WEBVTT 00:09:00.000 --> 00:00:14.520 Kia ora koutou. Hello and welcome to episode 3 of NZangels.com, a guide to raising angel 00:00:14.520 --> 00:00:19.960 investment in Aotearoa, New Zealand. I'm Dave Moskovitz, one of New Zealand's most experienced 00:00:19.960 --> 00:00:26.080 angel investors. In this episode, I'll tell you my story, how I became a founder and later 00:00:26.080 --> 00:00:31.919 an investor. I'll talk about why I'm an angel investor, my MO, and what other adjacent 00:00:31.919 --> 00:00:37.580 initiatives I'm involved with. But let's start at the start. I was born in Los Angeles 00:00:37.580 --> 00:00:43.640 to a middle class family. I had encephalitis when I was 5, which resulted in me being partially 00:00:43.640 --> 00:00:49.320 deaf. My mom was a professor of educational psychology, and dad was an electronics engineer 00:00:49.320 --> 00:00:55.840 who started his own business. I grew up soldering printed circuit boards on his knee. Dad taught 00:00:55.840 --> 00:01:01.320 me how to design circuit boards and early solid state electronics. Mom had access to 00:01:01.320 --> 00:01:05.800 a timeshare computer at a university, and I started programming when I was 11 years 00:01:05.800 --> 00:01:11.520 old. Dad's startup failed due to slow paying customers, so I got my first programming 00:01:11.520 --> 00:01:18.200 job at age 14 at another local startup. So I had electronics, computers, and startups 00:01:18.200 --> 00:01:24.440 in my blood. I got an degree in computer science and linguistics from Berkeley in 1981 with 00:01:24.440 --> 00:01:31.520 honors. My thesis was on artificial intelligence. Yes, in 1981, I designed a natural language 00:01:31.520 --> 00:01:37.360 interface to a bibliographic database. But I didn't like the direction the US was going 00:01:37.360 --> 00:01:43.500 in, and I was itching for OE, or overseas experience. A friend at Berkeley, a New Zealander 00:01:43.500 --> 00:01:48.520 named David Teece, convinced me to move to Wellington. He's now Sir David Teece, and 00:01:48.520 --> 00:01:54.640 he's still in Berkeley, but that's a story for a different time. I arrived in Wellington 00:01:54.640 --> 00:02:00.399 on 1 December 1982 with a backpack and $500 in my pocket to a terminal that more highly 00:02:00.399 --> 00:02:06.199 resembled a leaky cow shed than an airport. The stiff southerly was blowing, the rain 00:02:06.199 --> 00:02:14.400 was horizontal, and it was 11 degrees on the first day of summer. I was in love. I want 00:02:14.400 --> 00:02:18.880 to thank New Zealand and New Zealanders for accepting me 44 years ago, and if you're 00:02:18.880 --> 00:02:24.400 Tāngata Wenua, tēnā koe, I especially appreciate you taking me in, as well as all the other 00:02:24.400 --> 00:02:30.520 pākehā. I hope to do my bit to uphold Te Tiriti, which defines the relationship between Māori 00:02:30.520 --> 00:02:35.580 and those who arrived after. Later in the series, we'll talk about Kiwi values and 00:02:35.580 --> 00:02:42.480 how they affect how you build a startup and attract investment. I got a job within a week 00:02:42.480 --> 00:02:47.840 of arriving with Fletcher Challenge, and later for an American mainframe manufacturer. 00:02:47.840 --> 00:02:53.399 But I grew weary of corporates, and in 1990 I started a PhD at Victoria University studying 00:02:53.399 --> 00:02:59.120 the phonology of New Zealand Sign Language. It may sound random, but it was a great way 00:02:59.120 --> 00:03:06.339 to combine my love of languages, my deaf identity, and IT. I never finished the PhD, but I did 00:03:06.339 --> 00:03:11.640 do the IT work behind the dictionary of New Zealand Sign Language, and later the Maori 00:03:11.640 --> 00:03:16.540 Language Commission's Hei Pataka Kupu, a monolingual Maori dictionary, the largest 00:03:16.540 --> 00:03:22.399 non-fiction work ever collected in today's Maori. I developed a second career in computational 00:03:22.399 --> 00:03:29.060 lexicography, or dictionary IT. That failure to complete the PhD was the biggest professional 00:03:29.060 --> 00:03:36.679 failure in my life, but I can trace all of my later successes back to my time at Vic. 00:03:36.680 --> 00:03:41.980 Failure is the compost that nourishes success. 00:03:41.980 --> 00:03:47.860 While I was up at Victoria University in 1993, before anybody else had email, a friend told 00:03:47.860 --> 00:03:54.180 me to download a new program called Mosaic, the first web browser. I fired it up and said, 00:03:54.180 --> 00:03:59.180 wow, this is going to change everything. None of my friends could see what I was so excited 00:03:59.180 --> 00:04:04.600 about, this internet thing, but eventually I convinced my wonderful wife, Kate Frykberg, 00:04:04.600 --> 00:04:10.140 to go into business with me building stuff on the internet. We were domain number 302 00:04:10.140 --> 00:04:17.659 in .co.nz, and Kate went on to become business woman of the year in the year 2000. We built 00:04:17.659 --> 00:04:22.580 a startup helping large companies and government agencies take their organizations online and 00:04:22.580 --> 00:04:28.180 sold it at the top of the .com boom. Although we had built a great business with a fabulous 00:04:28.180 --> 00:04:33.980 team, rapidly growing revenue and loyal customers, we did get very lucky with our timing. 00:04:34.800 --> 00:04:41.600 Since then, my main passion is growing the startup community in Wellington and New Zealand. 