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 NZ Angel Association held its annual conference in Queenstown last week.  It was a great chance to meet up with old friends, get the good goss on what’s going locally in other regions, and trade war stories hopefully learning to avoid painful mistakes others have made.

There were a few recurring themes from many of the talks:

• It’s all about people.  When you invest in a company, you’re investing in a combination of ideas, resources, capacity to execute, and people.  Of these, by far the most important is the people.
• Failure is a great teacher. We tend to underrate previous failure as an experience. No one starts a company with the intention of failing, but we should appreciate and seize the learning opportunities presenting by failure.
• The Kiwi Diaspora is ready and willing to help. Kiwis are everywhere, and most of the overseas speakers with Kiwi connections laboured the point that the Kiwi Expat Association (KEA), NZTE and others are generous with their connections and networks.  You’re silly not to use them.

Stephen Tindall was presented with an Archangel Award, recognising his contributions to the angel space.

It was announced that Colin McKinnon has taken on the position of Executive Director of the Angel Association.  Given that he spends the rest of his time as the Executive Director of the NZ Venture Capital and Private Equity association, hopefully he’ll be able to encourage follow-on investment for successful early stage companies.

Some choice quotes from the summit:

Alan McConnon (Upstart Angels)

The rule of Five: It always takes five times longer, five times as much money, and yields one-fifth of the expected rewards.

The five P’s of due diligence: People, Punters, Portion, Profitability, and Plan.

A good idea is only 20-30% of the value of a company.

Sir Eion Edgar (Sinclair Investments Limited)

Never do anything you wouldn’t want to see on the front page of the papers.

My aim in life: To be sure that everyone owes me a favour

Jim Connor (Sand Hill Angels)

If you want a higher valuation, go get some customers

We love cheap penny-pinching entrepreneurs!

Don’t invest in R&D, only invest in execution.

Bridget Liddell (Fahrenheit Ventures)

NZ companies generally have surprisingly weak digital and internet marketing strategies

Large US companies have become incapable of growing, except by acquisition

All up, the summit was useful, although the ratio of angel investors to others was disappointingly low (my guess would be around the 50% mark); it would also be great to have more time to mingle in structured and unstructured settings.  I might respectfully suggest that (for some people, anyway) lunchtime wine tastings are not the best way to get people to focus on key issues.  That said, I’m glad I went and will be looking forward to next year’s summit.

The Angel Association will be holding their second annual summit in Queenstown on 5 and 6 November.

Speakers include Stephen Tindall (K1W1), Eion Edgar (Forsyth Barr) and Alan McConnon (Aorangi Labs).

Last year’s summit was brilliant, with great presentations and unparalleled opportunities to network.  Angel investing is all about building relationships and building the best teams to make your investments fly; you won’t find a better place to share knowledge and war stories with the great group of people that are New Zealand’s active angel investors.

To book your place, contact Anna Hamilton-Manns, or you can download the flyer for more information.

The angel investment scene is thriving in New Zealand.

That’s my take-out from the inaugural Angel Association NZ summit.  About 80 enthusiastic, committed, and engaged angel investors gathered at the Cable Bay winery for a day of seminars, networking, workshops, networking, debate, networking, food, and more networking.  My biggest regret about the event was that there wasn’t more time for networking.  Seriously.

Luminary speakers Joe Platnick, Stephen Tindall (who quoted my very own Kate Frykberg in his talk), Tom McKaskill and Rob Cameron provided excellent food for thought, while the brilliant culinary team at Cable Bay provided delectable food for the tummy.  I met loads of people with whom I’d only corresponded by email, or knew about through mutual friends before, made many connections and created opportunites for future relationships, and made some new friends too.

The breakout sessions on Building Value in your Portfolio run by Phil McCaw (Movac) and Greg Sitters (Sparkbox), as well as the session on Planning for Exit run by Colin Harvey (Ancare Scientific) and Tom McKaskill were particularly useful.

Phil and Greg built their workshop around key issues raised by the participants, which was a really nice approach.  Phil’s notes for this session can be found in his excellent blog.

Tom’s central thesis was that start-ups should focus on building strategic value for exit, rather than focussing on building a successful business.  The two goals can overlap, but not necessarily. He gave the example of a company he’d built which had virtually no sales revenue and was six months away from insolvency, but had built a product of great strategic value to his chief multinational competitors.  Pick up the phone, create some competitive tension between bidders, and voila – big payday.  Tom made it sound easy, and in order to make this strategy work you’d really need to be adequately resourced and have an appetite for the risks involved; but clearly it worked for Tom.

Both of these sessions underscored the importance of planning for exit before investing, and having clear expectations of value inflection points for everyone concerned.

I went into the conference with the desire to crack a key issue: increasing opportunities for cross-region syndication by angels with similar interests.  Unfortunately, this issue wasn’t formally addressed during the sessions, although I did have a chance to talk about it with a number of different players.

I’ve started an online discussion on the topic in the NZ Angels LinkedIn group.  If you have any ideas, please do contribute to the discussion; if you’re not a member of the LinkedIn group, you’ll need to join first.

In all, the Summit greatly exceeded my expectations; it was educational, created opportunities for new business, and was fun too.  You can’t beat that.

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.