Matū Planning through COVID-19

What a difference a week or two makes, to NZ and to the world around us! As we are writing this, the Matū team are in lockdown working from home, but we remain in close contact, supporting each other and our portfolio companies via the use of various online tools and the internet. Business is continuing as normal; this week we have completed a Lean Canvas workshop on a microfluidics project at Massey University, the Return on Science and Momentum Investment Committees are meeting, and we continue with due diligence on a couple of early-stage opportunities.

We are also participating in several industry groups that are advising the government on potential programs and projects to try and keep the research and innovation sector moving in these trying times. The COVID-19 Innovation Acceleration Fund from MBIE has already been announced in the last week to research organisations. We are also in the final steps of completing an investment into portfolio company #5, Ligar Polymers.

While we are now in little doubt that we are in for some pretty challenging times in the coming months and perhaps years ahead, we are confident that the underlying broad strength of the New Zealand economy will see us through. This will definitely create new and disruptive investment opportunities for Matū as NZ and the world has to learn to innovate and use technology on a completely different level. In January, we completed some strategy planning looking at the next couple of years, but we will clearly need to iterate this over the next couple of quarters once things settle somewhat.

In the last two weeks, we have conducted reviews with each of our portfolio companies, with a particular focus on impacts and contingency planning related to COVID-19. Naturally, they are all very busy looking at burn rates, identifying cost reductions where possible, and modelling cashflow scenarios in consultation with financial advisors. Spreadsheets are definitely working overtime! Not unexpectedly, with portfolio staff there are a wide range of emotions and genuine concerns about what the future might hold for them and their families. We are encouraging each team to focus on the things they can control, and continue to move the business forward whilst being very careful to protect cash.

Going forward, we are remaining positive. We remember that we have been through many tough challenges as a country in recent times, including the Christchurch earthquakes and the Mosque shootings.

After the Global Financial Crisis, recovery was in part led by disruption and innovation: Uber, AirBnB, Lyft, and Amazon’s pivot are just some examples of start-ups emerging from the ashes of the chaos. This time won’t be any different. Technology will play a major part in getting business back on its feet, in new ways.

We know that when the pandemic is over, things won’t be the same again. However, when the grief and shock makes way for a positive can do attitude, human insight will come to the fore. We recognise that we will have to approach the same things different to move forward in the “new world”.

Matū is ready and we will play our part in this new wave. Our pipeline is solid and continues to expand. We are well positioned to ride out this economic “correction” and we continue to interact on a daily basis with innovators and entrepreneurs in this new era.

We will clearly need new capital to execute the opportunities, and we continue to engage positively with potential investors. We are also expecting market corrections to take shape in a softening of valuations and general investment terms.

Sectors rife for disruption could include fintech, digital health, wellness and medical devices, industrial processing, digital security, remote collaboration tools, and AI. We could see a mad scramble of a lot of venture money globally into these sectors, and we will continue our careful and scientific approach to early-stage investing.

We hope that you and your families are safe and well during the lockdown, and please do reach out if we can lend an ear or help in any way.