NZVIF invests $11 million in new Silicon Valley-style venture capital micro fund
By Fiona Rotherham
Jan. 20 (BusinessDesk) - The New Zealand Venture Investment Fund has committed around $11 million to become a cornerstone investor in a new joint New Zealand-Taiwan venture capital fund, the Global from Day One Fund 11.
The technology-focused, 10-year fund has raised more than $30 million including $11 million respectively from NZVIF and its Taiwan counterpart, the National Development Fund, and is targeting a total of $45 million.
It has been set up by investors from Auckland early stage fund Sparkbox Ventures and Taipei-based early investment fund Pinehurst Ventures who were previously involved in the first Global from Day One which focused on seed investment.
With a rise in angel investors providing seed investment for early stage start-ups, the new fund is styled on a Silicon-Valley micro VC fund, targeting high growth technology companies in New Zealand and Taiwan at the next level up for Pre-Series A and Series A funding of between $250,000 and $1.5 million.
Fund manager Chinataka Ranatunga said the idea was to help grow start-ups to a level where they could attract US and Asian venture capital interest for series B funding at around the $10 million mark.
The first investment has already been made in an Auckland-based software company that he wouldn’t name at this stage and the fund hopes to make a total of 20 investments.
Ranatunga said the focus will be start-ups who are exporting and technology companies with a software-as-a-service model which New Zealand had built capability in among software developers and entrepreneurs, partly due to Xero’s success.
“Kiwi enterprise and software development companies can compete on a global scale. For consumer companies it is a lot tougher because New Zealand has such a small domestic market,” he said.
A portion of the fund will go towards start-ups using Taiwan as a springboard for growth into Asia and the terms of NZVIF’s commitment requires at least half the fund to be invested in New Zealand high-tech companies.
Outgoing NZVIF chief executive Franceska Banga said when the fund closes it will be the first new venture capital fund for a year and fills a gap in the New Zealand market for funding Series A opportunities.
“It is a welcome addition to the growth stage investment sector and it is the 11th venture capital fund established with NZVIF as a cornerstone investor,” she said.
The New Zealand Seed Co-Investment Fund was a cornerstone investor in the first Global from Day One fund which has nearly fully committed its near-$3 million funding by investing in 14 Kiwi companies.
Ranatunga said it's anticipating its first exit this year with the sale of one of the companies to a US buyer and the fund’s internal rate of return so far has matched US peers.