Bill Payne is an iconic US angel investor, who is visiting New Zealand for six months as the BNZ University of Auckland Business School Entrepreneur In Residence at The ICEHOUSE. He has founded four angel networks, and invested in over fifty companies.
Bill spoke recently alongside Wayne Mapp at a NZVCA and Angel Association function at NZX, discussing the importance of angel investment in the New Zealand economy, particularly in job creation and wealth creation. It was a great introduction to angel investing, and worth listening to if you’re not familiar with the space.
Bill revealed the results of some informal research he conducted, where he compared 2009 data on angel investment in New Zealand to the similar-sized areas in the US: Wisconsin, Oklahoma, and the Boston Metro area. Bill’s study showed that New Zealand angel investors are significantly more active than Wisconsin and Oklahoma, and that we invest at similar levels to the high-tech and well-educated Boston Metro area.
Synopsis:
Who are angel investors? Wealthy, experienced businessmen and women, and exited entrepreneurs who share their time and money with entrepreneurs in starting new ventures. They typically invest 5-10% of their net worth in total. They expect a high rate of return but know they can’t achieve that without a diversified portfolio.
Why are angel investors important? They create jobs in the economy. Most job creation in the US economy comes from companies less than five years old. Angel investors like to get involved right at the start of a company, but want to know if “the dogs will eat the dog food”; whether the product is a “must have” rather than a “nice to have”, a “pain killer” not a “vitamin pill”. Almost all companies are pre-revenue. Venture Capitalists on the other hand tend to get involved when companies are closer to break-even. Angels and VC’s are not competitors, we just get involved at different stages.
Angel investing has changed a lot over the last 15 years. We found that by working together with other angels in groups, we could use each others’ skills and experience and complete much better deals. There are now 16 angel groups in New Zealand, and we’re easy to find.
How do Kiwis compare to the US? There are some very impressive entrepreneurs here in New Zealand, biomatters, optima, power by proxi, mobile mentor, m-com, nexus6, are all great opportunities for entrepreneurs and investors. Entrepreneurs are founding great companies, and they’re being funded by Kiwi angels.
In 2009, $50m was invested in 62 companies. NZ Angels are funding proportionally more seed and startup companies than expansion than in the US.
New Zealand Angels funded more money into more companies than the similarly populated US states of Wisconsin and Oklahoma, and a comparable amount to the Boston metro area, which is considered to be a very active area.
Through their own successful entrepreneurship and the wealth they’ve generated through their own ventures New Zealand angel investors Sam Morgan, Stephen Tindall, and Rod Drury have helped to create more wealth locally through their investments and philanthropic endeavours. The jobs and wealth they create endure even after their exit.
Recommendations:
Celebrate angel investors and investment as important components of the economy
Encourage business-savvy wealthy people to become angel investors
Find ways to foster the creation and growth of angel groups
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.
Auckland-based wireless power solutions company PowerbyProxi has secured investment to accelerate growth from local investors Movac and Evander Management <outbind://5/#_msocom_1> , sending a positive signal that high growth potential businesses are still getting funded in these changing economic times.
PowerbyProxi delivers ‘unplugged power’ – eliminating the need for a physical power cable. The technology was developed to change the way electricity is delivered in hostile industrial environments where traditional power cables and physical connectors are problematic due to moving parts and/or wet and dirty environments. The technology can also be used for consumer device applications where convenience or design demands a wireless power solution.
PowerbyProxi Executive Chairman Greg Cross says, “PowerbyProxi are pioneers in the design and development of turnkey wireless power solutions. We’re delighted to have the backing of Movac and Evander Management as we go to market. Their investment and expertise will be used to accelerate technology development, grow the team and build on the 2008 launch of our first commercial products in the US.”
The current cap round as well as the follow-on round were fully taken up by angel investor Movac with a track record of early stage investment success including TradeMe, and Evander Management Limited a private investment company.
David Beard a partner at Movac said, “With all of our investments we look for high growth potential, and the PowerbyProxi technology, team and global potential impressed. We’re funding a company that has a fantastic market opportunity and a really compelling sales proposition. Movac is committed to investing in early stage companies. This investment shows that businesses can still get money in tough times if they are focused on meeting unmet needs.”
PowerbyProxi, based at the ICEHOUSE business growth centre, is founded based on leading edge research from the University of Auckland in 2007. The company has already come to the attention of industry due to a 12 month development effort with John Deere.
PowerbyProxi recently completed the commercial launch of the Proxi-RingTM, a completely contactless slip ring which is used to transfer power across 360 degree rotating joints. The new technology replaces mechanical slip rings which have a reputation for failure and high associated maintenance costs.
Greg Cross says, “Securing investment has allowed us to accelerate our plans for key international markets like the US and Japan. It will also enable us to build out our research and development team who really are doing some ground breaking work in this exciting space.”
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 ICEHOUSE is looking for an Executive Director to lead the ICE Angels and ICE Accelerator business units. This is a rare opportunity to make a huge difference to the start up scene in New Zealand, bring cool business concepts to fruition, matchmake between angels and entrepreneurs, and spend your working hours at the heart of one of NZ’s largest and most exciting innovation centre.
Position Description:
Title: Director, Start Ups
Reports to: CEO, The ICEHOUSE
Status: Full time
Location: Auckland
Remuneration: Upper $100k’s
The ICEHOUSE was established in 2001, in recognition of the importance of SME’s to the NZ economy. The principal aim is to create, assist, support and grow successful businesses which are world class.
