OnYa Kiwi Entrepreneurs

Posted by: Phil McCaw in Entrepreneur resources, Angel Investment on 2-Mar-2010, Read comments (0)

Mesynthes Obtains U.S. FDA 510(k) Clearance for Endoform Dermal Template™

Posted by: Phil McCaw in News on 3-Feb-2010, Read comments (0)

Novel Biomaterial for Wound Healing and Regenerative Medicine

WELLINGTON, NZ (February 2, 2010): Mesynthes, a privately held regenerative medicine company, today announced that the U.S. Food and Drug Administration (FDA) has granted 510(k) clearance for the company's Endoform Dermal Template^TM. Endoform, a proprietary extracellular matrix biomaterial, provides a unique biologic template for tissue regeneration.

"FDA marketing clearance for Endoform Dermal Template^TM paves the way for commercial launch into the U.S. dermal market and establishes our Endoform^TM platform as a new medical biomaterial for tissue repair and reconstruction," said Dr. Brian Ward, Chief Executive Officer.

Mesynthes's Endoform^TM technology utilizes a proprietary extracellular matrix biomaterial containing a complex mixture of important biological molecules, including structural and adhesive proteins, such as collagens, elastin, fibronectin and laminin, and glycosaminoglycans.

"In tissue regeneration, it is now well recognized that a diverse mix of extracellular matrix components is important for orchestrating a regenerative response. These components provide important structure, signals, and substrates to cells within the healing tissue," said Dr. Ward. "Once applied to the wound bed, the Endoform Dermal Template^TM provides a uniquely supportive environment to guide the growth of cells and new tissue. Over time, Endoform^TM is completely replaced by the patient's own tissue. Clinically, the impact of applying extracellular matrix within a chronic wound is to restart the stalled healing process and stimulate new tissue growth in the wound bed. In acute wounds, extracellular matrix replaces lost dermis, advancing the wound healing process and reducing contracture."

Chronic wounds are difficult to heal, require ongoing care, and risk complications that can lead to amputation. In the United States, the treatment costs of chronic and complex wounds have been estimated to be $20 billion per year, which creates a significant burden on the healthcare system.

Endoform Dermal Template^TM provides a new tool to address this important issue. About the Endoform Dermal Template^TM
Endoform Dermal Template^TM is presented as a sterile dry sheet in a peel pouch and is strong and easy to handle in a dry or wet state. It is applied directly to the wound bed, then rehydrated, covered with a non-adherent dressing, and secured in place. Endoform^TM is quick and easy to apply, available off-the shelf, and doesn't require special storage.

Endoform Dermal Template^TM is intended for the management of a wide variety of wounds including:

• partial and full-thickness wounds 
• pressure ulcers 
• venous ulcers 
• diabetic ulcers 
• chronic vascular ulcers 
• tunnelled/undermined wounds 
• surgical wounds (donor sites/grafts, post-Moh's surgery, post-laser surgery, podiatric, wound 
• dehiscence) 
• trauma wounds (abrasions, lacerations, second-degree burns, and skin tears) 
• draining wounds

Endoform's unique features include its innate biology, strength, size, usability, and versatility. Also, Mesynthes' proprietary processing and ovine (sheep)-derived biomaterial combine to add a new level of xeno-biological safety and cultural acceptability.

Mesynthes is developing a suite of medical devices for applications in regenerative medicine including products for wound care and soft tissue reconstruction based on the Endoform^TM platform.

About Mesynthes
Mesynthes Ltd. is a privately held regenerative medicine company that has developed Endoform^TM, a novel extracellular matrix platform for soft tissue repair and reconstruction. For more information on Mesynthes and its technology and products, please visit our web site at http://www.mesynthes.com.

Contacts:
Brian Ward
Mesynthes Chief Executive Officer
Ph: +64 21 727646
Email: brian.ward@mesynthes.com

Joan Kureczka
Kureczka/Martin Associates
Ph: +1 (415) 821 2413
Email: Jkureczka@comcast.net

AngelLink welcomes Life Science Angels Network

Posted by: Phil McCaw in News, Angel Investment on 10-Nov-2009, Read comments (0)

Hamilton, New Zealand - 6 November, 2009 – AngelLink, a national angel investment network backing New Zealand high growth technology ventures, with an emphasis on life sciences, engineering and ICT, welcomes the inclusion of the Life Science Angels Network into its structure.  The move is designed to create greater scale and focus in the life sciences angel investment space.

Tindall becomes NZ’s first ‘Arch Angel’

Posted by: Phil McCaw in News, Angel Investment on 10-Nov-2009, Read comments (0)

Sir Stephen Tindall has been appointed the first ever New Zealand Arch Angel at the Angel Association of New Zealand's second Angel Summit in Queenstown on Friday.

Angel Association Chair Andrew Hamilton said the award of Arch Angel honours Sir Stephen's extraordinary contribution to the angel investing industry.

"Sir Stephen Tindall has invested over $150 million in seed and venture capital companies - both directly and as a fund-of-funds. He and his family have invested in over 100 New Zealand companies.

"His passion is to assist young entrepreneurs and he has invested in a variety of sectors including
biotech, clean tech, IT and design led companies. He wants to see New Zealand develop as a leader
in the ‘knowledge economy', and to help create a culture of making New Zealand ‘cash flow positive'
in international goods and services trade.

"Sir Stephen's wider contribution to New Zealand has been exceptional , including his charity work,
founding Kea - the expat organisation that now has over 25,000 members worldwide, focusing on
climate change, or actively investing into emerging Kiwi companies that are now taking on world
markets. His contribution is quite extraordinary in a world-setting and we are extremely grateful to
Stephen for his continued support and investment."

Houston might we have a problem?

Posted by: Phil McCaw in Financial, Angel Investment on 3-Sep-2009, Read comments (1)

Over the last couple of weeks our deal flow has gone through the roof.  In the normal course of events we receive about 100 investment proposals a year.  They range from "I had an idea in the shower this morning" through to "well worked up businesses seeded with personal and / or family money".  The thing that's different at the moment is that we're seeing:

• more deals,
• better worked-up - with money behind them,
• all looking for funding of between $1m and $5m, and
  
• backed by great people

This points to a giant hole in the early stage New Zealand capital markets - a complete dearth of options for young New Zealand companies to go to for second stage funding.  I say second stage because by and large the early stage, seed investment market is operating OK.  It's the second stage that looks increasingly broken.  And here's the rub, if we don't fix the second stage the first stage of the market will run out of steam as well!

What's this mean? For ENTREPRENEURS:

• make sure you have an excellent story regarding where your follow-on funding is coming from; and / or
• Bootstrap - find ways to make revenue = always a good thing!

For INVESTORS:

• Time to get our act together!
  

Mesynthes Wins 2009 Bayer Innovation Award

Posted by: Phil McCaw in News on 31-Aug-2009, Read comments (1)

Mesynthes - a medical device company - has been recognised for it's  work in the research and development of tissue scaffolds.  Mesynthes were awarded a Bayer Innovators Award in the Science and Health category.  Movac, Sparkbox and NZVIF have provided seed capital to Mesynthes.

The full press release follows:

Bayer Honours New Zealand’s Leading Innovators

Friday, 28 August 2009, 12:34 pm
Press Release: Bayer NZ

Bayer Honours New Zealand’s Leading Innovators

Auckland, Friday August 28 - Five of New Zealand’s leading lights have been acknowledged for their contributions to innovation at the 2009 Bayer Innovators Awards.

The Bayer Innovators Awards are designed to identify the country’s best and brightest innovators and this year’s winners are representatives from the science, commerce and agricultural sectors.

Winners were presented with their awards by the Minister for Research, Science and Technology, the Hon. Dr Wayne Mapp and Bayer Senior Country Representative Hans-Dieter Hausner.

Awards categories and winners are as follows:

Science and Health: Dr Brian Ward, founder and chief executive of Mesynthes Ltd. A medical device company, Mesynthes develops and manufactures speciality devices for wound healing and tissue reconstruction.

Design and Engineering: Rod Walker, executive director and head of research and development at Simcro Animal Health Delivery Systems. The company specialises in manufacturing customised animal drug delivery systems for the pharmaceutical industry.

Agriculture and the Environment: Professor Richard Warrick, founding director and chairman of the board of Climsystems Ltd. The company designs, develops, and markets advanced, user-friendly software systems for assessing climate variability and change.

Information Technology and Communications: Patrick Costigan, founder of Motorweb and chairman of the New Zealand Inventors Trust. Motorweb is a web-based e-government system which facilitates motor industry transactions with government departments while improving consumer protection and reducing legal compliance costs.

Research and Development: Professor Jim Johnston, Professor of Chemistry, School of Chemistry and Physical Sciences, at Victoria University of Wellington. Professor Johnston is internationally recognised for his research and development of new innovative nanotechnology materials and chemical process technology platforms.

Hans-Dieter Hausner, said it was important to acknowledge not only innovation, but the people leading these endeavours in New Zealand.

“I firmly believe that innovation is vitally important to business success, not only for individual companies, but also for countries as a whole.

“Behind every great creative advancement, there is an individual – an innovator, and it is those people that we recognised through the Bayer Innovators Awards.”

Mr Hausner added that Bayer had increased its research and development spending to the equivalent of approximately 6.2 billion New Zealand dollars, the largest amount in Bayer’s history.

“This investment is designed to drive our growth and create innovations that hold potential for the future, thereby safeguarding jobs and prosperity – even if the fruits of these efforts will not be evident for many years.”

The Hon. Dr Wayne Mapp acknowledged Bayer’s contribution to innovation and its support of the Awards.

“Bayer has a long history of successful products in New Zealand in healthcare, agribusiness and high-tech materials. It’s also a very important global player in research and development, investing more than six billion New Zealand dollars globally last year,” he said.

