We are excited as our portfolio company PowerON (www.poweron.one) launches their capital raise, targeting a NZD$3mil raise to support further R&D work and build on the vision of soft robotics. Their “smart switch” technology is well suited to disrupt many industries, from robotics to consumer electronics, with a lot of interest from industrial partners already. We’re keen to support PowerON through their next stage of growth.
Congratulations to our Iraoho-Analyst Olivia Ogilvie, who graduated with her PhD yesterday at a ceremony in Auckland. Her thesis explored how food processing alters the structure and digestion of gluten, focussing on the peptides that are involved in celiac disease. This has led her to take a strong role in the biochemistry, food science, and agritech parts of the Matū research team’s work.
Standards NZ has written about ACABIM, the compliance automation product from CAS that has made some standards digital and compatible with building information management (BIM) systems. It helps show that CAS is getting good buy-in from industry bodies and regulators, and that they understand that CAS is solving an important problem.
Matū is proud to sponsor the Momentum Student Entrepreneur of the Year Award, as part of the KiwiNet Research Commercialisation Awards.
The eligibility criteria are quite simple: be a current, or within the last 12 months, enrolled student at a NZ university or wānanga. Full details are available on the website at www.momentum.ac.nz.
If you or any student you know are in the entrepreneurial space, tono mai (please apply)! Applications close soon on the 26th of May.
The Angel Association of New Zealand (AANZ) is co-hosting with New Zealand Growth Capital Partners (NZGCP) a series of workshops on early-stage investment. The second instalment was on Portfolio Management, held in Wellington on 13 May 2021. Andrew Chen from Matū was there to hear about real portfolios built in New Zealand. Participants heard about both the theory and reality of portfolio management from three different experiences:
- Marcel van den Assum provided the angel investor perspective, having invested in over 50 companies over 15 years.
- Jason Graham from Movac provided an early-stage venture capital fund perspective, detailing 35 investments made across 5 funds and 22 years.
- Marcus Henderson and Hursh Shah provided the institutional venture capital perspective, with NZGCP’s Aspire NZ Seed Fund having invested in over 160 companies over 15 years.
The presenters gave some common messages: the theory says diversification is critical for mitigating the downside risk of your investment(s) crashing to zero, especially in the high-risk early-stage investment space. The data shows that a small number of investments in each portfolio will account for the vast majority of the returns, so you need to invest in enough opportunities to increase your chances of finding a winner.
But what is the right way to diversify in practice, in the New Zealand context? It’s not just about taking every possible opportunity and making a lot of investments. All the speakers agreed that active investment approaches – getting involved in the portfolio companies rather than passively waiting for returns – are critical to improving the likelihood of success. Marcel spoke about five Cs that help him select the right investment opportunities:
- Connections: can your networks offer access to markets or relevant expertise?
- Capability: do you have the right skills to help the company in their current context?
- Capacity: do you have the time, capital, and headspace to help the company?
- Culture: is the company willing to let you help, and can you work with them?
- Capital (strategy): are you sufficiently incentivised to do the work and help the company?
The key constraint for the angel investor is in capacity, and Marcel noted that as he becomes more experienced, he’s looking more to partner with others with complementary skills and time so that he has confidence that his investments are getting the right support. This is where the venture capital funds might have a bit of an edge – a team of people can dedicate more resources to supporting their portfolio companies, and are more likely to have the right networks and skill base to draw from. For example, Movac has a number of Operating Partners who are able to provide sector-specific expertise for the portfolio companies, and potentially get their hands into the companies themselves to provide operational support.
Movac also offered some key metrics that can be monitored to evaluate whether your portfolio is sufficiently diversified:
- Number: an important metric but it doesn’t tell the whole story by itself
- Sector: investing across a range of sectors mitigates macro-trend risks
- Concentration: knowing and playing to your strengths can reduce risk
- Recovery: showing that you are at least breaking even is helpful
- Hit Rate: picking winners more often than others means you have good selection processes
Alongside diversification, a couple of other aspects also contribute towards building a strong portfolio, including:
- having an investment mandate or thesis to provide safety rails around your decision making
- negotiating reasonable terms and valuations that look to the long-term
- building dealflow so that you have access to more opportunities and can select from the best possible options.
Additionally, Marcel and Movac both said the vast majority of their returns came from follow-on investments into companies that were doing well, so it’s important to ensure you have the capital and capacity to support good performers past the current investment round.
Finally, Marcus and Hursh from NZGCP talked about what they’ve learned from managing a massive portfolio of companies, and their new strategies moving forward. For the Aspire fund, they have categorised the portfolio companies into three buckets depending on how much interaction or support they might need, and have assigned team members to provide between 30-120 minutes of active support per week to each company. Looking at where the strongest returns have been in their portfolio, they have identified four focus areas for investment into the future: software, agri-tech, health-tech, and deep-tech. And they have seen a direct correlation between time spent on due diligence and returns, so they are prepared to spend more time evaluating investment opportunities and ensure they are the right companies to deploy capital towards.
