Houston might we have a problem?

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!

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