“This is a significant figure financially, and it very clearly marks Bayer’s serious commitment to research-led innovation. The commitment is also, of course, strongly reflected in the Innovators Awards that Bayer has established in New Zealand.”

Held annually, the Bayer Innovators Awards are now in their third year. For further information on the winners and other finalists, visit www.bayerinnovators.co.nz

ENDS

New angel investment network targets life sciences

Posted by: Phil McCaw in Angel Investment on 26-Aug-2009, Read comments (0)

Wellington, Tuesday 25 August, 2009 – A national angel investment network has been launched to back New Zealand high growth technology ventures, with an emphasis on life sciences, engineering and ICT.  AngelLink aims to bring together active angel investors with a constant stream of high quality IP based deal flow, to facilitate early stage investment.

AngelLink’s members include some of the country’s leading biotechnology and high technology investors: Neville Jordan, a prominent science, technology and engineering investor; angel investment company Movac, an early investor in TradeMe; investment fund K1W1; and Sparkbox, an ICT angel investor.

AngelLink has partnered with the NZ Venture Investment Fund (NZVIF) through its Seed Co-Investment Fund.  NZVIF will contribute up to $4 million which will be matched AngelLink. Follow on investments from the angel investors could also substantially increase the investment over the initial $8 million target.

AngelLink Chairman Chris de Boer says, “Angel investors are a vital source of early-stage financing for high-growth science and technology companies.  We’re launching AngelLink at a time when access to capital is more important than ever.  We can make a very real contribution to New Zealand by unleashing economic potential from high quality science and technology research.”

AngelLink’s formation was initiated by WaikatoLink, the commercial arm of the University of Waikato, which will have a role managing the network and screening, monitoring and incubating ventures. 

WaikatoLink Chief Executive Mark Stuart says, “We need to take an NZ Inc approach if we want to achieve the scale required for the innovation ecosystem to deliver what it is truly capable of and to drive New Zealand’s success.  AngelLink’s collaborative investment approach will draw on the success we’ve had with Unicom, the university commercialisation consortium we initiated for collaborative investing at the earlier pre seed investment stage. National collaboration is the best way to ensure the highest chance of success for ventures.”

AngelLink's nationwide network and collaborative investment approach will allow a range of investors to participate in investment. 

Greg Sitters from Sparkbox says, “AngelLink and Unicom provide deal flow for participating members.  These initiatives represent one of the most organised and developed technology transfer collaborations between education, science and the investment industry.  In practise we will see better structured, better organised, investment ready opportunities.  We will be able to work quicker to turn around our investment decisions and support the company.”

“The benefits of AngelLink’s intentional co-investment strategy are clear cut.  We are 10 – 20, 000 miles away from our markets.  We need to get close to our markets as quickly as possible, and we’ll be able to do that by drawing on the experience of the group and tapping into existing networks.  If we can shorten a venture’s time to market by 2 years through this collaborative approach it may be the difference required to achieve market success.  We now plan on making at least 75% of our investments in collaboration with other investors to utilise capabilities of each group in an investment.”

David Beard a partner at Movac, another AngelLink member, reinforces this message, “AngelLink encourages co-investment among investment parties for the betterment of New Zealand and its structure fosters and supports this process. AngelLink represents the next step forward in angel investment as it exposes investors to more deal flow and better value propositions. Our investments stand the best chance to succeed when they have a good group around them to help them succeed – and this is not just about money, it’s about skills, experience and networks.  Each party brings something unique to the table. Our last 4 deals were co-investments and we envisage AngelLink will facilitate better and across a wider set of investors than we currently deal with.”

To ensure a vibrant angel investment network, investors need to see regular high quality opportunities. For each investment one of the core experienced investors will act as lead creating opportunities for co-investment with a larger group. 

Deal flow will come from a variety of sources across New Zealand including research institutions, universities, incubators, industry networks and professional networks, in order to offer angel members a diverse range of opportunities for investment. 

"AngelLink's strong focus on life sciences and nationwide coverage will see more early stage life science projects spun out of the lab into the market with benefits to all.  Angel Investment is an important part of the investment landscape and one which NZBIO believes will be vital to the success of a mature New Zealand life science industry. We applaud the initiative and will be lending support through our network." says Bronwyn Dilley, Chief Executive, NZBIO.

Companies seeking investment will be screened and taken through a proven stage gate decision process to validate their suitability for investment.  The suitable investees will be mentored to prepare them for due diligence and presentation to potential angel investors. AngelLink’s rigorous pre investment due diligence will be matched by close engagement post investment.  Each venture will be monitored and mentored to ensure visibility and planning for future investment rounds and syndication.  WaikatoLink, with a strong track record in due diligence and investment performance, will play a key role in this process. 

AngelLink will follow on from other collaborations to support commercialisation such as Unicom, the university commercialisation consortium comprising WaikatoLink, AUT University, Lincoln University and Canterbury University, which is supported by government pre seed funding.
 
Dr. Nigel Johnson, Director Research and Innovation, University of Canterbury says, “The Unicom collaboration has demonstrated value through pooling resources, networks, best practise, IP and experience across the group. Visibility at an early stage allows us to combine IP from the universities, if appropriate, and to tap into the skills of the group for commercialisation. This means we’re not duplicating effort and giving each venture the best chance of success. AngelLink continues this collaborative approach to investment.”

Dr. Kevin Pryor, Chief Executive, AUT Enterprises adds, “New Zealand is small and we have limited financial capital, human capital, and limited access to mentor programmes and in market advisors. The scale and increased activity we’ve achieved with Unicom has helped us attract a top calibre independent investment committee including Bill Day, Hon Ruth Richardson, and Professor Mark Ahn.  This has lifted the level and quality of business planning and commercialisation processes and ensures ventures are prepared for angel investment through AngelLink. “

AngelLink aims to connect investees to the full continuum of funding through its lifecycle from science to market spanning proof of concept, angel investment, early stage venture capital, expansion stage venture capital, and public markets.  

“At an industry level there is a real need to make some improvements to generate more economic benefit from life sciences and technology research.  We need to start with the end in mind and bring the market in from the start. We need to encourage a co-ordinated approach and funding models that encourage collaboration rather than competition.  AngelLink represents a step change in early stage company investment by formalising visibility to upcoming investment opportunities to all of the partners across the investment continuum”, says Mark Stuart.

Hon Dr Wayne Mapp, Minister for Research, Science and Technology adds, “The highest priority for the New Zealand Government is growth. Future opportunities will depend on innovation and entrepreneurship and much of this comes from fundamental science. AngelLink will connect research and investors with the intent of getting science to the marketplace. Our future prosperity depends on getting this right.”

– ENDS –

Free Book: Invest to Exit - Tom McKaskill

Posted by: Phil McCaw in Entrepreneur resources, Angel Investment on 15-Jun-2009, Read comments (0)

Tom McKaskill is a very successful business entrepreneur and well known and respected author on the subject of building businesses for exits.  I've known Tom for a couple of years now and enjoyed his significant insights on the subject of Angel Investing and exit planning.  Tom has written several books which are all excellent essential reads for entrepreneurs and investors alike.  I'd strongly recommend that you take a look at them.  The two he's making available free of charge are!

1. The Investor Pitch - see http://www.tommckaskill.com/art_Investor_Pitch.pdf; and
2. Invest to Exit - A pragmatic strategy for Angel and Venture Capital Investors.  Investors in early stage ventures need to focus on strategic exits if they are to achieve a high return on their investments. This book explains the characteristics of strategic value, how the investor should negotiate the investment and how they should manage the process to a strategic trade sale. The book includes a very detailed discussion on the problems of high growth ventures, the unrealistic expectations associated with IPOs and the advantages of investing in strategic value ventures. See http://www.wholesaleinvestor.com.au/public_panel/news_detail.php?id_NEW=44 or http://www.avcal.com.au/research/australian/4 or http://nzangels.com/

ENJOY!

How to address the recession

Posted by: Phil McCaw in Our Criteria, Entrepreneur resources, Angel Investment on 25-Feb-2009, Read comments (1)

The global recession is starting to bight hard.  But recessions present great opportunities for innovation.  Anecdotally and somewhat surprisingly (for us) the companies we've invested in have been experiencing an uptick in inquires over the last 6-months.  This appears to have been stimulated by a far greater willingness from businesses to consider change.  Anything that can help reduce costs or stimulate demand are now being more willingly considered.  So, that's good.

However, capital markets are drying up and early stage investors need to consider long and hard the wisdom of investing in start-ups that have large on-going capital requirements - in this environment.  The view we're taking at the moment is to "shy away" from opportunities that we see will need more than $5m in capital to commercialise them.  The reason being that the risks associated in raising this capital have increased significantly over the last 6-months.  We want to see businesses that could be realistically bought to market without requiring a big hit from a large US Venture Capital firm.

The path-to-break-even is also extremely important in this environment.  Cash is king and demonstrating a path to early cash flow generation will be a real plus in the eyes of any early stage investor.  To manage risk we are look long and hard at whether companies have options for generating enough early stage sales to become self-sufficient (maybe not hitting the high growth points we earlier would have hoped for) but providing the opportunity to ride out the storm and be positioned for growth when the world starts to right itself.  FYI, my current view is that we're in this for atleast another three years....i hope i'm wrong and it's shorter.

In summary three things to think about:

1. How does your business / opportunity provide value, to who, in a recession?
2. Be conservative on your overall cash requirements - don't set a plan to raise the same amount of money as Facebook or Twitter?
3. Plot a potential path to break-even....ASAP

Tax break's for small business - hygiene

Posted by: Phil McCaw in Tax, Economic Policy on 21-Feb-2009, Read comments (0)

The government announced a range of tax breaks for small businesses on the 4th of Feb.  By and large this was all good stuff and if we weren't in the throws of a deepening recession would have been received to tumultuous applause.  Frankly the provisional tax penalty regime is an absolute crock, you get pinged because you earned more money than you thought - now that's an incentive for growth.  So by and large the package fixed a bunch of hygiene factors - stuff where improvement was needed but nothing that was reflected the new set of economic circumstances business face.

