Fund 4 – 7 things we're looking for
Late last year we announced that we had completed a first close on Movac Fund 4 with $105m in committed funds. The final close is at the end of March 2017, so if you’re interested in investing then please get in touch.
Movac Fund 4 is the first early stage growth fund to reach meaningful scale in New Zealand. We’re really excited to get to work investing this Fund and the opportunity to work with some of New Zealand’s leading entrepreneurial talent.
We expect to make between 8 and 10 investments in the fund with the size of investments ranging between $5m and $15m over the life of the investments. Generally, we like to start with a smaller investment and plan on investing more in subsequent rounds of funding. We announced the Fund’s first investment late last year into the cloud based, retail point of sale provider, VendHQ.
Movac Fund 4 is a growth, technology fund. This means we will invest in companies that have achieved demonstrable revenue traction, we do not take speculative R&D risk in Movac Fund 4, however we do expect that the companies we invest in will make significant on-going investments into R&D.
Our investment style is one of partnership. A partnership that’s built on a foundation of experience and capability, healthy debate, mutual respect, trust and ambition. It takes time to form this partnership, which means we like to spend time dating before we make a long-term commitment – the sooner we get to know each other, the better. If you’re just looking for passive money we’re not the investor for you.
Once we invest we are highly committed investors. We join your team and provide all the assistance that our wider team – Movac Partners, Associates, Venture Partners, our investors and our broader global network – can bring. We share the highs and lows, help formulate strategy, set priorities, help manage risk, work closely with you on building value and help raise subsequent funding rounds, including introducing new investors.
So, what are the key things we look for in evaluating new opportunities?
- Relationship / alignment – Can we form the type of partnership I described above? Can we work constructively together? Are we broadly aligned on the mission and the timeframe? Can we work through good and bad times while respecting each other’s experience and point of view? Can we listen to each other?
- Accelerating annualised revenues between $1m and $20m at high gross margin – Our investment mandate is targeted at technology companies earning in-excess of $1m in annualised committed revenue, at high gross margin and with a track-record of accelerating growth. If you have cracked $100k in monthly revenue then you should contact us.
- Tech sector based – We invest in technology companies. We have experience and networks in enterprise software, consumer and mobile software, on-line gaming, on-line media, health tech, medical devices, agri tech, food tech and hard tech (IoT).
- Capable, experienced team – You have the leadership team in place that will drive growth through the next phase. Your team comprises people with experience, enthusiasm and ambition spanning capability in product development, marketing, sales, recruitment, finance and strategy. You may not have all the parts in place but will have the core.
- Ambition and scale – You have a strategy and business model to either grow sales to in-excess of $100m or to build a very high net margin business on a lower level of sales.
- Manageable capital risk, prudent financial management – Your capital needs, through to profitability, either fit within the limits of what we can provide or the risk of us mutually securing the additional capital is manageable. You can demonstrate a robust approach to financial management and near term financial forecasting.
- Right risk return equation – The deal fits within our framework for projected risk and return. Generally, this means that the valuation is in a reasonable range for the stage of the business versus the scale of the opportunity and risks of success.
Over the coming months I will endeavour to elaborate on some of the detail under these seven things. In the meantime, if you think you’re in the right zone please drop Jason a line, in the first instance. Include in your intro email how you think your lining up against these criteria.
Take care, Phil