Morgo is Jenny Morel’s summit for people involved in NZ’s high-growth businesses. You’d be hard pressed to find a conference room in New Zealand with more entrepreneurial energy and smarts. Nearly all of the speakers are inspirational, and the quality and level of conversation is extremely high.
Unfortunately, Chatham House Rules apply, but here are some of the best generic quotes of the day:
Knowing where you’re going saves everything: time, energy, money, reputation, marriages
I don’t care about where our products are manufactured, or even designed. What I do care about is where we pay tax – we need to ensure our tax base stays healthy in New Zealand, otherwise it will place a disproportionate load on the rest of us.
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.
The NZ Herald has run some good articles on high-growth investment in the last week.
NZ’s Angel Industry Flourishes describes NZVIF’s quest to increase the pool of angel investors in NZ. Franceska Banga: “Finding 1000 angels is about deepening the number of angels that are active, and in particular drawing them into formalised networks, as well as encouraging new investors. There are some big pools of cash sitting around New Zealand looking for a home.”
Nothing Ventured begins (perhaps unfairly) with Jenny Morel describing the current state of the VC industry in NZ as “dire” citing the lack of institutional investors; K1W1’s Brian Mayo-Smith chimes in that the $150M they’ve invested is “a bit of a drop in the bucket” compared with what’s needed. Banga again: “The message from the Australian market to our institutions is: ‘Just get started. Stop mucking around and just start.’ Because until they actually bite the bullet and get engaged, they won’t know what they don’t know. It’s just conservatism at the moment.”
Who’s Who in the NZ VC Industry provides profiles of some of the key players. I was left scratching my head though at the journo Karyn Scherer’s opening line that “the purpose of venture capital funds is to give large loans to tiny businesses” … I think Karyn needs to do a little more research into the difference between debt and equity finance.
Computerworld also ran an article last week, Start-ups warned of VC funding pitfalls. Tony Crewdson, the former director of the INCIS project, suggests that entrepreneurs avoid external funding altogether as it “can distract you from your business, and it can also make you create a business you didn’t want.” Unfortunately for those individualists out there, in my experience, most great ideas require more capital to get off the ground than can be funded by organic cash flow. My unsolicited advice to budding entrepreneurs: If you’re planning on building a wildly successful business, you are almost certainly going to require external funding to get offshore. Sure, go in with your eyes open, but start seeking investment well before you need it.
There are two features which differentiate successful from mediocre investment funds. The good funds accelerate fast failure, and they also accelerate companies that are meeting and exceeding their targets.
On average, the announcement of an alliance has an 18% uplift in the market value of a small cap company.
Jenny Morel’s MORGO conference for 2008 is underway, and it’s some of the best professional development and networking time I’ve spent in a great while. The talks have hit the sweet spot between academic theory on the one hand, and moving personal stories on the other, with lessons from the coal face of applied sweat and sagacity bang in the middle. Most people you meet here have either hatched an audacious idea, or have funded one; in many cases both.
Here are some quotable quotes:
Bill Day, Seaworks [on going after a small slice of a large market, or focussing on the local market]:
What would you like for dinner, just some of the leg of a cow, or an entire ant?
Didier Elzinga, Rising Sun Pictures:
Growth doesn’t hurt when you’re growing, it hurts when you stop.