Its story is compelling, in six years they have worked with 50 start up’s and more than 1,000 businesses, raising $30M for the start up’s and growing earnings.
The ICEHOUSE is seeking an Executive “Start Up” Director to lead and manage the ICE Angels (angel investment) and ICE Accelerator (incubator) business units and play a key role on the leadership team. Reporting to the CEO and ICE Angels Board; the Director, Start Ups will be responsible for the strategic and operational management of these key parts of our business. Key responsibilities include: new business development – attracting “talent” to the incubator, angel membership development & growth, portfolio management stakeholder and investor management.
The key success factors are:
a passion for assisting start up and early stage companies
strong general management and leadership skills and extensive commercial experience
exceptional communication skills
a high level of energy and enthusiasm for helping others to succeed
an ability to effectively manage a wide range of stakeholders and manage and deliver a range of projects.
demonstrated ability to create results in challenging and complex environments
experience within an entrepreneurial environment
want to make a real difference to growing NZ businesses
If you are interested, or know someone who might be, please email Roger Branch on roger@kinross.co.nz.
Angel investors Sparkbox and Stephen Tindall’s investment arm K1W1have launched a new “Start-Up Fund” specifically aimed at ICEHOUSE residents. The Start-Up Fund in conjunction with the Government’s Seed Co-Investment Fund (SCIF) will provide up to $150,000 per project, and will fund up to five projects per year.
The ICEHOUSE CEO Andrew Hamilton says the ICEHOUSE Start-Up Fund will provide early stage funding to enable outstanding start-up entrepreneurs with promising ideas to test them and build a case for the next stage of funding from angel investors.
“This is pre-angel and post friends and family funding. Since 2001, The ICEHOUSE has been the most active facilitator of start-up funding in the New Zealand market but too often the funding is too late and great ideas can fall over.”
Hamilton says the ICEHOUSE Start-Up Fund will help to bridge the gap that most budding entrepreneurs must survive in the transition from self-funding their business to external investors, who typically wish to invest in proven business concepts.
“The ICEHOUSE Start-Up Fund will enable people with good ideas to much more quickly determine whether they have a viable concept and, secondly, can they turn it into a business.”
The two partners in the Fund, Sparkbox and Stephen Tindall’s K1W1, are joined by the New Zealand Venture Investment Fund’s Seed Co-Investment Fund (“SCIF”), which will match the investments made. This will enable Kiwi entrepreneurs to get up to $150,000 in funding per project. It is expected that the Fund will fund up to 5 projects a year.
Sparkbox’s Greg Sitters said: “We like what’s going on at The ICEHOUSE. It is clearly New Zealand’s most successful business growth group and its incubator, which accelerates start-ups, is something we have been keen to get alongside for some time. Since the establishment of the angel investment market in New Zealand, led by ICEHOUSE affiliate ICE Angels, we have noticed there is now a gap in the market ‘pre-angel’ and this Fund with K1W1 fits nicely.
“We are targeting new residents of the ICE Accelerator, the ICEHOUSE’s incubator, who often are needing up to $150,000 to prove market size, market interest and to protect intellectual property (IP). If collectively we do our job well, the result should be an increase in the number of ICE Accelerator residents, investable New Zealand companies and successful founders.”
Andrew Duff of Sparkbox, said “The ICEHOUSE Start-Up Fund is an important development which allows Sparkbox, K1W1 and NZVIF to work closely alongside the ICEHOUSE team in order to assist the founders with their ideas, prove markets, protect IP and deliver investible companies to Angel funders.”
Andrew Sharp, General Manager and co-founder of the ICEHOUSE graduate Black Hawk, which is involved in vehicle tracking solutions, says his company would be years ahead of where it is now had the Fund been in place when he was getting the company off the ground in 2005.
“This is brilliant,” says Sharp. “It’s almost impossible to overstate how tough it is to get a start-up company with big ambitions off the ground. I’m sure the ICEHOUSE Start-Up Fund will really help to reduce the failure of promising start-ups that simply can’t fund the development of their ideas.”
About The ICEHOUSE
The ICEHOUSE is a business growth centre focused on making a difference for New Zealand.
It is a charitable trust founded by the University of Auckland Business School partnering with BNZ, Boston Consulting Group, Ernst Young, HP, Microsoft, Minter Ellison Rudd Watts & Telecom/Gen-i.
The founders wanted to help more New Zealand companies to succeed here and internationally. They understood that these success stories would have a significant and long-term impact on New Zealand’s prosperity which is critical to our future.
Since 2001, The ICEHOUSE has worked with 65 start-ups and just under 1,500 established businesses. Its guidance and mentoring has allowed businesses to raise close to $35m for start-ups, while established businesses are growing earnings on average by 31% p.a.
You probably read the recent announcement about the establishment of the Angel Association of New Zealand. Andy Hamilton, the CEO of The Icehouse and founder of the ICE Angels in Auckland, is now also the chair of the Angel Association’s Council.
We caught up with Andy and asked him to tell us more about the association’s plans, including:
Andy’s vision for the angel space in NZ
Providing a single voice to government
Help with education of new angel investors
Promotion of angel investing
Enabling better syndication, both local and international
If you’re interested in more information about the Angel Association of New Zealand, you can contact Andy at ahamilton@theicehouse.co.nz, or ring him at The Icehouse on +64 9 308 6200 or 0800 ICEHOUSE (0800 423 468)