Slack’s Path to IPO

The VC community has been watching Slack’s listing on the NYSE intently, as Slack has used the unconventional direct listing approach which carries a lot of risk but also potential reward for the existing shareholders. Thus far it has looked to be successful, with a whopping 22-27x implied multiple on annual revenue, even though Slack is not profitable yet.

Here are two interesting datagraphics that have been prepared by analysts in the US about Slack’s pathway to the IPO exit:

https://equityzen.com/path-to-ipo/slack/

https://pitchbook.com/news/articles/tracing-slacks-tracks-from-founding-to-direct-listing-datagraphic

NZ’s first FDA-granted Breakthrough Device

Congratulations to the team at Surgical Design Studio (SDS) and the University of Auckland for achieving a Breakthrough Device designation from the FDA – the first medical device in New Zealand to do so. SDS have a novel device to help those suffering from gastrointestinal diseases, transforming their recoveries from surgery by reducing complications and improving quality of life.

Read more here: https://www.uniservices.co.nz/node/786

Rocket Lab not afraid of competition

Stuff has some excellent reporting today on an interview with Peter Beck, founder and CEO of Rocket Lab, discussing the huge amount of activity in the space start-up ecosystem and the challenges that brings. Of particular interest is the comment that most of the start-ups will fail, and with that a lot of investors will lose money and may become disillusioned and lose interested in space, which harms the industry as a whole. But to some extent, Rocket Lab has to just do the best job it can – it only has limited control over the competitors, and the focus has to be on beating the extremely high difficulty threshold of succeeding in space.

Read more here: https://www.stuff.co.nz/business/113066131/rocket-lab-is-keeping-tabs-on-117-rivals-but-thats-not-what-is-keeping-founder-peter-beck-busy

$300mil Govt Fund for Venture Capital

The NZ Superannuation Fund has put out a press release that provides a lot more detail about the much anticipated $300mil “Series A” venture capital intervention fund, designed to help companies in the $2mil-$15mil valuation range. Commonly known as the “valley of death” in NZ investment circles, many companies at this stage end up having to go overseas to find capital. Using a small portion of the government’s superannuation contributions is a positive signal that there is strong belief that this asset class can produce good returns over a long time-frame. However, it may take awhile before request for proposals and managers are appointed – we expect it to take at least a year to get to the point where this funding actually becomes available.

Read more here: https://investmentnews.co.nz/investment-news/nz-super-primed-for-new-300m-venture/

Zenno Astronautics on the first part of their journey

University of Auckland student start-up Zenno Astronautics hopes to use electromagnetic propulsion to help keep satellites in space, rather than having them fall back down to Earth too quickly. An interesting and wide-reaching interview, Managing Director Max Arshavsky tells the story of their early plans, how they manage their company and seek investment, and why they’re trying to do it from New Zealand.

Read more here:
https://m2magazine.co.nz/m2-success-summit-local-vs-space/

Invert Robotics closes NZD$13mil round

Christchurch-based Invert Robotics has closed a USD$8.8mil (NZD$13mil) funding round, with the support of Finistere Ventures (from Silicon Valley) and Yamaha Motor Ventures. This is particularly interesting as it is showing the interest from these two sources in New Zealand, and they are looking around for other early-stage investment opportunities. The company builds robots that can climb vertically up walls, using vacuum technology to ensure that they adhere to non-magnetic surfaces.

Read more here:
https://venturebeat.com/2019/05/02/invert-robotics-raises-8-8-million-for-inspection-robots-that-cling-to-non-metallic-surfaces/

Biomatters Acquired!

A leading provider of DNA data analysis solutions, Auckland-based Biomatters has been acquired by GraphPad, a US publisher of scientific software (particularly around biostatistics). With significant numbers of customers overseas (particularly in the US), the acquisition will help Biomatters take their software to the rest of the world, with a connection through to Insight Partners as well, a leading VC/PE firm investing in high-growth technology and software companies. The sale is great news for Ice Angels and NZVIF, who both held significant stakes in the company.

Read more here: https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12225362

The Art of the M&A Exit

Over at Forbes, Alejandro Cremades interviews Duke Rohlen – you may not have heard of him, but it turns out he has successfully grown and exited four medtech companies for a total of over US$1 billion. Thinking about potential exit strategies from the very beginning is key, alongside building integrity and trust with all parties. The trick is that Rohlen puts the business model first, then the team, and the technology last – often the opposite of what a lot of entrepreneurs do.

Read more here:
https://www.forbes.com/sites/alejandrocremades/2019/04/09/this-entrepreneur-sold-4-companies-for-over-1-billion-following-these-3-steps

Calls for new models for commercialising university IP

Michael Biercuk writes in The Australian about his issues with the traditional university ownership model around IP, and the chilling effect it has on commercialisation. The reward structure that once made sense for licensing well-formed and packaged IP is struggling in the age of the spin-out, where academic teams and founders need to be highly motivated to continue working on their projects in order for ventures to succeed. Matū is pushing for increased awareness about this at all of the universities in New Zealand – while we have seen some resistance, some of the universities are agreeing that a new model is needed in order to attract good investment money into new ventures.

Read more here:
https://www.theaustralian.com.au/higher-education/university-research-brains-and-cash-need-better-forum/news-story/9776d88065840cb2711e7873efa8e165

The Re-investment Effect in New Zealand

Callaghan Innovation has just released a report titled “Growing the Pie: How entrepreneurs are creating a better NZ”, which focuses on two main discussions:

  1. Even though many successful NZ start-ups get acquired by overseas companies or have to shift their headquarters to other countries in order to access markets, this isn’t necessarily a bad thing. This is because the people involved in these companies take their success, and re-invest it into the next generation of New Zealand start-ups. The report interviews several successful entrepreneurs and investors, and focuses on the case study of Sir Peter Maire and Navman, showing the ecosystem around Navman and the following generation of companies that were supported by Maire.
  2. The last fifteen years have seen enormous growth in terms of success in the NZ start-up industry. Once upon a time, a company being sold for $100 million was a very big deal, but now there are nine Kiwi business with a valuation of over $1 billion, and the report estimates that Kiwi unicorns have over $34 billion in value between them. This is only really possible because companies have started to embrace overseas investment, and understand that it’s simply a necessity in order to keep growing. Funds like Matū have to keep developing and nuturing our international connections so that we can help our investee companies find the right capital when they need it.

A press release about the report, and the report itself, are available here: https://www.callaghaninnovation.govt.nz/news-and-events/nz-%E2%80%98unicorns%E2%80%99-create-more-34-billion-value