Business Week published an interesting article on “Super Angels” – small firms unfettered by the corporate machinery of the bigger VC firms, and focussing on larger-percentage stakes in smaller seed-stage investments, launching startups for “only” $1M.
From time to time I refer to New Zealand as “honey I shrunk the country”, and so even though the scales at play in the US are different from here by orders of magnitude, we still have the “super angel” phenomenon, although we’ve approached it from the other direction.
With the flight of VC cash from the NZ market, players like Movac and Sparkbox have moved up the food chain from where they started. And it makes good sense, as the single-digit-millions (NZD) funding rounds, otherwise known as the “valley of death”, have been harder and harder to achieve from VC’s in the last couple of years.
The other key difference between NZ’s super angels and the microcap type funds covered in Business Week is that the NZ firms are true angels – they’re playing with their own money, unlike traditional VC’s who are typically playing with institutional cash.
I like to think that our model is better than their model for purely parochial reasons, and that the choices made by people with 100% of their own skin in the game will be more sensible. But we still have the basic problem in New Zealand that we find it tremendously difficult to scale our companies into international enterprises. And the main issue with that comes back to scale – “honey I shrunk the country”. It isn’t cheap to go offshore, and that’s where we need the supersize resources available in larger economies to make it happen.
But we can have a blended model (seed capital from NZ and expansion capital from offshore), and that’s what most entrepreneurs strive for.
Does governance have an image problem? Possibly so. While 73% of the Deloitte/Unlimited Fast 50 companies have boards there is anecdotal evidence that many other high growth organisations are slow to embrace external directors and formalised boards.
Why is that? Perceptions that a board’s primary contribution is centered around compliance has gradually shifted – strategic planning and direction is now recognized as being twice as important as other board functions including governance culture, management accountability and compliance. Two other issues may therefore be impacting the adoption of governance:
Alignment: directors are typically seen as being older, more conservative and culturally misaligned with the new breed of rapid growth ventures.
Access: entrepreneurs have limited opportunities to be exposed to potential directors and informally discuss or experience the value and support that can be provided.
These were some of the ideas behind SpringBoard – a group recently formed to support the next generation of New Zealand directors and to promote age diversity around the board table. Existing directors or trustees under 45 years of age now have a forum for sharing ideas and experiences as well as the ability to professionally grow through attendance at events. SpringBoard actively promotes younger directors for appointment to established and nascent boards in both the commercial and NFP sectors.
If you’re interested in joining this community then connect with us via LinkedIn. If you’re looking to be put in touch with directors from a younger demographic please make contact with SpringBoard here.
As further insights arise in relation to high growth governance we’ll share them with you via this NZ Angels blog.
Two studies from North Carolina State University show that project managers can get much better performance from their team when they treat team members with honesty kindness and respect, and that product development teams can reap significant quality and cost benefits from socializing with people who work for their suppliers.
In other words, “nice guys finish first”.
Dr Jon Bohlmann, the author of the first study says his results show that if a team’s leader was perceived as “basically being a nice guy,” then “team members showed a significant increase in commitment to the team’s success and to the project they were working on.”
The second study, led by Dr Rob Handfield, showed that significant cost and quality benefits can result from informal socializing between employees of a product-development company and those companies that supply the product developers with material and labor.
It does sound like common sense, but it’s nice to know that good business behaviour has tangible returns.
The International Sustainable Cities Forum to be held on 30 March brings together government and business leaders from both China and New Zealand, in conjunction with the first anniversary of the signing of the China-New Zealand Free Trade Agreement.
The overall aim of this Forum is to establish and leverage effective long-term cooperation between Chinese and New Zealand business leaders and high-level government officials. The visiting Chinese entrepreneurs and investors have also expressed interest in exploring commercial opportunities in New Zealand as well as to understand New Zealand’s approach to sustainable development.