But i digress, i've been mulling over what would be something radical, something different that the govt could do from a tax point of view to stimulate business.  So here it is...make equity investments in businesses tax deductible...particularly if the money is lost.  Why do i suggest this?  to stimulate the flow of private capital into businesses.  Debt has dried up and institutional money has shrunk dramatically, so anything that makes more capital available and ensures the longevity and future prosperity of these business should be a good thing.  I appreciate that i'm sailing very close to suggesting a Capital Gains tax regime here and maybe its time to have that debate as well.  But that's a topic for another day.

END RANT.  Comments welcome.

$1.5b on broadband - i don't get it

Posted by: Phil McCaw in Technology, Economic Policy on 21-Feb-2009, Read comments (2)

I don't get why the New Zealand tax payer needs to spend $1,5b on delivering fibre-optic broadband to the masses.  According to Gartner 43% of NZ households had Broadband access in 2007.  Admittedly its DSL but for the average home punter it's OK and it's getting better.  Our three leading Telco's say they can do it and they don't need the govt money - sure they have a vested interest.

So what are we going to do with better broadband?  We're going to watch more YouTube and download more movies i.e. spend more on US derived content, wow that's got to be good for NZ - more mindless drivel.  I don't think it will make me faster at reading Stuff and NZHerald and if i ever become a Facebooker i'm sure its my typing speed that will be my biggest handicap.

Where's the economic benefit in this for New Zealand?  Sure, some will argue it provides a platform for New Zealand businesses to promote and sell their products and services overseas.  BUT, if you're going to do that then you host your web-site in the CLOUD and guess what the CLOUD doesn't need the NZ fibre-optic network, cos it lives in the US and Europe.

In my experience the biggest issue we face in developing Internet based businesses from New Zealand is getting the market development strategy right.  The Internet is a very big place to pitch a tent.  The problem is not an infrastructure one for NZ based Internet plays, the problem is how do you grow and promote a business globally.  You do this very carefully, one step at a time using the established channels - viral marketing, Internet advertising and social networks.  Perhaps the $1.5b would be better spent by making it available to NZ businesses that are trying to do this (oops, now i have a vested interest! didn't see that coming).

New Zealand Red Cross Givealittle Challenge

Posted by: Phil McCaw in Philanthropy on 12-Feb-2009, Read comments (0)

The human tragedy and suffering unfolding from the Australian Bushfires is immense.  If you've found this post then follow the link to www.givealittle.co.nz/campaign/movac and help us help our neighbours.

Angel Philanthropy

Posted by: Phil McCaw in Philanthropy on 4-Feb-2009, Read comments (2)

Late last year i was having a catch-up with Dave Moskovitz, the brains behind NZAngels amongst other things, and we were discussing angel philanthropy and he challenged me to start blogging on the subject.  At the time i thought OK and i headed back to the office ready to break out into print.  Half an hour later i figured out this wasn't going to be a 10 minute blog post.  So the New Year's trucked in and i thought i'd give it another go.  I will write here in a series about a personal journey into the unknown.  Philanthropy is a subject that i am an absolute babe in arms and something i'm only just starting to explore in any depth in 2009.

That said, 2009 is going to be one gigantic challenge for the charitable sector in New Zealand, with all the major Foundations starting to report material reductions in the amount of cash they have available to give....such is the reality of the financial recession we are now in.  So now more than ever there is a need for us all to stand up and be counted - for those who aren't active, to make the time and money available and get engaged and see whether we can help fill the breach.

The greatest challenge i've faced personally in trying to engage with philanthropy has been to understand FIRST "WHAT DO I BELEIVE IN" and SECOND to then find those causes (amongst the squelions out there) that are THE MOST EFFECTIVE and MOST SUSTAINABLE in achieving those goals.  Both parts of this equation are not easily answered and i'm only just starting to scratch the service of these questions.

What i know so far is that all Angel Philanthropists are different and the choices they make are deeply personal and influenced by their upbringing and experience.  One thing though that does seem to be a constant is they all want to know that THEIR MONEY IS BEING WELL SPENT, and that the organisations they give to CAN MEASURE THEIR PERFORMANCE and REPORT ON PROGRESS.  This simply reflects the backgrounds of Angels - they're successful business people, they demand high standards, and expect outcomes.  That's a good thing and something not a lot of charities yet get.

But i'm dodging...the question i posed above was "WHAT DO I BELEIVE IN?".  So here's a macro view and then let's try to break that down...I'm privileged to be in a unique position to be able to MAKE A CONTRIBUTION and haopefully MAKE A DIFFERENCE....SO WHAT?  Well, for me charity begins at home, i'd like to contribute to "MAKING NEW ZEALAND THE BEST PLACE IN THE WORLD TO LIVE AND RAISE FAMILIES"  When i put that out there i've got some concerns around:

• social dislocation in parts of New Zealand
• the seeming break-down of family values and family support systems
• the unsustainable way that we've chosen to live
• the impact of the recession on people and families who lose employment

So my personal journey around Angel Philanthropy is going to be find ways to contribute to organisations and projects that make progress in addressing these issues. As i said at the start, i'm a babe in arms on this subject, this blog post is me stepping up to the....start line.

PLEASE all advice, comment most welcome.

Givealittle set to change giving in New Zealand

Posted by: Phil McCaw in News on 10-Dec-2008, Read comments (0)

media release

Givealittle has launched with plans to change behaviour and attitudes to giving in New Zealand by offering a new way for everyday donors and business givers to engage with charity and the non-profit community online.

Givealittle.co.nz is an online marketplace where those doing great things for the community can attract givers of time and money as well as build a network of supporters for their community-good initiative.

International research suggests that up to one third of all giving will be made online by 2010. Givealittle is part of an international movement to harness the potential of the web for social good.

Any non-profit, charity, school, community group or individual working towards the greater good is welcome to register at Givealittle.co.nz. There is a wide range of projects that givers can support directly, ranging from some of New Zealand's most well-known charities to small innovative individual projects.

Chief Executive Nathalie Hofsteede says Givealittle.co.nz has been set up to normalise giving time and money in New Zealand and lower the cost of fundraising for New Zealand's non-profits and community groups.

Founded by Ms Hofsteede with investment partners Movac, Givealittle.co.nz offers a sustainable and cost effective platform for the New Zealand community and non-profit sector.

Based on 18 months of research, consultation and development, Givealittle.co.nz is set to change the way we think about giving in New Zealand.

"I started Givealittle.co.nz to address some of the common concerns we were hearing from the public around existing methods of giving.

"Everyday we are bombarded with requests to give. We are asked to give into a white bucket on the street, put money in the post, view a TV advert then call a 0900 number. I think everyone's favourite has to be the phone call at dinner time. What we were hearing from people was an absence of the good feeling that we should have when we give.

"Givealittle.co.nz is an online home for everyone. You can find something you care about and get involved easily. You can also be assured that what you are giving is going directly to the people and projects that you want to support," says Ms Hofsteede.

"Through the web we can build a community of New Zealanders to share in the great results that can be achieved when many people give a little. "

Another important driver behind Givealittle.co.nz is to protect the personal information and privacy of donors.

"During our research many people indicated they felt fatigued by the continued requests to give after they donate, or that their personal details were being sold as part of donor databases." Ms Hofsteede says.

Givealittle.co.nz vigilantly protects member privacy and information, whilst retaining the option to receive feedback and communication as a donor after you have given.

Attachments

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BMW Oracle Trimaran

Posted by: Phil McCaw in Random on 9-Dec-2008, Read comments (0)

MAN, say what you want about the BMW Oracle vs Alinghi court fight, also the fact that this BIG BOYS TOYS thing seems inappropriate as we head into a global recession, but boy would i like to see this thing racing!

For more picies see bmworacleracing.com

Attachments

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It's Xmas - i've gone to the light!

Posted by: Phil McCaw in Technology on 9-Dec-2008, Read comments (0)

OK, so I've been looking over the shoulder enviously at all those Mac users for some time.  What is it that makes them gush, oooh and arghhh so much about their machines?  Why do I as a mere Windows users feel so second rate?  Why do i not LOVE my machine the way adoring Apple users do?

SO...I've ventured to the WHITE SIDE, to find out...My very first computer was an Apple IIe so i feel like i'm coming home...but i've been a Windows users for 20 years now...so can i do it?...painlessly?

Why have i ventured forth on such a productivity destroying mission?  Well my four year old PC is suffering from bloatware, it got decidely slower about a month ago when Bill downloaded the latest CPU sapping patch.  What's more the writing was on the wall - while i was nice and comfy in WindowsXP and OfficeXP i wasn't going to be able to stay there for another year.  So given the choice of Vista + Office 2008 or Mac + Office 2008 I've punted for the latter.

What i bought: 24" iMac + MS Office 2008 (some things i just couldn't let go of).

