Venture Investment Fund Board Appointments
Sunday 29 July 2001
The Government has appointed a six-member advisory board for the new $100 million New Zealand Venture Investment Fund.
The fund, launched in the Budget, is a key measure amongst the Government's initiatives to stimulate business growth and transform the New Zealand economy.
"The VIF is a bold initiative to accelerate the development of New Zealand's venture capital sector, which is vital to the formation of innovative new businesses," said Research, Science and Technology Minister Pete Hodgson. "This money will back New Zealand's innovators in universities, Crown Research Institutes and the private sector.
"The advisory board will provide the commercial knowledge and judgement the fund needs to drive up seed and start-up investment activity. Its expertise will be crucial in the establishment phase of VIF, when we will be seeking private sector partners for a series of 'drop-down' investment funds."
The chair of the advisory board will be John Grant, currently executive chairman of Australian investment company Grantham Capital. Mr Grant has 20 years experience in private equity investing in Australia and internationally and is a former committee chairman of Australia's Industry Research and Development Board.
Grant is joined on the board by:
Peter Taylor, company director and chair of a HortResearch/Enza joint venture company and Gas Investments (NZ) Ltd;
John Hindmarsh, Treasurer, Auckland City Council;
June McCabe, chief manager, WestpacTrust;
Geoff Page, chief executive, Industrial Research Ltd;
Grant Ryan, manager NBCi New Zealand Ltd;
Dr James Buwalda, chief executive of the Ministry of Research, Science and Technology, (ex officio member).
The $100 million in NZVIF will be invested in a number of individual funds over the next two to three years, with each fund operated by professional venture capital fund managers contracted by the board. Managers will be sought from the venture fund management industry in New Zealand and internationally through a request for proposal (RFP) process.
Mr Hodgson said the advisory board's expertise would be called on in defining the conditions of the RFP, assessing proposals, negotiating the conditions for VIF investment in individual funds, making judgements about when to set up individual funds and balancing the government's risk across the portfolio of VIF funds.
"The advisory board balances internatioinal venture capital expertise with good governance skills and technical capability from New Zealand's innovation sector," Mr Hodgson said. "I am confident it can successfully guide the VIF in its mission to accelerate the formation of a thriving venture capital sector in this country."
New Zealand Venture Investment Fund
Advisory Board Profiles
John Grant has 20 years of successful experience in private equity investing in Australia and internationally and is experienced in active participation at Board-level in public companies and statutory authorities.
John is Executive Chairman of Grantham Capital, an investment company, which he established in 1981 to invest in and provide advice to high-potential, innovative Australian businesses. Through Grantham Capital in 1984, he jointly founded, with Hambros Plc the UK based international merchant banking and investment group, a venture capital investment management firm, Hambro-Grantham Limited. John was appointed Hambro-Grantham Managing Director and CEO and in 1994 assumed the additional role of Executive Chairman. John ceased his executive involvement in the firm in 2000 when the company became a wholly-owned subsidiary of the Commonwealth Bank of Australia, following the sale of Grantham Capital's fifty percent shareholding.
John’s previous experience of twelve years in investment banking included six years as Managing Director and CEO of International Pacific Corporation (now Rothschild Australia). His earlier business experience was in management consulting and public accounting.
John is a Chartered Accountant and holds a Master of Business Administration degree from Columbia University, New York.
Other Government appointments
John was a member and Committee Chairman of the Commonwealth of Australia's Industry Research and Development Board (a statutory authority providing grant funds to promising Australian technology companies). He has served as a member of two Australian Government Committees of Review and was a member of the steering committee of the Australian Government sponsored Innovation Summit.
Private sector appointments
John is non-executive Chairman of H-G Capital Limited and a non-executive Director of Goodman Fielder Limited, John Swire & Sons Pty. Ltd, Vision Systems Limited, Mincom Limited and H-G Ventures Limited. He was previously a Director of Perpetual Trustees Australia Limited.
