The ramblings of an over active investor and frustrated entrepreneur.
2015 has been a roller coaster year, but ending on the way up rather than the way down! That’s important.
First, the tough stuff. The tough stuff has been the human stuff.
The lowlight, was the passing of our very dear friend and partner in Movac Fund 3, James Graham. James was one of those larger, literally, than life characters who was always the calm head in the room and had a knack for chipping in with the right perspective at the right time, always delivered with a wonderful Irish sense of humour.
If the world was made up of people like James we’d all be that much better for it. We’re worse off without him.
The other tough stuff, has been working with founders to transition their roles as the growth of their companies has accelerated or the focus changed. These are really hard conversations – they go to the heart of what defines and motivates us as human beings and losing control of your baby is immensely challenging. The issue always comes up though, as there are very few New Zealand entrepreneurs who have the experience of growing, building and sustaining an international company. The time comes when professional experience needs to replace drive, determination and enthusiasm. This is only avoidable if founder’s build experienced teams around them and actively develop their own skills.
I really appreciate the respect with which these conversations were had this year by all those affected.
On a more humorous note, has anyone been watching the HBO series, Silicon Valley? I caught a few episodes on Air New Zealand international flights this year – it’s a Movac reality TV show. I was especially captured by the episodes that deal with a spurious injunction being served against Pied Piper (the start-up company), their investment case subsequently collapsing, followed by a low ball offer for acquisition from the competitor that filed the injunction. This stuff actually happens – we’ve lived through it with one of our companies this year. Try raising money when you’ve got an injunction sitting over your head! Doesn’t seem to matter that “It’s not fair!”.
That’s the hard stuff but there’s also been some really good stuff in the portfolio as well. A few of the highlights include:
PowerByProxi nailed another significant strategic partnering deal that provides further validation that the company has the best wireless power technology in the world and is a step closer to wide-spread adoption in industrial and consumer markets. The entire PowerByProxi team has fought incredibly hard to get themselves into this position.
Author-IT more than doubled its revenues for the year and re-oriented itself from a generalist supplier of high volume production authoring tools to a specialist provider of authoring tools to the life sciences sector. As a consequence, their average deal size increased by 20 times. This shows the benefit of specialisation in a high value niche, something that’s really hard to figure out if you stay focussed exclusively on the New Zealand market for too long. We’re great generalists but scale comes through specialisation.
1Above, the flight drink that relieves jetlag (and is a great hangover cure – FYI), launched in major US airports in 2015 – LAX, JFK, LaGuardia and Chicago O’Hare. It grew revenues by 65% and successfully introduced the new effervescent tablets which now make up more than 50% of revenue. Focus for 2016 will be the continued expansion across the US.
Kaynemaile, a unique injection moulding company that I’ve been a champion of for a very long time, is on-track to grow revenues by over 300% this year and is starting to leave significant footprints on high profile buildings around the world. After a long journey I’m confident that the company has found its niche in the world.
Shift72, a secure platform for hosting and streaming video content over the internet, finished the year by securing a number of domestic and international clients. Domestically Shift72 is now powering www.choicetv.co.nz and ondemand.nzfilm.co.nz. Internationally, Shift72 will be providing the platform for on-line streaming of films at the South by Southwest festivals, in Austin, Texas in 2016, and commenced a pilot program with Screen Australia.
And some of my more recent angel investment have made great strides this year. Flick Electric, a retail electricity provider that provides direct access for consumers to the wholesale electricity spot market, just closed a $5M investment round that will be used to scale the business (click on the link and give your current provider the flick). Publons, an on-line business that speeds up science by curating peer reviews, has gone from strength-to-strength and recently closed a significant investment round to accelerate growth internationally.
So 2015 is closing on high note.
Looking back over the year, what have been my key learnings? Here’s a few of them:
The value of team – we’re passionate about the companies we invest in and we become part of the team. We build deep bonds and friendships, forged through times of challenge, change and significant stress. Along the journey tough stuff needs to be dealt with and this is where the Movac “team” and the support and perspective this “team” bring is especially important. I wouldn’t do this gig on my own.
The value of gut – the benefit of experience and being on multiple investment journeys at the same time is that it enables us to see or sniff stuff out before it happens. We need to act faster when our gut tells us to.
The most passionate and effective directors are those who have something at stake – we see things drift in boards of early stage, growth companies. There’s nothing more that tunes you into issues and brings a sense of urgency than having your own cash at work. Investor directors have a sense of urgency that independents typically don’t bring – you need a balance in boards.
Close investment rounds fast – I’ve seen many investment rounds drift for far too long this year. I’m guilty of being the architect of a few. Many of these have taken many months to close and investors have pulled out as time and other priorities take over. For the companies involved in these, make sure that you’re over-prepared for an investment round and you can answer all questions either on the spot or within 24 hours. Momentum is everything when you’re working with new potential investors. If you take a week to respond you’re dead in this game. If your key business metrics aren’t on the tip of you’re tongue your dead in the game.
So roll on 2016. For us 2016 will be:
- a year for consolidation growth across our portfolio of investments.
- the year we raise Movac Fund 4 – an $80M+ investment fund, focussed on providing the benefits of over 15 years experience and scale capital to New Zealand technology companies that have started to hit their straps. The quality of the companies we’re engaging with is the best we’ve ever seen. If you’re interested in Fund 4, please drop me or Mark Vivian an email.
Merry Christmas to all, turn the device off occasionally and enjoy quality time with family and friends, and we look forward to another eventful and prosperous 2016.