First impressions: for a week I tracked my new Mac online as it was delivered via China.  I watched with high expectations at around 8:30 the other morning when the courier tracking system proclaimed that it was "In Wellington and out for deliver" - time 7:30am.  Expectations rising, Mac likely to arrive through the door any minute.  Morning comes and goes.  Lunch comes and goes.  Early afternoon and still no sign...arghhh....where is it???  A call through to the courier....it's on the road, it will be there soon...but i have to leave the office soon...panic setting in...where is it???  call from the courier, it well be there in 10 minutes...yee haa, start dancing a jig around the office (why? i don't know, it must be a Mac thing?).  The courier is here, but he only has one box...that's strange...sign for it and tell everyone in the office "it's here!"...unwrap the plain brown box and find one of those pretty white boxes inside...a bit like Russian dolls...pull out the WHITE box, temperature rising, rip open the white box...oooohhhh, arghhh, my it is VERY PRETTY so very very much prettier than my tired old PC.  BUT, strange again, only one plug, where's all the cables?  no need for a power box?  Turn it on....ooooggg arrggghhh...hello in 30 different languages flying across the screen...it's just so pretty...heads turning in the office...a general cry of "i want one too"...well "you cant have it, it's mine!"...

OK, I've turned it on, got it connected to the network and bugger me if i can't figure out instantly how to get working...this is going to take some time...installed MacOffice and another very strange thing...even Microsoft can make their icons look cool on a Mac! fancy that.

OK, I'm back on my PC as i need to get some work done.  Clearly the holiday project is going to be unlearning everything Windows and learning everything Mac.  10 years of short-cut keys out the proverbial window...i guess that's progress!

Stay tuned, I'll let you know when I'm productive again!  Now how do i migrate 10 years worth of email?

Attachments

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Repatriating talent, capital and contacts

Posted by: Mark Vivian in Technology, Entrepreneur resources on 12-Nov-2008, Read comments (0)

The current turmoil in financial and business markets does have a potential upside for early stage NZ ventures - the prospect of experienced Kiwis returning and others migrating to New Zealand.

Several local recruiters are already reporting that they're experiencing a surge in enquiries from those seeking to return or migrate from the UK and US sooner than they had planned. Many have gained specific knowledge, capital, and most importantly, contacts, from their time working overseas.

For those of you who are building (or potentially building) NZ-based businesses, such people can be critically-important resources, either as employees, advisors or investors.  

On the flip side, for many of those who have worked in specialist roles overseas, there are simply no corresponding roles in NZ, hence the need to re-invent themselves to a certain extent. Others will see their migration as the chance to stop working in a traditional corporate environment. So for many, either starting a new venture or getting involved with early stage ventures will be their most likely form of business actitivity.

A logical way to try and find these returning Kiwis and new migrants are though networking events run by incubators, business groups, and professional service providers, as they themselves will be using such events to connect with what's going on locally as well.  

Just something to bear in mind for those of you seeking potential routes to specific market knowledge, investment capital and well-stocked Rolodexes.

Creating value

Posted by: Phil McCaw in Entrepreneur resources, Angel Investment on 30-Oct-2008, Read comments (1)

The inaugural angel association conference is scheduled for next week.  This conference is a great opportunity for angel investors to get together, network and share war stories.  I've been asked to run a session at this conference on the subject of "creating value in companies", so i thought i'd take the opportunity to: a) get organised; and b) share some thoughts.

So here goes..."Building value in investee companies...an investors perspectives".

Three key things to think about:

Focus early on the things you believe will create value,

Actively avoid the things that could destroy value, and

Actively manage your on-going funding needs

Things that add value

Building a business and managing your investment funding is about identifying and doing the things that create value in a business.  So, if we did an initial investment at say a valuation of $2m, we need to ask and answer the question "what do we need to do to grow the value to say $6m".  From an investment point of view the valuation should be increasing significantly at each subsequent investment round.  So what's the justification for value increase?  Well, it kinda depends on the idea and the industry that the business is operating in, but the things i look for are:

1. We've nailed the technology / product - note i use "we" because when Movac invests we become a team and its our job to help ensure these objectives get achieved...moving on...the first investment stage should ABSOLUTELY sort out the key technology or product risks and establish that the company can produce its widgets and ideally knows how to scale production up.  Generally i take this as a given - KIWI's are bloody good at this.
   
2. We've protected our technology position - this is not relevant to all businesses, but patents can have significant value.  They provide a window of opportunity and protection for executing a new idea.  They also provide a basis for licensing deals. But you need to go beyond simply filing a PCT (i don't rate PCTs without the backup) and do the real work...establish freedom to operate and commence the process of filing in your targeted market geography.  This means finding and spending the money on a good patent lawyer.
   
3. We've passed or progressed any major regulatory hurdles - again not relevant to all businesses but fundamentally important to BioTech businesses and any physical product that is likely to run into regulatory hurdles - domestically or internationally.  Be aware that the regulatory issues in Europe are somewhat of a mind field for young NZ businesses and this will be an area that you need help with.
   
4. We've assembled market proof - this is the stuff that, in my experience, KIWI companies are kinda crap at (gross generalisation, I know).  The strongest position that you can be in, in this regard, is that you are trading product; and/ or have signed distribution agreements; and/ or have an established pipeline of opportunities.  Leverage the support that NZTE and organisations like KEA can provide to this process.  You need to get offshore, meet people and do deals.  You need to figure out how to sell your widget globally.
   
5. We know how to scale up - we've addressed how to scale our business, particularly manufacturing and distribution, we've worked out the issues associated with manufacturing at scale, we understand the support issues, we've worked through any compliance related issues.
   
6. We've got a great team that's positioned to execute - this one can not be under-rated and the worst assumption that we see made is when entrepreneurs believe they have all the skills and experience - in some cases they may have the skills but not the experience.  Having people that have been there before is absolutely invaluable and earns a BIG TICK from us.  An execution team, in our view will comprise:
   • A sales guy / gal - the person who can get out there and sell / market the sh*^te out of the product.
   • A product gal / guy - the person who knows how to make the product sing and dance.
   • A numbers guy / gal - the person who understands how the business operates in a spreadsheet.  Can articulate the implications of key decisions.
   • A strategic / management gal / guy - the person who can define and articulate long range strategy and who can recruit and build teams.
     
7. We've got good governance in place - ideally we've got a functioning board with some wise, experienced heads, one or two independents directors (who have no or minor shareholding stakes) and a robust Shareholder's agreement.  Shareholder agreements are crucial to enable effective decision making around subsequent stages of investment.

Things that destroy value

Apart from failing to achieve the things outlined above, the things that can destroy value in a business are typically the big time wasters such as:

1. Unaligned shareholders + poor governance - a shareholder and / or director group that is not aligned around the goals for their investment (particularly timeframes for returns), confused about their roles or in openly hostile confrontation are sole destroying for a start-up.  From an investment point of view you can smell these issues a mile away.  The tend to create a corrosive culture around a business and result in lots of wasted time and distraction.  For this reason - treat you shareholders and investors well; communicate openly and regularly; work at maintaining alignment but don't engage them in operational aspects of the business.
   
2. Entrepreneurs who do not listen - the transition from entrepreneur to manager of a global $10m plus business should not be underestimated.  Entrenched entrepreneurs who are not willing to adapt their role as the business develops can be and generally are major impediments to growth.  Working through these issues consumes a lot of time and is highly demotivating for all parties concerned.
   
3. Badly diluted founders - founders tend to be emotionally attached to their shareholding percentage and this can have a major impact on their on-going motivation in the business.  The tricky exercise here is managing the risk / reward equation throughout the on-going investment stages of the business.
   
4. Failing to manage the investment pathway - early stage companies always run out of money.  You need to stay on top of the businesses on-going requirements for capital and actively manage where you expect this to come from.  Avoid the assumption that the initial group of shareholders will keep investing for ever; regardless of how the company is doing you can not anticipate your investor groups wider drivers and limitation on funds.  See further comments below.

Managing the investment pathway

The investment pathway is something often ignored in the business proposals that we see.  Essentially this is actively planning the capital (investment) requirements for the business and putting a plan in place to:

1. Achieve the investment objectives (normally the same as the business objectives); and
2. Procure the funds at the target valuation

Many early stage investors and founding entrepreneurs often ignore the impact of potential dilution rounds on their projected returns - this can become a real stumbling block to obtaining agreement on subsequent rounds of investment.  So, the better prepared that everyone is for this the better.

The capital investment plan looks at:

1. The staging of capital - how much money is needed at each stage (each stage should provide for at least 18-months business development);
   
2. The objectives to be achieved for each stage - these are the things that, if achieved, will improve the value of the business; and
   
3. Where we expect the capital to come from - you  need to start your understanding and research on this early.  Most venture capital companies are upfront with their investment criteria, so you should be able to identify potential sources of capital.  The other things to explore are: what value can they add outside of money; how far through their funds they are; and their timing needs for exit - these factors will help identify the playing field for potential funding.

You need to start the dating game with potential investors very early in the process.  You should plan a "relationship development" campaign in exactly the same way you would with a potential large client.   Don't leave it to the last minute to start this process.

If you've managed to do all these things, then your business is well positioned for growth and sucess - even in the current climate.

Good luck

QED (-;

Stephen Tindall discusses Seed Investment, Philanthropy and Sustainability

Posted by: Phil McCaw in Angel Investment, Economic Policy on 21-Oct-2008, Read comments (0)

I stumbled on this interview today, hosted by Paul Callaghan of The MacDiarmid Institute with Stephen Tindall.  In this interview Stephen discusses a range of topics including his passion for early stage investment, his work in philanthropy and sustainability.  Much of what he has to say resonates personally with me.

Enjoy...(FYI: set aside 20 minutes, to get through it)

Click here.

R+D Tax credits - any value in them anyway?

Posted by: Phil McCaw in Economic Policy on 13-Oct-2008, Read comments (0)

I've been intrigued by the way that the press have picked up on the Nats plans to remove the R+D tax credits.  Obviously its a bad look to be dropping these - when our focus as a country should be on growth, innovation and jobs.  What i'd like to see, though, is some analysis of what value the tax credits were expected to generate and for whom.  I've read aspects of the policy and attended a couple of briefings and the strong message i came away with is that the tax credits would:

• offer little to nothing to the IT / Software industry;
• offer nothing to the start-up sector;
• be extremely difficult to claim.