Peter Taylor has over 30 years business management and restructuring experience. He has worked at Board level in large corporates, as well as maintaining a hands-on involvement in small to medium sized businesses.
He is a past managing partner of the Wellington office and a past member of the National Board of Ernst & Young. Over the period of 1984-1991 he led the Ernst & Young Wellington office corporate recovery and reconstruction practice and was national leader of the practice over the period 1987-1991. He retired from the partnership in December 1998 to become a self-employed Consultant and Company Director.
Prior to joining Ernst & Young, Peter was Group Development Manager with Cable Price Downer Limited. Prior to this, he had been a partner with KPMG in Africa.
Peter is qualified as a Chartered Accountant and completed the Executive Program, 1993, at the Coalgate Darden Graduate School of Business Administration, University of Virginia.
Peter is Chairman of the “Modernisation” Board – Public Trust and is a member of the Commerce Commission. He was Chief Executive for CCMAU from June 1994-October 1996. He previously was a Director for PowerDesignBuild Limited, a subsidiary of ECNZ Limited.
Peter is also a Director of Hortresearch New Zealand Limited
Private sector appointments
Peter is on the following Boards:
Chairman - Hortresearch/ENZA Joint Venture Company
Chairman – Gas Investments (NZ) Ltd
Director – D.F. Mainland Group
Trustee - Totally Wellington Trust
Director – Isaac Construction Limited
Director – CanMap Hawley Limited
He also has had previous Directorships with Ernst & Young, Turners and Growers Limited, MAS Technology Limited, and until recently was Chairman of Trustees for the Dame Malvina Major Foundation
John Hindmarsh has extensive experience in the New Zealand capital market. He has arranged funding for businesses both large and small including the New Zealand Dairy Group, New Zealand Apple & Pear Marketing Board, ANZ Banking Group (New Zealand) Ltd, and the Auckland City Council.
John’s career highlights include being appointed an advisor to Fletcher Building on the formation and operation of its venture capital company Inventure Limited.
In 1994, John was invited to teach a paper entitled “Finance for New Ventures” to adult students enrolled in the University of Auckland Diploma Programme. That course has evolved into a short course entitled “New Venture Financing Proposals” now offered as part of the University’s Executive Programmes.
John has an MBA degree from Auckland University that included a dissertation on the venture capital process.
June McCabe is Chief Manager, responsible for WestpacTrust’s Government Business operations and Corporate Strategy. She has particular accountabilities for Crown Transaction Banking and for providing the Chief Executive with strategic advice on the financial services industry.
Prior to becoming Chief Manager, WestpacTrust, she was the CEO and a Director of Mortgage Corporation New Zealand Limited and was accountable to the Board for overseeing the operation of a mortgage portfolio with an approximate value of $700m.
Ms McCabe’s previous roles include:
Executive Director of Mortgage Services Ltd, accountable for the establishment of the company
CEO of The Home Mortgage Company Ltd, accountable to the Board for overseeing performance of a $700m portfolio of mortgage assets,
Rental Manager, Housing New Zealand accountable for the region’s rental operations
Branch Manager, Housing Corporation of NZ, whereby successfully completing sale of $500m prime rate mortgage portfolio.
Ms McCabe has also provided consultancy services to the State Services Commission for the appointment of State Sector Executives and Director-General positions.
Ms McCabe is a Director of the ACC and was a member of the Prime Minister’s Enterprise Council. She has held Directorships for Housing New Zealand, Department of Corrections Assurance Board, was Chairperson of the Maori Economic Development Commission, and was a working committee member for the Select Committee on Child Support Legislation Review (1994)
Private Sector appointments
Ms McCabe is currently a Trustee for General Church Trust. Past Directorships include Mortgage Services Limited, Mortgage Corporation of New Zealand Limited, and Moana Pacific Fisheries Limited. Ms McCabe was the Chairperson of the Maori Multiple Owned Land Development Committee and a member of the Maori Directors Group.
