Investments Made ‘One a Month’, Says VIF

3 November 2004

Investments Made ‘One a Month’, Says VIF

Early stage, innovative kiwi companies with major growth potential are benefiting at the rate of almost ‘one a month’ from the Government’s Venture Investment Fund and a reinvigorated venture capital sector, since the four VIF seed funds were fully established in December 2003.

The New Zealand Venture Investment Fund (VIF) reported in its latest annual report (to 30 June 2004, tabled in Parliament yesterday) that it had made eleven investments in seed or early stage companies, alongside its seed fund managers. VIF’s commitments to early stage companies were still flowing as the report went to press, with two further investments made in high growth technology companies.

Investments by VIF have included*: (alongside seed fund manager Endeavour i-cap) in Waikato University’s Ectus Limited, which provides on-line e-learning tools that ‘redefine lectures’ by integrating video conferencing, video streaming, on-line discussion etc. (alongside seed fund manager No 8 Ventures) in Proacta Therapeutics Limited, a cooperative venture between the University of Auckland and Stanford University, which has developed technology to target non oxygenated cancer cells in solid tumours. (alongside seed fund managers Endeavour i-cap and TMT Ventures) in GeoSmart Limited, which has developed geospatial mapping technologies. (alongside seed fund manager iGlobe Treasury) in Xegen Limited, which is developing intelligent analytic tools for structured and unstructured data.

Chairman of VIF John Grant said: “This represents tremendous progress in terms of the number of young, high growth technology companies that have received investment support.”

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Comments by venture capitalists and others in the sector (which were quoted in the annual report) suggest that VIF has galvanised the venture capital industry in the past year to 18 months, and is having a positive impact on private investment in New Zealand companies.

VIF’s report stated that: $100 million had been committed to the VIF programme by private investors, alongside VIF’s $50 million, to 30 June 2004. $20 million had already been invested through the programme, with a further $7 million of commitments from VIF Seed Fund managers to invest in existing investee companies. Of the 11 venture investments made at 30 June, four originated from either Universities or Crown Research Institutions. One of the goals of the VIF programme has been to facilitate increased investment in projects from public sector research.

The report pointed out that a pleasing outcome of VIF activity had been the willingness of offshore investors to invest private capital in New Zealand. “This has meant that expertise and capital which would otherwise not be here has been attracted,” said VIF Chief Executive Franceska Banga. An example was the participation of GBS Ventures, Roche and Genetech in Proacta had attracted total investment of $12.5 million.

VIF also reported that progress to establish one or more Biotechnology Seed funds was well under way. Four Biotech funds had been short listed, with one - Life Science Ventures – identified as investment grade. VIF’s Chief Executive said that negotiations were progressing with Life Science Ventures Management Limited, with the intention that an allocation of $15 million would be made to the fund (subject to agreeing upon commercial terms).

A further $35 million of capital would be available in the next financial year for allocation to an expected two further new funds.

The New Zealand Venture Investment Fund was launched in 2002 as a “fund of funds” initiative to kick start brilliant New Zealand business ideas and bring them to market. Under the initiative, the independent, specially selected venture capital seed fund managers choose innovative businesses to invest in using private capital, and VIF provides additional investment in the businesses alongside.

ENDS

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