I outlined why in an earlier post.  The basic issues appears to be that you can only claim the direct costs associated with producing something that is demonstrably novel applying a structed research process.  Most software would fail the novelty test and i'm also informed that our BioEngineering oriented work would also fail the test.  The credits are therefore targeted at "research" in almost the purest definition of the term and most of the innovation (in my experience) in New Zealand simply wont pass the test.  Interestingly, one of the main beneficiaries of R+D tax credits in Australia have been the banks???  For our early stage companies, $100k in research, might qualify for a $15k rebate a year later.  Is it worth the effort and distraction of focus?

My advice to the start-up companies we work in, is don't bother with the R+D tax credit.  If you're a large, established company undertaking research, then there might be something in it for you.  But if that's the case then you probably should have been doing it anyway.

If others have a different understanding of the R+D Tax Credit regime then i love to here it.

Financial melt-down - the landscape is changing

Posted by: Phil McCaw in Angel Investment on 24-Sep-2008, Read comments (1)

Well, the last few weeks have been somewhat eye-opening and stomach churning, watching investment portfolio values swing all over the shop.  The big challenge in the current environment is "where do you hide / are there safe havens for money at the moment?".  Global share prices are all over the place.  Bond portfolios are being hammered as traditionally "safe" companies struggle to refinance.  Personally, i don't think we will see the end of this for at least 6-month yet.  So what's this mean for investment into early stage or growth companies?  Here's my take:

Venture Capital - if VCs haven't raised money prior to the latest shambles then i don't rate their chances over the next 24-months.  Institutions have been the main backers of VCs in New Zealand and my bet is that they will take a very conservative view on the allocation of new money to VCs.  So outlook for NZ VC community = gloomy.

Private Equity - there's a number of PE funds in NZ and Aust that were well cashed up prior to recent events.  The challenge for the PE industry is that it has relied on cheap debt to fund acquisitions.  Accessing this is going to be problematic for some time.  I think opportunities will still exist in the lower value end of the market (<$100m) but we've seen the last of the mega deals for a while.  With limited leverage pressure will come on valuations.  NZ Outlook = deals will get tougher, valuations will fall.

Angel Investment - Angel Investors, are still cashed up, but will be worried about the value of their share and bond portfolios.  This could make them more conservative.  Angel Groups will probably by the key source of early stage / growth capital in New Zealand for the next two years.  However, until we see a clear direction from the markets Angel Investors may start to close their wallets for a while.

What's this mean for entrepreneurs?  Your best source of early stage finance is still going to be the Angel Networks but you will need to be better prepared than ever.  Key issues your going to have to consider include:

• How will a global slow down impact the growth of your business?  It would be reasonable to assume that products or services positioned in the "discretionary" part of the market could struggle to get traction over the next couple of years.  That said its a big world and NZ is a small place so opportunities will stll exist. You will need to demonstrate clearly what makes your proposition unique and what will make consumers / businesses compelled to buy / use it.
• If you require follow-on funding (after an Angel round) where do you think you will get it from?  The NZ VC space is contracting, you will need to do some homework to identify the potential sources for follow-on funding.  At least show that you are thinking about this.  Angels are not experts on this subject and need to be lead by you, the entrepreneur.  Make sure that you budget adequately to hunt beyond NZ for your next round of funding.

That said, the current turmoil will potential provide a window for market exploration and product development.  If your a year away from going to market now is not a bad time to put your head down and get your business positioned right.

Global slow-down great for Angel Investment

Posted by: Phil McCaw in Angel Investment on 28-Aug-2008, Read comments (2)

There's been a lot of doom and gloom in the financial markets and the news this year.  Its been one hell of a rocky ride in the equity markets - world wide.  Companies that shouldn't have gone bust have gone bust because they haven't been able to access capital.  Oil shot up then fell back down.  Food prices have shot up.  The collapse of finance companies in New Zealand has sucked the life savings out of middle New Zealand.  All rather depressing really and a situation where you would expect early stage investment to have all but dried up.

BUT, completely counter-intuitively it hasn't, in fact, there's lots of money swashing around looking for home.  Why's this?  A lot of High Net Worths or Angels that i talk to have retreated to cash in their investment portfolios.  This means they have cashed up their equity investments and are looking for new places to invest it.  The great thing about start-up businesses are:

• you don't have a schizophrenic market telling you that the value has gone down every day; and
• you get to work with some amazing and passionate people with great ideas.

So, for all those budding entrepreneurs out there, now's a GREAT TIME to bring your ideas forward.

EBus - Entrepreneur of the year 2008

Posted by: Phil McCaw in News on 11-Aug-2008, Read comments (0)

Congratulations Carmini and team for taking out the Entrepreneur of the year award at the Incubator Awards last Tuesday night.  The Incubator Awards celebrate the success of young New Zealand companies that are currently located in Business Incubators throughout the country.  EBus has been located in the ICEHOUSE in Auckland for the last couple of years, where Andy Hamilton and team have offered great support.

There were other outstanding companies represented at the awards.  For more information see:

Stuff - Start-ups shine as incubators grow new crop;

Scoop - Spark alumni start-ups shine in entrepreneurship; and

TVNZ - Start up entrepreneur of the year (interview).

Flossie Set to Shake Up Women's Media Market

Posted by: Phil McCaw in News on 7-Aug-2008, Read comments (0)

Jenene Freer, Movac Investments and NZ Girl shareholders inject $1,25 million into new venture aimed at stimulating the online advertising market and making it more effective to reach and engage with Kiwi women.

Auckland, New Zealand: Wednesday, 6 August, 2008: One of New Zealand's most successful online entrepreneurs, nzgirl founder Jenene Freer, today formally announced the arrival of her biggest, boldest venture yet - Flossie.com (launching 4th September 2008).

The new initiative is based around a female centric network of sites and is backed by leading angel investors Movac (the original backers of TradeMe) and the founding investors of NZ Girl.

Gaining the support of such high profile backers was no mean feat, as Phil McCaw of Movac explains, "Jenene and her team had to force us to change our view of advertising as a business model, and she did. This is especially impressive when you consider that we accept less than one percent of the proposals we receive; Flossie is a great investment opportunity".

"Our new business model has been inspired by the successful 'masthead networks‘ that have appeared overseas in the last few years and are now beginning to pull in significant revenues. The intention is that within 12 months of launching this model in New Zealand, Flossie will become the single biggest media channel to reach women, irrespective of their age or demographic, throughout
the country," says Jenene Freer.

"The Flossie network draws its strength from New Zealand's most popular female-centric websites; of which there are 17 sites in the network at launch including nzgirl.co.nz, findsomeone.co.nz, and thewire.co.nz. These sites, combined with exclusive Flossie articles and the best daily content, will mean that when women come to Flossie they'll find what they're looking for easily," she adds.

McCaw says Freer's undisputed drive, determination and entrepreneurial flair combined with a clear vision for international growth were key components in the decision to back Flossie Media Group.

"With investments such as this, it's always about talent, and it's sometimes about timing. The online trends we have observed in other markets around the world suggest Flossie Media Group is now
perfectly placed to establish its position as the most powerful means for advertisers to connect with women across Asia and the Pacific," he adds.

The teams we invest in

Posted by: David Beard in Our Criteria on 31-Jul-2008, Read comments (0)

The capability of the management team is a key consideration for us when assessing new investments opportunities.  It takes talented, motivated people to make businesses successful.  You therefore need to prove to us that YOU can make this work - with a little guideance and support.  In our view a great team has three key characteristics. All three are rarely found in one person, though by no means impossible. We know we've found the right team when we can identify:

Finalists named for Gen-i NZ Incubator Awards

Posted by: Phil McCaw in News on 28-Jul-2008, Read comments (0)

I had the pleasure of assisting with the judging for two of the Incubator New Zealand awards this week. The standard of innovations and businesses was truly exceptional with some fantastic results being achieved for companies in the first years. Below is the full press release, with details of the short-listed businesses / individuals for each category. Note: from a personal perspective its great to see eBus in the list and also i wasn't involved in judging this category!

Finalists named for Gen-i NZ Incubator Awards
Monday, 28 July 2008, 2:58 pm
Press Release: Incubators New Zealand

Ten of New Zealand's most dynamic start-up companies, including companies developing GPS tracking systems and utilising robotic technologies, have today been named as finalists in the 2008 Gen-i New Zealand Incubator Awards.

The finalists will contest four categories, with the winners to be announced in Wellington on Tuesday, 5 August. An additional award will be made to a company that has graduated from the incubation environment and excelled in their recent business achievements.

The Awards were introduced by Incubators New Zealand in 2005 with the aim of celebrating the knowledge-based start-ups that business incubators are helping to grow.

Incubators New Zealand Chairman Jonathan Kirkpatrick congratulated the finalists and believed they should be applauded for their achievements.

"Creating an outstanding business requires more than a great idea. It takes an incredible amount of commitment and perseverance, particularly when you're also taking on the world, and all of these companies deserve recognition for what they've achieved," he said.

Principal sponsor Gen-i's GM of Wellington Key Clients and Enterprise, Paul Wilson, congratulated the finalists and said that sponsoring the Awards is just one way Gen-i encourages emerging ICT businesses.

"The Gen-i Incubator Awards are all about recognising the innovation shown by emerging New Zealand businesses and entrepreneurs. We are committed to supporting these successful companies whose skills and ideas contribute to building a strong local ICT industry. Hopefully their achievements will provide the inspiration for other New Zealand entrepreneurs," he said.