00:04:41.600 --> 00:04:45.340 When people ask me what I'm about, I tell them I'm building the world I want to live 00:04:45.340 --> 00:04:49.640 in. I want to live in a city and country where entrepreneurs are pushing the boundaries of 00:04:49.640 --> 00:04:55.480 what's possible, creating value, and making the world a better place. If you're a startup 00:04:55.480 --> 00:04:59.720 founder, this is exactly the work that you're doing, and you're exactly the people that 00:04:59.720 --> 00:05:06.740 Angel investors back. I started investing in startups even before we completed our own exit. 00:05:06.740 --> 00:05:13.460 Back in the early 2000s, there were no formal Angel groups, and we Angels operated independently. 00:05:13.460 --> 00:05:18.860 I helped start Angel HQ, Wellington's Angel Club, as I found Angel investment was much more 00:05:18.860 --> 00:05:25.340 interesting and fulfilling as a group activity. All of us are smarter than any of us. I also ran 00:05:25.340 --> 00:05:30.460 15 out of the first 16 startup weekends in New Zealand and was involved in the first 10 Lightning 00:05:30.460 --> 00:05:36.520 Lab accelerators, and I still make myself available to founders who need advice. I'm currently chair 00:05:36.520 --> 00:05:41.719 of the Global Entrepreneurship Network NZ, whose purpose is to unite the startup ecosystem so that 00:05:41.719 --> 00:05:45.979 entrepreneurs can connect to the people and resources they need to thrive locally and globally. 00:05:45.979 --> 00:05:54.159 I have the title, the godfather of Wellington startups. Like Don Corleone, I want to go out 00:05:54.160 --> 00:05:59.940 with everyone owing me a favor. Actually, the godfather epithet has a much more prosaic origin. 00:05:59.940 --> 00:06:05.460 I used to call myself the startup midwife. I like to coach founders at the birth of their companies. 00:06:05.460 --> 00:06:11.660 Stefan Korn and I ran a seed fund in the mid 2000s, and he said that midwife wasn't a very 00:06:11.660 --> 00:06:20.780 manly term. Who else is around at the birth? The godfather, of course. It's stuck. I invest through a 00:06:20.780 --> 00:06:25.239 trust and have a maximum amount of my family's assets that I can lock into angel investments, 00:06:25.239 --> 00:06:32.400 because they are very high risk. My anti-portfolio, the companies I could have invested in but didn't, 00:06:32.400 --> 00:06:38.719 is outstanding and includes TradeMe, Xero, and HNRY. That's another story for a different time, 00:06:38.719 --> 00:06:46.080 but the TLDR is that I would make the same decision not to invest again. As Wellington 00:06:46.099 --> 00:06:50.140 and New Zealand became better at generating startups, I focused much of my effort on EdTech, 00:06:50.140 --> 00:06:55.580 as I believe this field is still very ripe for disruption, and education is a key component 00:06:55.580 --> 00:07:02.380 in self-actualisation. My current portfolio has around 30 companies, depending on how you count, 00:07:02.380 --> 00:07:09.260 after seeing thousands of pitches. You can work out the hit rate. I'll typically invest 20 to 30k 00:07:09.260 --> 00:07:14.099 in a first round and more in subsequent rounds, and the more I invest, the more involved I want 00:07:14.120 --> 00:07:19.600 to be, ranging from reading the annual report at the low end through making introductions, 00:07:19.600 --> 00:07:26.560 being an advisor, to being an investor director on the board. My most successful investment to 00:07:26.560 --> 00:07:31.280 date was Publons, a platform for academic peer review that started in the first Lightning Lab 00:07:31.280 --> 00:07:38.320 accelerator in 2013. My first investment was $5,000 in a convertible note during the accelerator. 00:07:38.580 --> 00:07:44.580 I became the investor director, and the company eventually sold after seven years, valued in the 00:07:44.580 --> 00:07:49.900 mid tens of millions of dollars. Although it's been my biggest exit, it wasn't my largest 00:07:49.900 --> 00:07:55.780 investment. There are still many in play. After working as the entrepreneur in residence at the 00:07:55.780 --> 00:08:02.140 first Kiwibank FinTech accelerator in 2017, I was in on the first round of Sharesies. So far, 00:08:02.360 --> 00:08:09.400 that's returned 18x, on paper anyway. For my efforts, I was awarded the Angel Association 00:08:09.400 --> 00:08:17.240 NZ's Archangel Award in 2018, which they give out to the top angel investor every year. I'm still 00:08:17.240 --> 00:08:21.520 an active member of Angel HQ, and I'm one of the members who screen founders looking for angel 00:08:21.520 --> 00:08:27.440 investment. That was a big motivator for me doing this course. I keep giving the same advice to newbie 00:08:27.440 --> 00:08:33.340 founders seeking angel investment over and over and over again. Now this advice will be 00:08:33.340 --> 00:08:39.620 codified properly into this series. Your homework for this episode is to go through your LinkedIn 00:08:39.620 --> 00:08:45.140 network, find some angel investors that you're not distantly connected to, and start scheming 00:08:45.140 --> 00:08:51.340 how to connect to them. Extra credit for sending me a LinkedIn request. Include a message saying 00:08:51.340 --> 00:08:55.980 that you're doing your homework with a description of your startup, and I'll accept your request for 00:08:55.980 --> 00:09:04.480 sure. And the pithy quote I'd like to remember from this episode is, failure is the compost that 00:09:04.480 --> 00:09:11.680 nourishes success. Our next episode is all about terminology. There's a lot of jargon thrown around 00:09:11.680 --> 00:09:16.600 in the angel world, and we'll demystify the basics so that you're not flummoxed by the double-dutch. 00:09:16.600 --> 00:09:19.440 Until then, ka kite!