Geoff Page is CEO of the Government-owned Industrial Research Ltd, a group of companies operating in New Zealand, Australia and Singapore. As a senior executive with 12 years experience in his current role and as CEO for the New Zealand Dairy Research Institute, Geoff has led the development of world class research groups, initiating new areas while establishing and maintaining international governmental and private organisational relationships.
During his career he has been involved in creating 18 companies and joint ventures and established numerous licensees. He has been keynote speaker at numerous national and international conferences.
Geoff has been a Senior Lecturer in Food Technology at Massey University and has led and managed multi-disciplinary food technology projects for Unilever in the Netherlands and the United Kingdom. Geoff has worked internationally as a scientist at a number of major organisations including Schering Corporation.
Geoff has a PhD from the Imperial College of Science and Technology, London. In 2001, he was elected an Honorary Fellow of the Institute of Professional Engineers of New Zealand (IPENZ). Geoff was also awarded a DSc. (Honor causa) by Massey University this year.
Geoff has had a wide range of experience as a member of many statutory organisations. He is currently Chair of the Industrial Research Ltd subsidiary Materials Performance Technologies Pty Ltd and Board Member of a number of joint ventures including: Superlink Developments Ltd, Gracelinc Ltd and Damping Systems Ltd. He is also a Board member of Telarc Ltd, a council member of the Testing Laboratory Registration Council and Member of the Association of Crown Research Institutes.
Grant Ryan is Manager, NBCi New Zealand. Grant is the originator of the internet search technology that lead to the formation of GlobalBrain Ltd in March 1998 which was then purchased by NBCi (backed by General Electric) in May 2000.
Prior to establishing GlobalBrain, Grant worked for two and a half years as a scientist for Industrial Research Limited.
He has been involved in numerous international research projects including one at the Université de Versailles in Paris on an EC research project modelling pollution flows in European economise. He has also led research into impediments to the uptake of new and emerging technologies.
Grant has a Degree in Mechanical Engineering from the University of Canterbury and PhD in Chemical and Process Engineering.
Grant was on the expert advisory panel that helped allocate money for the Incubator Development Programme run by the Ministry of Economic Development in June 2000).
Private sector appointments.
Grant has been a Director of GlobalBrain Ltd (NZ Company), GlobalBrain.net (US company),and Boulevard Web Systems (Christchurch based software company).
CE, Ministry of Research Science and Technology
James Buwalda is Chief Executive of the Ministry of Research, Science and Technology (MoRST). James took up that position in 1996 and leads a team of about 50 advisors and support staff with the aim of advancing the benefits of research and innovation in New Zealand.
He has a background in agricultural and horticultural research.
Since joining the Ministry, he has overseen the Foresight Project and introduction of new evaluation methodologies, and in more recent years, become dedicated to stimulating the growth of high technology companies in NZ.
James Buwalda will serve as an ex-officio member of the NZVIF Advisory Board.
Venture Investment Fund
An introduction to the New Zealand Venture Investment Fund
"VIF is a bold initiative to accelerate the development
of New Zealand's venture capital sector, which is
vital to the formation of innovative new businesses,"
Minister of Research, Science and Technology
The New Zealand Venture Investment Fund (VIF) was launched by Government on 24 May 2001 to accelerate the development of the venture capital market in New Zealand. Through VIF, the Government will invest NZ$100 million over the next three years in innovative New Zealand businesses developing technology and high value-added products and services.
The New Zealand Venture Investment Fund will invest its capital through a series of individual investment funds. These individual funds will be operated by private sector fund managers and will include private-sector venture capital as well as the Government's investment contribution.
These individual funds will, in turn, invest in New Zealand businesses. Individual funds will typically be about NZ$30-NZ$50 million in size and will have a focus on seed and start-up investments in New Zealand's high-tech and innovative industries.