The finalists for the 2008 Gen-i New Zealand Incubator Awards are:

Start-Up of the Year
• Blackhawk Tracking Systems Limited (Auckland)
• INRO Technologies Limited (Auckland)
• TracPlus Global Limited (Dunedin)

Start-Up Exporter of the Year
• CropLogic (Christchurch)
• Hector's World (Auckland)
• TracPlus Global Limited (Dunedin)

Innovation of the Year
• iMonitor Limited (Auckland)
• PowerbyProxi Limited (Auckland)
• TracMap NZ Limited (Dunedin)

Start-Up Entrepreneur of the Year
• Carmine Masiello - eBUS Limited (Auckland)
• Chris Hinch - TracPlus Global Limited (Dunedin)
• Neil Fitzpatrick - Oh! Group Limited (Wellington)

--

BACKGROUND INFORMATION:

About Incubators New Zealand
Incubators in New Zealand are organisations that give fledgling entrepreneurs an opportunity to develop their innovative ideas and set up new businesses in order to commercialise them. The entrepreneurs' term of activity in the incubator considerably enhances their prospects of raising the financial investment they need, finding strategic partners, and emerging from the incubator with businesses that can stand on their own two feet.

Incubators New Zealand was established in 2003 as an industry body and charged with driving and guiding the development of incubation. The association is tasked with providing New Zealand's regional incubators with the tools, capability and networks to significantly increase their chances of growing the next wave of Kiwi start-up entrepreneurs. For more information, please visit www.incubators.org.nz.

About Gen-i
Gen-i is at the forefront of helping customers take advantage of the convergence of technology and telecommunications, and the new opportunities this makes possible. Gen-i works alongside its 3,300 corporate, government and business customers to deliver seamless and integrated ICT solutions. A member of the Telecom New Zealand Group, Gen-i achieves this with the support of 3,300 highly skilled people in 17 locations across New Zealand and Australia. For more information on Gen-i, visit www.gen-i.co.nz

The following information relates to each of the finalists.
The text in brackets is the incubator that they are/were resident in.

BLACKHAWK Tracking Systems Limited (The ICEHOUSE, Auckland)
The only event-based telematics company in Australasia, BLACKHAWK's products are designed for car finance companies, hire equipment firms, refrigerated container companies and personal vehicles. Combining internet mapping, GSM and GPS tracking, BLACKHAWK sends a text to a vehicle or asset owner when an event happens and the owner can then track its position using GPS viewed online or on a nominated mobile phone. This event could be when an asset moves from within a set perimeter or when a vehicle is in an accident. BLACKHAWK have already secured significant angel investment, and seen staff numbers grow to 10 employees.

CropLogic (Canterbury Innovation Incubator)
CropLogic, a start-up from the New Zealand Institute of Crop & Food Research, provides internet based supply management and forecasting services to food processors, the fresh produce supply chain and crop management advice to their suppliers. CropLogic services deliver improved quality and yield, better economic returns and a reduced environmental footprint. With their first Product, the Potato Calculator, CropLogic already has contracts with the world's five largest potato processors and their major suppliers, with over 90% of revenue coming from export sales.

eBUS Limited (The ICEHOUSE, Auckland)
eBUS has developed cutting edge software that allows production teams, creatives and their clients to access and work on the same piece of video footage at the same time no matter where in the world they are. It is little surprise that the original TradeMe angel investment company Movac and TradeMe founder Sam Morgan have recently invested $1.25m in eBUS when you consider that it has over 50% market share in New Zealand and promising signs from international markets in South East Asia and India.

Hector's World (The ICEHOUSE, Auckland)
Hector's World offers high quality and reliable products that help children become wise and confident users of information and communication technologies. A charitable subsidiary of New Zealand's internet safety group, NetSafe, Hector's World is a social entrepreneurship venture. Their products are designed to work well alongside existing cyber-safety programs in a country and already it has been launched across Britain, through UK primary schools, by a UK Governmental organisation.

iMonitor Limited (AUT Technology Park, Auckland)
iMonitor is an Auckland company that has developed wireless technology that enables people to monitor and control situations at remote locations, in real time, from practically anywhere on the planet. Having grown in eighteen months from 2 to 12 staff, iMonitor is now installing their technology into food cool stores which can not only save the operator energy costs but will reduce cool store product losses worth millions of dollars annually.

INRO Technologies (The ICEHOUSE, Auckland)
INRO Technologies uses robotics to automate customers' existing vehicles, autonomously moving products within warehouses and cold stores. In the past year the company has grown from volunteer staff to over 20 full-time staff and received one of the largest angel investments ever in New Zealand.

Oh! Group Limited (Creative HQ, Wellington)
Oh! Group is an independent drinks innovation and marketing company based in Wellington. Their first product, Loud&Lola Cocktails, was launched in late 2007 in conjunction with DB Breweries and is now distributed to over 150 liquor stores nationally. This is only the first step for a company that is actively creating new products and entering new markets.

PowerbyProxi Limited (The ICEHOUSE, Auckland)
A spin-out from the University of Auckland, PowerbyProxi is a pioneer in the design and development of turnkey wireless power solutions, which eliminate the need for a physical or frictional power connection to electronic devices. Their first product, Proxi-Ring a completely contactless slip ring, is ready to be launched after a 12 month development effort with John Deere.

TracPlus Global Limited (Upstart Business Incubator, Dunedin)
Recent winners of the Global Technium Challenge, this Dunedin company has developed a revolutionary tracking service for commercial, government and non government agencies that is now operating in 14 countries and areas, including the Antarctic. TracPlus allows users to not only monitor the status and location of their assets, but also to securely share that information with other users, regardless of tracking hardware and network chosen.

TracMap NZ Limited (Upstart Business Incubator, Dunedin)
TracMap provides a complete agricultural and horticultural GPS guidance and proof of placement mapping package for vehicles operating in demanding outdoor environments. For fertiliser spreading contractors it can achieve a 15% productivity gain and reduce environmental impact from fertiliser application. In less than two years TracMap has grown from 2 to 14 staff, sold over 300 units nationally and developed a product variant for the aviation industry.

ENDS 

"Comment on Blog" working now

Posted by: Phil McCaw in News on 28-Jul-2008, Read comments (0)

Apologies to those who may have tried unsuccessfully to post comments on this blog over the last couple of weeks.  We had a bug in the system, that's now been corrected.  Goes to show that my coding ability is not fully up to scratch!  We welcome your comments.

Ideas worthy of investment

Posted by: Phil McCaw in Entrepreneur resources on 24-Jul-2008, Read comments (1)

David, from ReelClever, sent me this interesting blog post from Paul Graham at Y Combinator.  Y Combinator's business model for investing in start-ups is really unique and worth a look for those involved in the investment industry.  Paul's described some of the ideas that they'd like to invest in.  The challenge for us at Movac, is to now to do likewise which we will do over the next couple of months. 

Here's 3 from Paul's list that we've debated in the past and still intrigue us:

90 day employment trial period - Good for start-ups

Posted by: Phil McCaw in Economic Policy on 24-Jul-2008, Read comments (0)

The National Party's proposal of a "90 day trial period" for new employees hired into small businesses (less than 20 employees), is good for start-ups, in-fact in my view it's an imperative.  I haven't read the detail yet but the intent appears to be to give employees the right to dismiss new hires, no questions asked, within the first 90 days.  No doubt there will be opportunities to abuse such a provision but, in my view, these will be the exception to the rule.  We need these provision because:

Good people grow business, bad people kill business

Most of the businesses we invest in have between one and three employees when we invest.  If we make a wrong employment decision, which despite years of experience is still easy to do, we are faced with a lengthy and difficult exit procedure - we have lawyers prepared to act for employees on a "fee contingent basis" in New Zealand.  The exit process can shave months off the life of a start-up business and can kill it.  The reality of start-ups is that you have to move quickly and take risks; when you make a bad decision you have to "lance it" and move on quickly.  Bad hires not only cost time and money, they also bring the wider team down.

Money on employment lawyers is dead money

All of the businesses we're involved in spend money on lawyers trying to: a) get their employment contracts right; and b) seek advice on how to manage "bad hire exits".  This money is unproductive and is money taken away from investing in growth.  The money is one problem, the greater problem is the time and aggrovation taken with managing your way through the process; time that is better spent on growing your business.

More flexible employment terms will encourage employers to take greater risk

Knowing that we can "back-out" of an employment agreement will allow employees to take greater risks in employment decisions and provide potential employees with the opportunity to demonstrate their value add.  Under a flexible 90-day stand down arrangement, I know that the businesses we are involved in will hire more people..."on success based contracts".

No doubt the devil will be in the detail, but this is clearly a step in the right direction and an opportunity for small / start-up businesses to have some economic policy that reflects their needs rather than having "one size fit all rules which are largely designed for large corporates and unions" imposed on them.

What's Angel Investment?

Posted by: Phil McCaw in Angel Investment on 20-Jul-2008, Read comments (0)

What's Angel Investment? Angel Investment is a relatively new term for New Zealand.  It's a term, borrowed from the Americans, used to refer to those people or groups of people prepared to invest in very early stage business ideas.  Typically, Angel Investors are those people prepared to:

• take a punt, and
• work along side people with great ideas

With the over-riding goal of helping to build a successful, profitable and valuable business. In my view, the best angels are those prepared to contribute time and experience along side their cash - "people make businesses successful".

Angel Investors sit along-side friends and family as one of the first ports of calls for entrepreneurs.  They typically invest in: people they like + ideas that interest them + the potential to earn a good return.

How much do they invest?  In New Zealand Angel Investors range from those prepared to invest between $25,000 (at the low end) and up to $1m (at the high end).  At the high end they tend to operate more professionally and rigorously in their approach.  A lot of the organised Angel Groups (listed below) are backed by the New Zealand Venture Investment Fund - a fund set up by the government to support the Angel and Venture Capital communities - which invests along-side these groups.

