Dave Moskovitz is one of New Zealand’s most experienced angel investors, and the author and presenter of this series. In this episode, we look at how Dave became a startup founder, and later an investor, as well as how he builds and manages his portfolio.
Originally from Los Angeles, Dave moved to Wellington in 1982, co-founded an early internet startup in the mid 1990s, and sold it during the dot-com boom before dedicating himself to New Zealand’s startup ecosystem.
Dave is a member of AngelHQ and invests through a trust with a capped allocation to angel ventures given their high-risk nature. Having seen thousands of pitches, he’s built a portfolio of around 30 companies, typically investing $20–30k in first rounds and increasing involvement as he invests more, from reading annual reports through to serving as an investor director. His biggest exit was Publons, a company from the Lightning Lab accelerator wjere he was that went from zero to healthy exit in seven years. His investment in Sharesies (which also came out of a Lightning Lab accelerator where he was Entrepreneur in Residence) has returned 18x on paper. He received the Angel Association NZ’s Archangel award in 2018.
You can find out more about Dave on his blog, dave.moskovitz.co.nz
Failure is the compost that nourishes success
Homework for this episode: go through your LinkedIn network, find some angel investors that you’re not distantly connected to, and start scheming how to connect to them. Extra credit for sending Dave a LinkedIn connect request. Include a message saying that you’re doing your homework, with a description of your startup.
Transcript:
Kia ora koutou, hello and welcome to Episode 3 of nzangels.com – a guide to raising angel investment in Aotearoa New Zealand. I’m Dave Moskovitz, one of New Zealand’s most experienced angel investors.
In this episode, I’ll tell you my story, how I became a founder, and later an investor. I’ll talk about why I am an angel investor, my MO, and what other adjacent initiatives I’m involved with.
But let’s start at the start.
I was born in Los Angeles in a middle class family. I had encephalitis when I was 5 which resulted in me being partially deaf. My mom was a professor of educational psychology, and dad was an electronics engineer who started his own business. I grew up soldering printed circuit boards on his knee. Dad taught me how to design circuit boards and early solid-state electronics. Mom had access to a timeshare computer at her university, and I started programming when I was 11. Dad’s startup failed due to slow-paying customers, so I got my first programming job at age 14 at another local startup. So I had electronics, computers, and startups in my blood.
I got a degree in Computer Science and Linguistics from Berkeley in 1981 with honours – my thesis was on artificial intelligence (yes, in 1981). I designed a natural language interface to a bibliographic database.
But I didn’t like the direction the USA was going in, and I was itching for OE. A friend at Berkeley, a New Zealander named David Teece, convinced me to move to Wellington. He’s now Sir David Teece, but that’s a story for a different time.
I arrived in Wellington on 1 December 1982 with a backpack and $500 in my pocket to a terminal that more highly resembled a leaky cow shed than an airport. A stiff Southerly was blowing, the rain was horizontal, and it was 11 degrees on the first day of summer. I was in love.
I want to thank New Zealand and New Zealanders for accepting me 44 years ago. And if you’re tāngata whenua – tēnā koe, I especially appreciate you taking me in, as well as all the other Pākehā. I hope to do my bit to uphold Te Tiriti which defines the relationship between Māori and those who arrived after. Later in the series we’ll talk about Kiwi values and how they affect how you build a startup and attract investment.
I got a job within a week of arriving, with Fletcher Challenge, and later for an American mainframe manufacturer. But I grew weary of corporates, and in 1990 I started a Ph.D at Victoria University studying the phonology of New Zealand Sign Language. It may sound random, but it was a great way to combine my love of languages, my deaf identity, and IT. I never finished the PhD, but did do the IT work behind the Dictionary of New Zealand Sign Language, and later the Māori Language Commission’s He Pātaka Kupu, the largest non-fiction work ever collected in Te Reo Māori. I developed a second career in computational lexicography, or dictionary IT. That failure to complete the Ph.D was the biggest professional failure in my life, but I can trace all of my later success back to the my time at Vic. Failure is compost that nourishes success.
