If you are involved with an angel investment network or fund, the New Zealand Venture Investment Fund Limited would be interested to talk with you about a co-investment relationship. SCIF enter into co-investments alongside “approved Co-investors” through our $40 million Seed Co-investment Fund (Seed Fund) to invest into young companies at the seed and start-up stages. The SCIF partners choose the companies, decide on the details of each investment, and work with the ventures to help them grow and ultimately exit. The Seed Fund is there to support these partners as a passive co-investor.

SCIF invests to a maximum of $500,000 in any eligible company (or group of companies). Co-investment partners must, at minimum, match the amount invested by NZVIF, in each investment.

NZVIF is inviting private investors, investor networks and funds who would like to make an application to become an approved Seed Fund Co-investor to submit written proposals.

The evaluation process takes approximately three months and includes a desktop evaluation, a site visit, and detailed due diligence on the capabilities of the potential investment partner. If successful, a co-investment partnership will be offered by NZVIF.

NZVIF is also looking for expressions of interest from potential partners who would like more information on the requirements of becoming an approved Co-investor.

Process

This is a contestable process and NZVIF is looking for applications from potential Co-investment partners which demonstrates their experience, credibility, commitment and professionalism in early stage investing in New Zealand.

If you’re interested in applying, contact either Chris Twiss or Richard Palmer in the first instance to indicate your interest.

You’ll then be asked to submit an application that addresses the following areas:

1. Is the proposed angel investment structure a ‘best practice’ commercial and legal structure? The proposal should adequately describe how the applicant intends to govern and manage its operations.
2. Explain how the proposed structure is commercially and sustainably viable in the medium term.
3. Does the applicant have in place adequate processes and systems across all stages of the investment process – sourcing deals, due diligence, negotiating terms, managing investments, etc?
4. Provide a full explanation of the decision making process including details of the key investment personnel, investment committee, and any other parties who will have a role in investment decisions.
5. Does the applicant have a credible board and investment management team (or individual) who understand and have experience in running an early stage company investment business?
6. Does the applicant have access to credible and experience investors who understand investing in seed and early stage companies?
7. What sort of track record and investment strategy does the applicant have in terms of making money in early stage company angel investing?
8. Does the applicant have the necessary experience with co-investing and deal syndication to ensure access to capital and markets in New Zealand and offshore?
9. Does the applicant have an extensive pipeline of potential investments?
10. Is at least $5m of private sector capital available over a 3-4 year period for co-investment with the Seed Fund?

Applications close on 27 August 2010.

For more informatio, see the official Call for Applications.

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1. Manawatu Investment Group and SCIF put $1m into Speirs Nutritionals

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.

Related posts:

1. Manawatu Investment Group and SCIF put $1m into Speirs Nutritionals
2. Wayne Mapp talks about innovation and commercialisation

Conceived and managed by WaikatoLink, AngelLink is a new national angel investment network specifically designed to commercialise intellectual property from universities and CRI’s, and is backed by the country’s most experienced and well-resourced hi-tech and biotech investors.

It brings New Zealand angel investment to the next level.

This is exciting news for a number of reasons:

• Movac, K1W1, Sparkbox, Neville Jordan, Waikato University, AUT, and SCIF are coming together to actively collaborate. While these players have co-invested with each other on a tactical basis before, this is the first time they’ve all agreed to work together in a more formal, strategic framework.
• Research institutions generate considerable intellectual property that until now has never seen the light of day, due to limited resources and commercialisation experience in the niche investment spaces and geographic locations that they occupy. A national network will increase the likelihood of successful commercialisation of some of New Zealand’s best IP.
• Conversely, angel investors nationwide have had limited access to university-sourced IP. AngelLink will give access to opportunities to a wider group of experienced investors.

The common theme is that all of the stakeholders – inventors, entrepreneurs, incubators, investors, and government – all understand that there are huge gains to be realised by working together, and have the appetite to make it happen. People realise that the pie can be made disproportionately bigger by relinquishing some ownership and control.

There’s a word for that – maturity.

And the experience and professionalism is evident from the start. AngelLink achieved SCIF accreditation prior to launch. Although based in the Waikato, they chose to launch at NZX in Wellington to underscore the national nature of the network. AngelLink is not a small club of wealthy dentists and farmers. At the launch, Chris de Boer, AngelLink’s chairman, said that he’d never seen such a broad spectrum of New Zealand investors in one room, ever. The gathering included people like Wayne Mapp (Minister of Science Research and Technology), Mark Weldon (CEO NZX), Franceska Banga (CEO NZVIF), Sir John Anderson (Chancellor Waikato University), Jim Bolger (Chairman NZ Post), Neville Jordan (Endeavour Capital), Mark Stuart (CEO WaikatoLink), Greg Sitters (Sparkbox), Phil McCaw and David Beard (Movac), Suse Reynolds (Angel HQ), John Errington (CEO VicLink), as well as a number of familiar faces from the local Wellington angel scene. Exposure to the entire investment food chain is compelling.

Chris said that they already have pipeline with four deals ready to go on day one.