Where do you find them?  Fortunately this is getting a little easier through the formation of organised angel groups throughout the country.  The down-side (for people looking for money) is that with organisation comes greater discipline so you need to make sure you're prepared.  I'd characterise the angel community in New Zealand into three groups today:

• Organised, closed groups - the closed groups have a limited number of investors and generally have been operating for some time.  Their approach tends to be rigourous and they may have a particular industry focus.  The ones i'd include in this category are SparkBox, Movac, CureKids, Chrysalis, K1W1 (Stephen Tindel) , Jasmine (Sam Morgan).
• Organised, open groups - the open groups have a wide range of members who will "club together" on a deal by deal basis.  They will agree between themselves the roles they want to take and how much they are prepared to invest.  The ones, i know of,  that are actively doing deals today include: Auckland - IceAngels; Wellington - AngelHQ; Manawatu - Manawatu Investment Group (BioCommerce Centre); Nelson - Venture Accelerator; Canterbury - PowerHouse Ventures; Dunedin - UpStart Angels .
• Independents - there are still plenty of high net-worth people out there that aren't actively involved in the networks listed above.  These people are tougher to find, talk to your accountant and lawyer, start networking through things like your local chamber of commerce and by attending industry events where you think they might be.

Remember Angel's are "people" and by and large they are interested in being approached with good ideas from motivated, interesting people, it's your job to find them and don't be afraid to "pitch".

Other resources: The other places you should look for information include:

• The New Zealand Venture Capital Association - list VC, Private Equity and Angel groups / investors.
• NZAngels.com - full of lots of good information on what's going on in the Angel Investment sector.  Also a good place to post your opportunity.
• Start-up.co.nz - the web-site of start-up magazine. Full of lots of good tips on raising capital from around the world.
• Escalator - the Escalator programme is funded by New Zealand Trade and Enterprise and run by the Economic Development Association of New Zealand.  The Escalator programme is designed to help early stage businesses get funded so it's well worth looking at.

Attachments

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iPhone pricing

Posted by: Phil McCaw in Technology on 9-Jul-2008, Read comments (1)

Well no surprises from Vodafone with their iPhone pricing announcement.  I'm sure there will be lots of fuming punters out there.  It seems the basic patter is "New Zealand is expensive (cell-phone duopoly after all) and we're just pricing the iPhone at the same rate as other high end phones...in New Zealand".

That said, the iPhone is obviously a seriously cool piece of kit...it will change the world (maybe not NZ at these prices)...but i certainly wasn't that keen on the previous non-3G / locked version.  So i went out and bought a LG Viewty (an iPhone want-a-be).  This puppy:

• is 3G,
• has a 5 mega-pixel camera,
• takes divx movies,
• has a touch screen - so is great for texting,
• can browse the web,
• can be used as a modem, and
• available on any plan

I never used to think having a camera in your phone was a big deal until i bought the Viewty.  I use it heaps with the kids, just to grab those little clips that you'd otherwise pass up.  Given that its camera is significantly better than the iPhones, i'm not convinced that i will trade up / across.  As always individual choice of product comes down to what you're going to use them for.

Another observation...phone web browsing...i've had it for a few years on various phones and its always worked at a ponderously slow rate (i'm sure Vodafone slows it down deliberately to try and get you  into the pay Vodafone Live service). Well i just installed Opera Mini and what a revelation that is.  Opera have a bank of servers that compress and reformat web content before its sent to your phone.  This is seriously cool...Opera runs really fast and the pages are instantly readable without scrolling all over the place.

For those of you queuing for your iPhone enjoy the weather, i think we're going to crack 10 degrees in Wellington on Friday!  I think i will stick with what i've got for now...

Successful web businesses - case studies

Posted by: Dion Mortensen in Entrepreneur resources on 8-Jul-2008, Read comments (1)

I came accross http://www.startup-review.com/ the other day.  The site is a collection of case study type reviews on successful web based startups - written by Nissan Gabbay of Silicon Valley VC firm, Sierra Ventures. 

The site features weekly, in-depth case studies on successful (global) Internet start-ups. The companies profiled have achieved either: a) significant exits, b) large revenue, and/or c) strong Internet brands.

The site offers some great points of learning for anyone building a site, I particularly like the focus on finding and converting revenue streams.

Congratulations Team New Zealand - World champions of the 2008 Global Enterprise Challenge

Posted by: Phil McCaw in News, Young Enterprise Scheme on 7-Jul-2008, Read comments (0)

It's great to see young New Zealand entrepreneurs succeeding on a global stage! Movac sponsors the Young Enterprise Scheme.  Below is the press release from the Enterprise New Zealand Trust.

Late yesterday afternoon students from 15 countries submitted a three-minute video presentation and written business plans via web-link to a panel of international judges based around the world, to compete for the right to win first place in this year's Global Enterprise Challenge.

Four awards were made in the early hours of this morning (New Zealand time). The overall winner was New Zealand, with Australia taking second place and Wales third. A creativity award was shared by Germany and Korea.

Eighty senior secondary school students from Kerikeri to Invercargill assembled at Massey University's Albany Campus during the weekend to prepare for the challenge.

The Prime Minister, the Right Honourable Helen Clark, launched the New Zealand challenge on Saturday and warned that the competition would be tough and challenging. Among those present were the Deputy Mayor of North Shore City, Professor John Raine, Deputy Vice-Chancellor Massey University and local business people.

The New Zealand students, who are all directors of student companies participating in the Lion Foundation Young Enterprise Scheme competed against England, Germany, Indonesia, Japan, Korea, Norway, Phillippines, Poland, Singapore the might of the United States of America, as well as Scotland, Wales and Australia.

Since the Global Enterprise Challenge's inception eight years ago, Enterprise New Zealand Trust organised New Zealand's participation in the event. The Trust operates the Lion Foundation Young Enterprise Scheme in New Zealand along with other programmes in enterprise education and financial literacy in schools. Each year some 40,000+ students participate in one of its programmes.

The 24-hour challenge issued by the international judges said, "Water is Planet Earth's most precious resource that is becoming scarcer by the day". Your challenge is: "to produce a working model of an innovative product, process, service or plan that will reduce the impact of growing demand on the world's dwindling water resources."

New Zealand students were divided into nine teams, and each team presented its plans to a panel of local judges including The Hon Tim Groser, National MP, Suze Strowger, Ministry of Education, Paul Lockey, a trustee of the Enterprise New Zealand Trust and Steve Corbett, CEO of the e-Centre at Massey University.

The judges chose a team that developed a product called "LillyPod" a stand-alone, floating saltwater farm, growing Salicomia (a plant grown in salt water). The aim of the team was to develop a world wide commercially viable sea based farm which reduces the impact of crops relying on fresh water.

This team then went on to represent New Zealand and made their presentation via an internet link to a panel of international judges based around the world.

In a web-streamed announcement of the winners, the GEC's judge coordinator, Len Norman said, "it has been an exciting event and the work quality has been absolutely outstanding. Creativity is extremely high. Business plans were very detailed and believable and the standard has improved year on year".

Dr Neil Pellis, Chief Scientist at NASA announced the winners of the event, with first place being awarded to Team New Zealand, whose members are:

Adam Botterill, Westlake Boys' High School
Ben McNab, Rangiora High School
Kristina Clarke, Long Bay College
Matthew Holt, Long Bay College
Louis O'Brien, St Thomas of Canterbury College
Brigid McLeod, John Paul College
Melissa Eade, James Hargest High School
Michelle Panzer, Garin College
Stacey Kenzelmann, Orewa College

"For New Zealand students to compete in a global arena and more than hold their own should give us great confidence in our future generation" said Tony Caughey, Chairman of the Enterprise New Zealand Trust. "Given the time constraints and pressure, our students were outstanding", he said.

The competition was made possible by the sponsorship of Massey University, New Zealand Trade and Enterprise, Enterprise North Shore and North Shore City. Nine local businesses were involved in mentoring the students, and acted as corporate hosts:

ActionMail
ActionCOACH
Apple Division, Renaissance Corporation
ASB
GlidePath
PKF Accountants
Quicken
Russell Investments
The Edge

Global Enterprise Challenge announcements and winning entries can be found at:
http://gec.abw.org.au/

For further information about the Global Enterprise Challenge, or the work of Enterprise New Zealand Trust please contact:

Sue Jury, General Manager
Enterprise New Zealand Trust,
Phone 0274 960037
Email: sue.jury@enzt.co.nz

Attachments

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Angel industry group established

Posted by: Phil McCaw in News on 2-Jul-2008, Read comments (0)

Angel Association New Zealand
Media release
1 July 2008

Angel industry group established

Angel investor groups have formed a new industry body - the Angel Association New Zealand - to advocate for and to promote best practice within the fastgrowing investment sector.

The association's members consist of 15 angel groups from around New Zealand. Andy Hamilton, CEO of business growth centre The ICEHOUSE, is the inaugural chairperson of the association's council.

"Angel investing - individuals and groups investing in early stage businesses - is an emerging industry which has the potential to be a key asset class and a very influential player in commercialising New Zealand innovations," says Andy Hamilton.

"Overseas, we have seen national angel bodies formed once the sector reaches a critical mass. Establishing a national body in New Zealand is a sign of the recent growth of angel investing in our local market.

"The Angel Association New Zealand will set a national vision for the sector, and help to raise the capability and knowledge of angel groups, many of which are at relatively early stages in their maturity and mainly focused on their own issues and challenges."

Clyde Rogers, from Auckland regional economic development agency AucklandPlus and a member of the establishment board, says a key role for the Association will be to advocate for initiatives which will assist the sector's growth and development.

"To date, in New Zealand, much of the growth in early stage investing and the formation of angel investor groups has been organic and informal, rather than market-led.