The three presentations all drew from the same theory of diversification, but it was apparent that different types of investors have different tools and choices that allow them to apply diversification in different ways. For the angel investor, their own expertise and time to help guide companies makes the biggest difference to their portfolio’s success. For venture capital funds, active support is important, but having more funds available allows them to invest more widely and spend more time on investment selection. But for all investors, the need to constantly learn and refine their choices is critical – all of the presenters have changed the way they make investments in comparison to 15 years ago, and all are still on a journey to learning more.
Keep an eye out on the NZGCP website (https://www.nzgcp.co.nz/news-and-media/) for future workshops in the Early-Stage Investment Series.
The team at Matū is extremely proud of two of our iraoho-analysts who have been selected as judges for some major science commercialisation and deep tech awards.
Olivia Ogilvie has been selected as an expert judge for the XPRIZE Feed the Next Billion competition based on her research background in food science and cellular agriculture. This is a four-year, $15M competition that will incentivize teams to produce chicken breast or fish fillet alternatives that replicate or outperform conventional chicken and fish in: access, environmental sustainability, animal welfare, nutrition and health, as well as taste and texture. Read more here: https://www.xprize.org/prizes/feedthenextbillion/articles/meet-the-judges-of-xprize-feed-the-next-billion
Kiri Lenagh-Glue has been selected to be one of the judges of the 2021 KiwiNet Research Commercialisation Awards. These are New Zealand’s premier awards in the early-stage science and technology investment sector, celebrating individuals, teams, and organisations in their efforts to commercialise publicly funded research. Matū is well-aligned with the objectives of the awards, and we sponsor the Momentum Student Entrepreneur of the Year Award. Read more here: https://kiwinet.org.nz/Awards/Awards2021Judges
The Auckland Bioengineering Institute at the University of Auckland has received a $15mil grant to develop build towards a complete digital model of the human body, in particular the various organs that keep us alive. Virtual or digital models of these organs have been developed over time, but the complex interactions between the organs also needs to be well understood, not just from a biology perspective but also chemical and physical as well. By building more detailed and accurate models, researchers may be able to better rely on virtual models rather than having to run experiments on live organs, greatly increasing the speed at which the research can be conducted in the initial phases.
Read more here: https://www.nzherald.co.nz/nz/15m-mega-project-aims-to-create-virtual-humans/2EFAU6L7INU3RY4R6EUJ5SEVGA/
New Zealand Growth Capital Partners has featured our GP Dr. Andy West in their great interview series with various folks in the early-stage investment space. He talks about what it takes to be a successful early-stage deep-tech company in Aotearoa, and talks about some of the lessons that he has learnt first hand.
Read more here: https://www.nzgcp.co.nz/news-and-media/new-blog/korerorero-andrew-west-matufund/
Our newest portfolio company, Alimetry, has now left stealth mode to announce that they have achieved CE Mark on their diagnostic product, which will be followed by work to achieve FDA regulatory approval. From their press release:
“The new wearable product, called Gastric Alimetry, is positioned to transform the diagnostic pathway for millions of patients worldwide suffering from diseases such as functional dyspepsia, gastroparesis and chronic nausea and vomiting. Gastric symptoms are extremely prevalent and impart a vast burden, affecting around 10% of the global population. The Gastric Alimetry device collects data by non-invasively sensing the activity of the stomach from the body surface. The data is sent to the cloud for analysis, and is used by clinicians to determine the causes of gastric symptoms and direct treatment.”
You can read the rest of the press release here: https://www.scoop.co.nz/stories/SC2104/S00017/alimetry-leaves-stealth-mode-to-announce-ce-mark-on-new-wearable-medical-device-for-gastric-diseases-and-investment.htm
Alimetry has also been in the local media after being named a finalist in three categories of the Hi-Tech Awards. There was an article in the NBR, and you can watch the Seven Sharp clip here: https://www.tvnz.co.nz/shows/seven-sharp/clips/kiwi-scientists-come-up-with-solution-to-end-invasive-techniques-to-diagnose-gastric-problems
And their new website is looking very slick, at www.alimetry.com!
Our portfolio company PowerOn has showcased its first product, a high voltage signal generator that is designed for use with soft robotics systems. The product was originally developed because of PowerOn’s own needs for stable and accurate high voltage signals during R&D, and the team decided to make some units available for other research groups as well.
Read more details and watch the video here: https://www.poweron.one/poweron-high-voltage-signal-generator-at-eap-in-action-spie-smart-materials-and-structures-conference/