There is some potential risk in setting up a new national angel network that has some overlap with the existing regional clubs. Some of New Zealand’s fledgling angel clubs are struggling to achieve and maintain critical mass, both in terms of investment capacity and ability to attract quality opportunities. But that shouldn’t be a problem so long as AngelLink sticks to institutional IP, and doesn’t compete with clubs for deals coming from local incubators and garage entrepreneurs. Syndication is all about sharing expertise, resources, risk and reward in such a way that everyone benefits.

And if AngelLink continues in the same manner as it has started, everyone will benefit from commercialising previously hidden IP.

New Zealand will be the winner.

It has been an excellent start to the year for seed, startup and early expansion investment, with both numbers of investments (33) and amount invested ($30M) for the first six months of 2009 higher than for all of 2008.

Most of the activity was in Q2; in other words, we’re on a steep upwards trend:

NZTE Escalator were particularly active with seven investments, along with ICE Angels (5), Cure Kids Ventures (3), MOVAC (2), Pacific Channel (2), Powerhouse Ventures (2) and others taking lead roles.  It was especially interesting that 85% of the deals involved syndication partners, significantly higher than previous reporting periods.

Even more telling is that the number of deals where SCIF was the only co-investor has dropped from 12 in 2007 to 8 in 2008 to only 2 in the first half of 2009.

That’s excellent news for the industry.  Investment groups are taking risks together, and not relying on gummint.  NZTE Escalator is taking tiny bets on embryonic plays where even angels fear to tread.

We’re coming of age.

Download the report.

Indigo makes remote monitoring equipment based on mesh networking for the agricultural sector.  It’s cool emerging technology, locally developed with huge potential application internationally.

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• The Halo Fund No 1 provides a passive ‘fund’ approach to Angel investing.
• It gives investors a unique opportunity to gain qualified access in a cost effective manner to a portfolio of over 30 New Zealand early-stage, high growth investments.
• It does so by partnering with New Zealand’s most experienced Angel investors to invest in new technology, high growth companies in high-value sectors like software, bio-technology, niche manufacturing and medical diagnostics.
• The Fund will be a passive investor which invests on a one-to-two basis in deals vetted and approved by the co-investing partners and the New Zealand Venture Investment Fund Limited’s (NZVIF) Seed Co-Investment Fund (SCIF).

You can download the pitch book, or view the Powerpoint slideshare show below.

Please also be sure to read our legal disclaimer, and note in particular that nothing you read on this site constitutes an offer of securities.

According to the numbers, the walk has been a relatively pleasant one amidst considerable turbulence, although the outlook is uncertain.  The good news is that the aggregate value of their investments has increased by $3.42M, compared to the SOI forecast of $1.67M.  Given that at the end of the day valuations are very subjective, this might or might not mean much, but it’s nice to see it written on paper.  After all, this is the NZ Government speaking, not Enron.

Other items that leaped off the page:

With respect to VIF,

• They haven’t invested in any new VIF funds in the last 12 months, and are now willing to talk to anyone about potential fund investment at any time without a rigorous EOI process.
• VIF-backed funds made eight new investments in the last 12 months.
• Most of the existing funds are now nearly fully invested; only two funds are seeking new invesment opportunities.
• Software and biotech combined account for 50% of the invested capital.
• To date, a total of $175M of combined NZVIF and private capital has been invested in 45 different portfolio companies.

SCIF has been an area of activity and growth, and this is really positive for the angel space:

• There are now eight SCIF partners, compared to four at the beginning of the year
• NZVIF’s focus for the next year is growing the number of angel investment partners and investments
• SCIF invested $5M between 18 investments (that’s an average of $277K per investment by SCIF)

So, all up it’s quite a good story for the low-end, but shows signs of coming trouble at the top.  Given current economic conditions, without NZVIF-backed funds sloshing more cash around in the VC-space, will there be enough expansion funding to get NZ companies offshore?  It looks like we’ll have to rely increasingly on organic growth, outstanding value propositions, private equity, and overseas sourced capital.  C’est la vie – let’s keep growing our Angel-backed businesses, so that when the market turns we’ll be ready for prime time.

Basically, the fund allows registered angels to take a passive stake in a diversified portfolio of startups that have been selected by the rest of the significant angel space in New Zealand, with potential support from VIF and SCIF.  That’s a brilliant concept, in that it allows people to hedge their bets and swing the wisdom of the crowd into action to everyone’s benefit.

The Halo Fund could occupy an important place in any angel’s portfolio.  Sure, there are some areas that I think I’m smart about, and will be better at picking winners than most.  But it’s always nice to have a balance to one’s own hubris, and there are also a lot of other good opportunities out there that I’m not really qualified to evaluate to the depth I’m comfortable with.  The Halo Fund provides an excellent complement to my own expertise, and allows me to leverage off the expertise of others (and vice-versa), with low effort and low cost.

Here’s the press release:

A new $5 million angel investment fund is being established targeting new angel investors and which will increase the capital available to seed and start-up companies.

Seven angel investment groups from throughout New Zealand and the New Zealand Venture Investment Fund are launching the Halo Fund.  NZVIF will manage the fund.