The individual funds will be for:
seed stage investment which is funding that enables development, testing and preparation of a product or service for commencement of business operations; and,
start-up investment which is funding to enable business operations to begin.
The purpose of VIF
The purpose of VIF is to encourage more New Zealand businesses on paths to global success by increasing their access to international experts, networks and market knowledge.
VIF will do this by helping to accelerate the development of the venture-capital industry in New Zealand that will, in turn, increase the level of seed and start-up investment activity in the New Zealand market.
It's intended that VIF will help to commercialise the innovations from Crown Research Institutes, Universities and the private sector.
It's also intended that VIF will encourage the development of a larger pool of people in New Zealand's venture capital market with skills and expertise in seed and start-up investment.
How VIF will work
"The Government understands that funding for basic research
underpins New Zealand's innovation system as a whole.
VIF will improve the commercialisation of ideas, continued
support for basic research will keep the ideas flowing."
Minister of Research, Science and Technology
VIF will invest NZ$100 million in about five individual investment funds. The first individual investment fund is expected to be operating by the end of 2001 and the rest will be established over the next two to three years.
VIF will contract with professional venture capital fund managers to operate the individual investment funds. The individual funds will be about NZ$30-NZ$50 million in size and will operate for seven to 10 years before they terminate and the profits are distributed among investors. An individual investment fund is likely to invest in 15-20 New Zealand enterprises over its lifetime and be actively involved in eight to 10 companies at any one time.
VIF operating principles
VIF will invest in individual funds under conditions that are attractive to private sector co-investors.
The activities of VIF should accelerate market development without crowding out existing venture operators or distorting market operations.
The operation of VIF will complement, and be coordinated with, other government, industry and regional development initiatives.
How VIF will invest its funds
VIF will be a minority investor in the individual investment funds. VIF will normally invest up to one third of the total capital raised for each fund. The rest of the capital will come from private sector investors. It will be the responsibility of the individual fund managers to secure the private sector capital.
VIF will invest in funds that are fixed-duration (closed end), private-equity investment vehicles.
VIF will normally invest up to one third of the total capital raised for a fund.
VIF will invest in funds that are of up to $50 million in total size.
VIF will give co-investors the right to exercise an option at any stage up to the mid-point of the fund to buy out VIF's investment based on a formula that refunds VIF's capital plus interest.
VIF's share of the proceeds of a fund at termination will be determined by a formula that refunds VIF's capital plus interest.
Each individual investment fund will be governed by an investment charter that will specify how an individual fund's capital will be invested.
The criteria that will govern the sorts of businesses individual funds will invest in are:
New Zealand businesses.
The VIF will invest in funds whose investment charters specify that they will make initial capital investments in New Zealand businesses, with these defined as businesses that have the majority of their assets and employees in New Zealand at the time initial investments are made.
Stage of business development..
Fund investment charters must specify that initial investments will be made in seed-stage and start-up businesses.
Limitation on size of total investment in individual businesses.
Fund investment charters must limit the size of the total investment in individual companies to no more that 15 per cent of the total capital in the fund.
Fund investment charters must exclude investment in the following classes of businesses:
re-investing and re-lending,
businesses associated directly with other investors in the
fund or directly with the fund managers.
How investment will be returned
VIF will give co-investors in the individual investment funds the right to buy out its investment at any stage up to the mid-point in the life of a fund. All investors, both New Zealand and foreign, will have access to this incentive. An early buy-out option for private sector investors will be based on a formula that refunds VIF's capital and interest only. Interest will be based on an applicable Government bond rate.
Precise formulae will be determined by negotiation with each fund manager and will be included in the investment charter for each fund.
If VIF has not been bought out before the mid-point of the term of a fund, it will take a pro-rata share of the net proceeds of the individual funds (including losses, if these have occurred) in the same manner as all other investors when the fund terminates.