In 1993, a friend told me to download a new program called Mosaic – the first web browser. I fired it up and said wow, this is going to change everything. None of my friends could see what I was so excited about, but I eventually convinced my wonderful wife Kate Frykberg to go into business with me building stuff on the Internet. We were domain number 302 in .co.nz, and Kate went on to become businesswoman of the year in the year 2000. We built a startup helping large companies and government agencies take their organisations online, and sold it at the top of the dot-com boom. Although we had built a great business with a fabulous team, rapidly growing revenue and loyal customers, we did get lucky with our timing.
Since then, my main passion is growing the startup community in Wellington and NZ. When people ask me what I’m about, I tell them I’m building the world I want to live in. I want to live in a city and country where entrepreneurs are pushing the boundaries of what’s possible, creating value, and making the world a better place. If you’re a startup founder, this is the work you’re doing. And you’re exactly the people that angel investors back.
I started investing in startups even before we completed our own exit. Back in the early 2000s, there were no formal angel groups, and we angels operated independently. I helped start AngelHQ, Wellington’s angel club, as I found angel investment was much more interesting and fulfilling as a group activity. All of us are smarter than any of us. I also ran 15 out of the first 16 Startup Weekends in New Zealand, was involved in the first 10 Lightning Lab accelerators, and I still make myself available to founders who need advice. I’m currently chair of the Global Entrepreneurship Network NZ, whose purpose is to unite the startup ecosystem, so that entrepreneurs can connect to the people and resources they need to thrive locally and globally.
I’ve earned the title “The Godfather of Wellington Startups”. Like Don Corleone, I want to go out with everyone owing me a favour. Actually, the Godfather epithet has a much more prosaic origin. I used to call myself the startup midwife – I like to coach founders at the the birth of their companies. Stefan Korn and I ran a seed fund in the mid 2000s, and he said that a midwife wasn’t very manly. Who else is around at the birth? The Godfather, of course. It stuck.
I invest through a trust, and have a maximum amount of my family’s assets that I can lock into angel ventures. They’re high risk. My anti-portfolio – the companies I could have but didn’t invest in – is outstanding, and includes TradeMe, Xero, and HNRY – that’s another story for a different time, but the TLDR is that I’d make the same decisions again.
As Wellington and NZ became better at generating startups, I’ve focused much of my effort on EdTech – as I believe the field is still very ripe for disruption, and education is a key component in self-actualisation.
My current portfolio has around 30 companies – depending on how you count – after seeing thousands of pitches. You can work out the hit rate. I’ll typically invest 20-30k in a first round, and more in subsequent rounds, and the more I invest, the more involved I’ll want to be – ranging from reading the annual report, through making introductions, through being an advisor, to being an investor director on the board. My most successful investment to date was Publons, a platform for academic peer review that started in the first Lightning Lab accelerator in 2013. My first investment was 5,000 in a convertible note during the accelerator. I became the investor director, and the company eventually sold after seven years valued in the mid-10s-of-millions of dollars. Although it’s been my biggest exit, it wasn’t my largest – there are still many in play.
After working as the Entrepreneur in Residence at the first Kiwibank Fintech Accelerator in 2017, I was in on the first round of Sharesies. So far, that’s returned 18x, on paper anyway.
For my efforts, I was awarded the Angel Association NZ’s Archangel award in 2018, which they give out to the top angel investor of the year.
I’m still an active member of AngelHQ, and am one of the members who screen founders looking for angel investment. That was a big motivator for me doing this course: I keep giving the same advice to newbie founders seeking angel investment, over and over. Now this advice will be codified properly into this series.
Your homework for this episode is to go through your LinkedIn network, find some angel investors that you’re not distantly connected to, and start scheming how to connect to them. Extra credit for sending me a LinkedIn request. Include a message saying that you’re doing your homework, with a description of your startup, and I’ll accept your request for sure.
And the pithy quote I’d like you to remember from this episode is: Failure is the compost that nourishes success.
Our next episode is all about terminology. There’s a lot of jargon thrown around in the angel world, and we’ll demystify the basics so you’re not flummoxed by the double-dutch.
Until then, ka kite!
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