possible to take great ideas through the investment cycle and come out the other end as a listed company. With backing by Endeavour Capital, ACC, Stephen Tindall’s K1W1 and the NZ Venture Investment Fund (NZVIF) they’ve managed to bring their product to the point where it’s ready for true international expansion.
Biovittoria appear to be in a great position to exploit their market, with exclusive rights the key ingredient in their PureLo artificial sweetener product. PureLo was the first natural sweetener of its type to achieve United States Food and Drug Administration (FDA) regulatory compliance through its Generally Recognised As Safe (GRAS) status. They expect full FDA approval in February next year. The global artificial sweetener market is worth over USD 3.5 Billion.
The prosperity of advanced economies is driven by innovation performance, which is why there are several reviews of New Zealand’s R&D industry in progress. Actions resulting from these reviews will improve economic outcomes most effectively if they address the four important obstacles to success discussed below. Innovation contributes to improvement in productivity per hour worked and to the formation of new businesses that can improve New Zealand’s export performance and wealth. New Zealand’s innovation ecosystem is already contributing. The Technology Investment Network’s TIN100 to be released in two weeks estimates that the top 100 technology companies produced overall revenues of $6.6 billion in 2008/2009, with $5.1 billion exported. These companies contributed over 23,000 jobs with average revenue per job of $280,000. They are growing.
Research conducted by the New Zealand Institute shows that the innovation ecosystem could contribute much more. New Zealand’s R&D spending per capita is well below average for the OECD. Despite an increase in effort over the last decade, New Zealand has a relatively poorly performing innovation ecosystem and is not yet making as much effort as other small countries that are seeking advantage from innovation.
Science provides the foundation of an innovation ecosystem. Skilled graduates, research contracts, technology licenses and launch of new businesses all flow from an effective science infrastructure. A successful innovation ecosystem has two important parts: the research facilities that produce the scientific output, and the business organisations that develop products and services for launch in international markets. The performance of the whole is only as good as the performance of the weaker part. Increasing output from the research units will only be sufficient to deliver a large economic performance lift if commercialisation performance is world class.
In recent years, many institutions that support the commercialisation part of the innovation ecosystem have been established in New Zealand: for example research commercialisation units, incubators, angel networks, and venture funds. We now have an innovation ecosystem with all the required participants and at best, the commercialisation of our innovation ecosystem is working well. However, the average performance is not reliably at the standard required due to four obstacles.
First, the larger and longer established commercialisation units perform relatively well but smaller ones need to be aggregated to achieve the critical mass required to field the wide range of skills necessary. Further, performance measures and incentives do not provide sufficient encouragement to form businesses so New Zealand is not creating as many firms with potential to become substantial exporters as it could.
Second, go-global businesses, those targeting international markets from inception, require skilled and experienced leaders, international marketers and boards. But there has not been time yet to accumulate the required talent in sufficient quantities and not enough effort to address the shortfall. The opportunity is to accelerate talent growth so the talent is looking for research with commercial potential as it does in successful innovation ecosystems, not the other way around as frequently happens in New Zealand.
Third, voice-of-market needs to be louder. The markets for our innovations are physically distant from New Zealand and therefore expensive and time-consuming to visit. Research organisations and start-up businesses usually have limited funds and plenty to do so there is an understandable temptation to get on with completing the research and developing the offer so revenues can be secured sooner, and before funds run out.
Investors report seeing hundreds of proposals where a scientist or entrepreneur has developed a product but has done no research to confirm whether or not there is a market for that product. The result is that when we approach customers the offer is often not what they need so another round of development is required. The solution is simple; we need to hear the voice-of-market much earlier and more strongly in the development process.
Fourth, more domestic expansion capital is needed. When our companies have gained a toe-hold in international markets they usually need capital for expansion. It is almost taken for granted that the source of capital to grow go-global firms will be international capital markets. In some cases international equity sale is necessary to secure channels to market or high quality business guidance. However, these inputs would more often be available without equity sale if our local innovation ecosystem was larger, more skilled, better connected and better capitalised.
One important reason why businesses are sold is that there are insufficient sources of later stage capital available within New Zealand. There is nothing inherently wrong with overseas ownership of these firms but, all other things being equal, it is better for the ownership of a successful international business to remain in New Zealand hands. Policy adjustments are required to encourage investment in productive assets, especially those that can help improve the current account, and to reduce the risks that limit the flow of equity and debt capital to expanding go-global ventures.
Ensuring that commercialisation units are at minimum sufficient scale, ensuring sufficient talent is available, listening more to voice-of-market and increasing the availability of domestic expansion capital will improve New Zealand’s innovation ecosystem. The innovation ecosystem will then contribute more to higher productivity, a stronger current account and economic prosperity.
The Springboard NZ governance group for emerging directors is starting up a Wellington Branch. The inagural meeting will be held on Tuesday 24 November at 5:30 pm at Minter Ellison, Level 24, Vodafone Tower.
The Angel Association AGM has been shifted in time and place on Wednesday 18 November at Minter Ellison Rudd Watts, 88 Shortland Street, Auckland. The agenda has expanded significantly as well, including consideration of applying to the Charities Commission for charitable status.
NZVIF’s $4 million commitment will be alongside the Trans Tasman Commercialisation Fund – an AU$30 million investment fund established last year to commercialise research at Auckland University and four Australian universities.
The investment partnership will look at commercial opportunities emerging from UniServices – Auckland University’s commercialisation agency. NZVIF and TTCF have already invested into two drug development companies spun out of UniServices – Pathway Therapeutics and Saratan Therapeutics.
NZVIF chief executive Franceska Banga said the partnership is encouraging given the level of innovation emerging from Auckland University.
“Auckland University is New Zealand’s highest ranked research university, and UniServices is generating some exciting commercial opportunities, as we are already seeing with Pathway and Saratan.
“NZVIF’s involvement in the trans-Tasman partnership ensures that there will be a New Zealand focus to companies being developed from New Zealand generated research.
TTCF Investment Manager Craig Reilly said there are significant investment opportunities in New Zealand-generated life sciences, engineering and ICT research.
“With this partnership, we hope to see greater investment in research which has the potential to advance to the commercial stage in global markets.”
NZVIF’s partnership with TTCF is through NZVIF’s Seed Co-Investment Fund. Through the fund, NZVIF is investing $40 million into early stage companies with strong potential for high growth, alongside investments made by its partners.
This is the eleventh partnership NZVIF has entered into through the Seed Co-Investment Fund. Through these partnerships, NZVIF and angel groups have co-invested over $33 million into 30 companies.
WebFund has invested in a new start-up, MusicHype, a music industry platform provider which will enable well-known bands and their fans to form valuable relationships.
The MusicHype team includes WebFund Directors Dave Moskovitz and Stefan Korn, Managing Director James O’Hare, Digital Strategist Annabel Youens, CTO Jeff Mitchell, and Hypemaster Adam Bryce.
