Start-ups flying offshore

Start-ups flying offshore

Angel investment group Sparkbox Ventures and the ICEHOUSE business growth centre are joining forces to raise a specialised $4 million angel investment fund - the Global from Day One Seed Fund - targeting Kiwi start-up technology companies with international horizons.

The fund aims to raise up to $4 million from investors. It also aims to draw on existing investment partnerships which Sparkbox and ICE Angels, the ICEHOUSE-linked angel group, have with the New Zealand Venture Investment Fund, which could see up to another $2 million available for co-investment.

Sparkbox chairman Andrew Duff said a key attribute for success for many New Zealand technology start-ups is having a global focus.

“The New Zealand domestic market is too small for a lot of technology concepts. Take a company like Booktrack – from day one its potential markets lay offshore. To succeed, its founders needed an international focus from day one.

“This fund will be targeted at new technology companies which can demonstrate proof of concept and have identified an international opportunity. We see considerable opportunities in companies with ‘disruptive’ technologies – a completely new idea which can change the dynamics of a market.

“By taking an international perspective from day one, we see these companies taking a much faster growth path. This will deliver faster returns to investors and also wider benefits to New Zealand in the form of highly productive jobs and recycled capital. Once companies have taken the step towards internationalisation, we would expect to bring in new investment – such as follow-on angel or venture capital investment - to take companies to the next level.”

The ICEHOUSE chief executive Andy Hamilton said the new fund is a new development for the high growth sector.

“This is something quite exciting. Global from Day One will be a seed investor in sectors like IT, social media and high-tech manufacturing, as well as other high growth potential areas of the economy. We have seen a new age develop recently with concepts like Y-Combinator and Tech Stars propelling start-ups into global markets from day one.

“Raising the earliest money continues to be very challenging in New Zealand. We see a great opportunity to provide ‘seed money’ coupled with support to accelerate into global markets. The fund will complement existing angel networks across the country, in that it funds the development of concepts and will make companies ‘investible’.

“Global from Day One will not make follow on investments so opportunities will gravitate back to the angel groups and other funders for follow-on investment rounds. The fund will be early stage but well diversified and give investors a unique window on New Zealand-wide opportunities with experienced players driving it.

“BigLittleBang [www.biglittlebang.com] is a good example of what is possible with seed funding. Sparkbox, K1W1 and NZVIF invested seed money in 2010, which was followed by angel investment from ICE Angels, and now the company is accelerating into the US market. We want many more deals like this from across New Zealand.

“To meet the Fund’s criteria, the start-up can be from anywhere in New Zealand, have a vision to take their technology into global markets, be open to working incredibly hard while also be prepared to have a partner in their business.”

The fund brings together some of New Zealand’s most experienced and successful angel investors with an internationally regarded business growth centre. Forbes Magazine rated the ICEHOUSE as one of the world’s top ten start-up incubators. Its angel network, ICE Angels, is one of Australasia’s more significant angel groups. Sparkbox Ventures has over a decade’s experience in angel investing and will manage the fund. The investment committee will be overseen by experienced angels from both groups.

Global from Day One is currently raising money from eligible investors from across New Zealand. It has commitments of $1.35million to date, and aims to raise up to $4 million by the end of August 2012. ICE Angels’ and Sparkbox’s existing investment partnerships with NZVIF could see up to another $2 million co-invested on a deal by deal basis. The fund, which is already considering investments, aims to invest into 15 to 25 companies over the next five years.

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