"As an investment class looking to attract more investors, it is important that newcomers to angel investing have confidence in the practices and methods which make this type of investing unique from others. The Association will develop ‘best practice' models and training for business angels and entrepreneurs.

"It will also provide greater visibility and promotion of the sector, so that entrepreneurs with innovative ideas can more easily find potential investors."

Andy Hamilton says the United States is the most developed and advanced angel investment market, and may of the current trends there bode well for the sector's development in New Zealand. In the US, for example:

• The number of accredited investors who are entering the angel world is increasing each year by over ten percent.
• There is an increase in the number of investors per deal with an average of four to five investors joining together to fund an entrepreneurial venture.
• The number of angel groups has grown, as have the number of ventures receiving investment from angel groups.
• Angel groups fund over thirty times as many entrepreneurial companies as the formal venture capital industry, investing three to five times more money in total.
• Angels continue to be the largest source of seed and start-up capital, and there has been a dramatic increase in post-seed funding by angels.

"While angel investing in the US has been a feature of its economy for a considerable period, it is the significant formalisation of the asset class over the last ten years - and the subsequent significant growth - which is most striking. "The trends occurring in the US are also occurring in Europe and the Asia- Pacific, which are more advanced than New Zealand in terms of the maturity of their angel sectors, and in having established national angel associations.

"The establishment of a national body will provide fresh impetus to the growth of angel investing in New Zealand," Andy Hamilton said.

Background

The Angel Association New Zealand's establishment is being supported by the NZ Venture Investment Fund and AucklandPlus, the economic development agency of the Auckland Regional Council. Law firm Minter Ellison has provided legal expertise.

The inaugural council members are: Andy Hamilton, Phil McCaw, Mark Houghton-Brown, Richard Palmer, Dean Tilyard, Steve Hampson, Norman Evans, Greg Sitters, Clyde Rogers, Mark Robotham. Questions and Answers

What is an angel investor? An angel investor is an individual who provides capital and, often, expertise to early stage businesses which can't source traditional sources of business funding. Angels typically invest their own capital, and often provide valuable management advice, mentoring and access to important contacts and markets.

What type of people become angel investors? Typically, angels are ex-entrepreneurs and successful business people looking to add early stage companies to their investment portfolio. By taking an active role in their investments, they provide not only governance by serving on boards, but also assisting companies with relationships, strategy, team building, and future fundraising.

What are angel groups or networks? Increasingly, angel investors are forming angel networks and groups to share research and pool their investment capital. They can operate as a collective of private investors who band together to increase their 'deal flow' (the number of investment opportunities they see). These groups connect high-potential start-up ventures, with willing investors to facilitate the funding and success of emerging companies.

How many angel groups are there? There are around 15 established groups in New Zealand. They include ICE Angels, Pacific Channel, Chrysalis, CureKids Ventures, K1W1 and Sparkbox in Auckland, Angel HQ & MOVAC in Wellington, the Manawatu Investment Group, Powerhouse Ventures in Christchurch, Venture Accelerator in Nelson and Upstart Angels in Dunedin. There are, however, other informal networks which operate in a similar way.

What are the returns on angel investments? Angel investors are exposed to high risks and expect that some investments will fail. If an angel invests in ten companies, the rule is that four will fail, three will tread water, two will return 2-5 times the initial investment, and one will result in a return of five to ten times the original investment over a 5-10 year period. Investors typically invest in a portfolio of prospective firms in the hope that 10-20 percent of the investments will be significantly successful, generating an overall healthy return across the portfolio. Each investment will have a defined exit strategy, such as plans for an initial public offering or a trade sale of the business.

Is there a large angel investing market in New Zealand? The angel market in New Zealand has long been predominantly informal. Over the last 2-3 years it has become increasingly vibrant with the launch of several angel networks modelled on similar organisations offshore. The New Zealand Venture Investment Fund's Seed Co-investment Fund has been a catalyst for the formation of formal angel networks and evolving practice standards - the Angel Investing Guide is an example.

What sort of businesses are suitable for angel investing? New Zealand is producing world class intellectual property in a number of areas such as ICT, life science and niche manufacturing. This intellectual property is behind the creation of a significant number of early stage companies that need angel involvement to succeed. Angel investors are enabling these companies to grow in scale and to become an increasingly strong and positive force for New Zealand's economic growth. Angel investors usually seek businesses with innovative products or solutions that have international market potential. Management capability is another key factor and founders often need to bring in experienced executives to take the business to the next level.

How many members does the Angel Association New Zealand have? At its establishment, the Association has 15 member groups. [Note: we are an association representing angel groups rather than individual angel investors. To be involved with the Association, an individual needs to be a member of an affiliated group.]

What is the next step for the Angel Association New Zealand? The Association is now an incorporated society. It has an establishment board. Members will be encouraging other angel networks to become involved in the sector, and promote the sector to potential new angels and entrepreneurs.

ENDS

Great educational articles for entrepreneurs

Posted by: Dion Mortensen in Entrepreneur resources on 26-Jun-2008, Read comments (1)

Recently I picked up a book with the unlikely title - 'Kauffman Thought book 2007' intending only a quick and probably dismissive browse through the table of contents I discovered a chapter entitled Kauffman eVenturing.  Again a quick browse revealed that this chapter was effectively an advertisement for a website offering resources for entrepreneurs (http://eventuring.kauffman.org/).  Not just any resource either, proud boasts like "...it aggregates the best of the best content on the web..." and the rare beast "...original articles" abound.

I decided that a quick check would not be too terrible a waste of my time and click i did.

Given the tone of my missive to now, you have probably guessed that my angle of approach was less than open minded.  I fully expected to encounter the same old re-hashed articles by the same names with afixed dates that might be more at home within a religous context.

Guilty as charged and I stand before you ashamed and now a changed man.

I absolutely and without reservation recommend this resource to all entrepreneurs - whether experienced or wet eared.  Stuff I loved:

• easy to access categories that make sense
• bite sized articles that you can read in one sitting
• well written, well researched
• who's who of entrepreneurial authors

Trade Me partners put $1.25m in Ebus

Posted by: Dion Mortensen in News on 24-Jun-2008, Read comments (0)

The original TradeMe angel investment company Movac and TradeMe founder Sam Morgan have joined forces again to back ebus, a local film and television production software company that is set to tackle Asia.

ebus has developed cutting edge software that allows production teams, creatives  and their clients to access and edit the same piece of video footage at the same time no matter where in the world they are.  The ebus system allows the footage to be sent across town or the world securely, and in an instant, eliminating the need for tapes or couriers.

The technology was developed in Auckland where ebus began life in the Icehouse incubator. After achieving success in the local market, ebus is gearing up for a major assault on the lucrative Asian market.

Movac and Jasmine Investments, Sam Morgan’s investment vehicle, have invested $1.25 million in ebus, their first joint investment since their original partnership in TradeMe in 1999.

Movac Director Dion Mortensen said ebus was an attractive investment option for the group because of the calibre of its CEO, Carmine Masiello, and the opportunities in Asia.

“Carmine is a remarkable entrepreneur whose energy and drive are compelling. Like all things, timing is everything in investment, and right now the time is right for ebus in Asia. Broadband capacity has just reached the level where the ebus business model is viable. Suddenly Asia is a huge untapped market,” he said.

ebus has set up a regional sales and marketing office in Singapore, and their nitial emphasis is on India.

R+D Tax Credits - No love for Software Developers

Posted by: Phil McCaw in Financial, Tax on 24-Jun-2008, Read comments (0)

I've had an opportunity to attend a few seminars on the R+D tax credit of late.  It doesn't look like there's going to be much love for software companies in this.  The credit is only to apply where something demonstrably novel has been created using a structured research process (NOTE: my interpretation, on what i've heard).  What this means is that the routine process of developing software is mostly ruled out.  However, if you systematically create something new (for example a new AI engine, or Crypto algorithm) then that part of the process is likely to apply.  I'm sure the IRD will approach each case with an open mind, but i doubt that much in the NZ software industry is likely to qualify or that the effort of implementing the systems and processes required to collect the 15% rebate will warrant the effort.

30x returns

Posted by: Phil McCaw in Our Criteria, Financial on 24-Jun-2008, Read comments (2)

At Movac we seek investment opportunities that have the potential to return 30 times (or more) our initial investment over a 5 to 7 year period.  Greedy buggers, i hear you say!  Well the reality is that this simply reflects the level of risk associated with working on start-up businesses.  Internationally its been shown that only about 1 in 12 investments made by an Angel investor will "go large" the balance will be made up of some that manage to return the initial cash invested and a bunch where the money is lost.  Across all our investments we're targeting a 25% rate of return (not a big number).  Remember also, that if we're getting 30x then you (the business creator) should be doing better than that for the right opportunity.

Putting the justification to one side, what does it take to create a 30x business?  In this post i will look at the numbers side.  In later posts we will go through the characteristics of the businesses we think have the best chance of achieving this level of returns.

The numbers

The maths is pretty simple; working backwards:

1. If we invest $500k we need to see the potential for a return of $15m (30 x $500k) or more - at year 5.
2. If we own 30% of the business at Year 5, this means the business must be worth $50m ($15 / 0.3 )
3. As a rough, first cut rule of thumb i value most businesses at 10x NPAT.  There are cases that can be made for using numbers a little higher and a little lower.  At 10x NPAT this suggests the business at Y5 must the potential of generating $5m NPAT per annum. 
4. Assuming tax at 30% this means $7.14m EBIT.  ($5m / 0.7)
5. Assuming a 15% net margin (on sales) this suggests an annual turn-over of $47m. ($7.14m / 0.15)

In my experience most financial people (around the world) look at the numbers in this way, they may spin it differently (using DCF) but the answers tend to come out the same.  These numbers mean that we must aspire to find break-out / world beating ideas.