If you are an investor and would like more information about the NZ Venture Investment Fund please contact the VIF Establishment Unit at firstname.lastname@example.org. If you want more information about investment opportunities in New Zealand, please go to the Investment New Zealand web site at www.investnewzealand.govt.nz.
Structure and operation of VIF
""Our aim is to increase the level of seed and start-up investment activity
in the New Zealand venture capital market, following a strategy
used successfully by countries such as Israel and Singapore."
Minister of Research, Science and Technology
As the New Zealand Government's venture capital fund, VIF will be responsible for meeting Government's goals to accelerate the development of the venture-capital industry in New Zealand. VIF will be set up as a distinct entity, administered by the Ministry of Research, Science and Technology under the operation of a General Manager with oversight from an Advisory Board drawn from the private sector. Work is already underway to establish VIF, which is expected to be operational by the end of August 2001.
It will be VIF's responsibility to:
seek and appoint fund managers to operate the individual investment funds
negotiate specific conditions that will govern the way VIF invests in the individual funds
make judgements about when to set up or exit funds
assess the investment charters of the individual funds
balance the government's investment across the portfolio of funds
monitor the performance of fund managers
report to government on the performance and progress of individual funds.
VIF Advisory Board
The VIF Advisory Board will provide the commercial knowledge and judgement VIF requires to operate successfully. The Advisory Board's expertise will be particularly crucial during the set up phase when VIF will be seeking private sector partners to manage the individual investment funds.
The Advisory Board will provide particular expertise in:
defining the conditions of the Request for Proposals from private sector fund managers to manage the initial individual investment funds
assessing the proposals from prospective fund managers
selecting fund managers
negotiating specific conditions governing VIF investments in funds
making judgements about when to set up further funds
balancing the government's risk across the portfolio of funds.
Government expects to announce the membership of the Advisory Board sometime in late July.
VIF design consultation
VIF was designed after consultation with international specialists, in particular:
Australian venture capitalists and Federal Government policy makers.
Dr Yigal Erlich (Managing Director of the Israeli Yozma Fund) who provided advice to the Minister of Research Science & Technology and government officials in March 2001.
New Zealand fund managers and investors at a series of meetings during Dr Erlich's visit and through a discussion paper on design options.
Singaporean venture capitalists and government officials during a visit of a delegation from that country in April 2001.
USA-based venture capitalists and New Zealand investors working in the USA market.
How to get involved
VIF will contract with professional venture capital fund managers to operate about five individual investment funds. These funds will be set up over the next two to three years. Managers will be sought from the venture fund management industry within New Zealand and internationally and will be selected through a Request for Proposal (RFP) process.
Selecting Fund Managers
Fund managers will be selected primarily on commercial merit judged by their ability to:
raise private sector investment funds for the individual funds; and
previous success in the management of venture-capital funds.
Those fund managers will then seek private sector investors to co-invest in each fund with VIF. Once the individual funds are established, fund managers will be seeking innovative New Zealand enterprises to invest with.
Request for Proposals and Expressions of Interest
A Request for Proposals (RFP) to manage the first VIF individual investment fund will be released in late August 2001. The VIF Establishment Unit is seeking expressions of interest from venture capital fund managers to participate in the RFP. If you are interested in receiving a copy of the RFP document, Please register with the VIF Establishment Unit at email@example.com. The RFP document will also be posted on the Venture Investment Fund website www.nzvif.com in late August 2001.
The final word
“While there is risk involved in venture capital investment, international experience also shows that there are gains to be made. That is why private sector investors have joined with government schemes in Australia, Canada, Singapore and Israel to jointly invest in seed capital and start up investments in high tech industries. Through VIF the New Zealand Government is seeking to develop the New Zealand venture capital market with private sector co-investors and improve the skills on the ground required to take New Zealand companies into global markets.
“New Zealanders are bursting with bright ideas with great business potential. We aim to turn these ideas and innovations into business successes.”
Minister of Research, Science and Technology