The organisers have managed to secure the attendance of approximately 50 senior business and government leaders from China to attend this Forum. Key Chinese leaders confirmed attending include:
Wang Shi, the Godfather of Chinese real estate, Chairman of Vanke, with market capitalisation over US$10b, the largest property developer in China;
Feng Lun, Founder and Chairman of Beijing Vantone Group, significant property developer with market capitalisation over US$1b;
Xia Gang, President of China International Industry and Commerce Company, significant commercial property developer;
Zhou Qing Zhi, Chairman of Nandu Holdings, investor, philanthropist;
Wu Xu, President of Chongqing Sincere Holdings, with interests in property and finance;
Li Ai-Jun, Chairman, Taoyuan Habitat Group, property developer and investor, philanthropist;
Meng Gang , Chairman of National Chiao Tung University Real Estate Group, City Union’s rotating presidency;
Government delegations from Xia Men City in Fujian Province, Chang Xing County in Zhejiang Province, Zhu Jia Jiao Town in Shanghai City, Wu Jin District in Jiangsu Province.
On the New Zealand side, the organisers are expecting a number of senior Government ministers and mayors to be in attendance, in addition to business leaders representing a variety of business to attend.
At this Forum, participants will have unparalleled access to some of the top investors and decision makers in the booming Chinese real estate and investment sectors.
At a glance:
What: International Sustainable Cities Forum
Where: Langham Hotel, Auckland
When: 8am-5pm, Thursday, 30 November
Why attend:
Unparalleled access to key investors and decisions makers
Understand economic and political developments in China
Obtain analysis of China’s future trends and the implications for your business
Hear the latest updates from successful Chinese corporate and government leaders
Appreciate Chinese culture and the business of relationships
Fast track your China ambitions by connecting with China and NZ-based Chinese businesspeople
Know how to deal with Chinese businesspeople and government officials
Who should attend:
CEOs / Directors / Business owners who want to explore opportunities in China
Business development professionals in the property/construction/engineering / design sectors
Businesspeople who want to understand the mindset of Chinese investors and entrepreneurs
Businesspeople who want to sell products / services to Chinese firms and need information/ networks
Management teams seeking investors with capital and connections in China
Professionals who can contribute expertise towards building sustainable cities
Government officials desiring to strengthen connections with Chinese government officials
The organisers are anticipating a balanced crowd of approximately 25% Chinese, 25% Chinese New Zealanders and 50% other New Zealanders. This would enable good networking as we expect that attendees will not be at a forum where participants already know one another.
I just came across these gems from Guy Kawasaki’s blogposts from 2006. They’re just as relevant, and just as uncomfortably funny today as they were three years ago:
The top ten lies of venture capitalists:
1. “I liked your company, but my partners didn’t.”
2. “If you get a lead, we will follow.”
3. “Show us some traction, and we’ll invest.”
4. “We love to co-invest with other venture capitalists.”
5. “We’re investing in your team.”
6. “I have lots of bandwidth to dedicate to your company.”
7. “This is a vanilla term sheet.”
8. “We can open up doors for you at our client companies.”
9. “We like early-stage investing.”
10. I’m at a Starbucks in Hawaii writing this blog. I’ve been at it for ninety minutes. I don’t have my charger with me. My PowerBook is out of gas. You’re going to have to be happy with the top nine lies of venture capitalists until “Dear God” ships the PowerBook Vaio.
The top ten lies of entrepreneurs:
1. “Our projections are conservative.”
2. “(Big name research firm) says our market will be $50 billion in 2010.”
3. “(Big name company) is going to sign our purchase order next week.”
4. “Key employees are set to join us as soon as we get funded.”
5. “No one is doing what we’re doing.”
6. “No one can do what we’re doing.”
7. “Hurry because several other venture capital firms are interested.”
8. “Oracle is too big/dumb/slow to be a threat.”
9. “We have a proven management team.”
10. “Patents make our product defensible.”
11. “All we have to do is get 1% of the market.”
Do read Guy’s full blogposts, as they contain detailed explanations of each of the lies.
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.
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.
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.
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!
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.