NZVIF chief executive Franceska Banga said the Halo Fund is an ideal way for new angel investors to enter the market and become familiar with angel investing.

“The Halo Fund will give its investors access to a diversified portfolio – which is important part of angel investing – of early stage companies in New Zealand.  The Fund will invest alongside NZVIF’s Seed Co-Investment Fund and its active investment partners.

“To invest in the Halo Fund, investors will need to belong to one of the Fund’s partnering angel groups.  Investors will then gain access to deals and investments being made by all the partnering angel groups from across New Zealand.

“At present there are limited opportunities for New Zealand investors to access the early stage investment opportunities that exist in the New Zealand market place.  The Fund’s investment objective is to provide investors with qualified access to a diversified portfolio of 15 to 30 plus investments over the lifetime of the  Fund.

“The best people to guide early-stage investments are successful high-tech entrepreneurs.  The Fund involves leading accredited angel groups in New Zealand and a significant proportion of New Zealand’s leading angel investors who have extensive experience of investing, working in and exiting angel investments.

“It is a unique opportunity to gain qualified access in a cost effective manner to a portfolio of New Zealand early stage, high growth investments. And young New Zealand companies will benefit from the increased capital available to fund their growth,” Franceska Banga said.

The Halo Fund – Fact Sheet

Halo Partners:

• New Zealand Venture Investment Fund
• Upstart Angels (Dunedin)
• Ice Funds – Ice Angels (Auckland)
• Powerhouse Ventures (Christchurch)
• Venture Accelerator (Nelson)
• Manawatu Investment Group (Palmerston North)
• Pacific Channel (Auckland)
• Sparkbox (Auckland)

The Funds key terms include:

• The minimum size of the Fund is NZ$5 million.
• The minimum investment for an investor is $25,000
• The Fund will be a closed fund i.e. once the fund closes there will be no further opportunity to invest in the fund, and operate for 10 years.
• Proceeds from liquidating investments will be distributed to investors, not invested back in the fund.
• Maximum investment in any eligible company is $125,000 first round, maximum of one follow up round of another $125,000 matching Co-investors’ investments on a 1:2 basis i.e. the Fund will invest 50 cents for every dollar invested by the Co-investors.

The Fund will only invest in eligible deals.  Eligible deals are those deals that are brought to the Fund by one of its approved Angel Groups and are:

• In businesses or business opportunities which are at the “seed” or “start up” stage of development a the time of initial investment;
• Do not fall within the following industry sectors (but without precluding investment in innovations which might be used by these industries): property development, retailing, mining and hospitality;
• Have a majority of their employees (by number) and assets (by value) in New Zealand at the time of initial investment.

The Fund’s investment process is that as investments are made into early stage companies by the angel groups and NZVIF, the Halo Fund will also invest on a one-to-two basis.  As an example, if an angel group committed to invest $250,000 into an eligible early stage company, the Halo Fund would invest $125,000 – putting in 50 cents for every dollar invested by the angel group. NZVIF’s Seed Co-Investment Fund could also invest up to $250,000. The total combined investment into the eligible early stage company would be $625,000.

Venture Accelerator Ltd is an angel investment group bringing together a number of highly successful business people now residing in the top of the South Island. Shareholders come from Nelson and Blenheim areas.

NZVIF chief executive Franceska Banga said the partnership with Venture Accelerator increases the capital available for new start-up businesses in the Top of the South Island and throughout New Zealand.

“Venture Accelerator Ltd is a network of private investors investing in early stage businesses. They bring considerable business and entrepreneurial experience, and are looking to be very active in searching for and investing in exciting new companies.

“While the group is Nelson-based, it has close links with angel investor groups in other centres and has already been involved in co-investment projects throughout New Zealand. These groups connect start-up ventures with willing investors to facilitate the funding and success of emerging companies.

“Under the partnership, both Venture Accelerator Ltd and NZVIF will each invest up to $4 million into high-potential companies.”

Venture Accelerator Ltd chief executive Mark Houghton-Brown said the group has a passion for the sustainable development of the regional economy and will focus on innovative companies offering significant & progressive solutions where the investment can add significant value.

“New Zealand is generating wonderful innovation but many prospective start-up companies struggle to get their ideas to market successfully, because of the difficulty in finding willing partners with the contacts and the capability to assist them.

“At the same time individual investors often find it difficult engaging with local entrepreneurs in a satisfactory way because of the lack of infrastructure and support. The opportunities for both sides are considerable.

“Venture Accelerator Ltd comprises highly successful business people from the ‘top of the south’ keen to invest in exciting new ventures. Not only do we bring capital, but we also have considerable skills and experience, in a range of sectors, which will be of benefit to helping young companies grow successfully.”

Venture Accelerator Ltd’s partnership with NZVIF is through NZVIF’s Seed Co-Investment Fund. Through the fund, NZVIF partners with groups like Venture Accelerator to invest in early stage businesses with strong potential for high growth.

Franceska Banga said the Seed Co-Investment Fund is an important product in NZVIF’s investment portfolio.

“This is the ninth partnership we have entered into through the Seed Co-Investment Fund. Through these partnerships, we and our partners have jointly invested over $16 million into 18 companies.”

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.