The government-backed New Zealand Venture Investment Fund has closed the first tranche of capital-raising for a new fund that aims to back kiwi firms into the greater China market, raising US$75 million and targeting at least a further US$25 million in partnership with its Taiwanese counterpart and a private venture capital group, GRC Partners, which has operations in Taiwan, Beijing, and Auckland.
NZVIF is committing US$20 million to the GRC Sino-Green Fund III, matched by its Taiwanese equivalent, the National Development Fund. Sino-Green III will invest at least US$35 million in New Zealand businesses in a move that GRC Partners' Auckland principal, Tony Bishop, says will provide a credible "leg-up" for local businesses seeking access to the fast-growing Chinese market because of its strong connections in-market.
GRC's Taiwanese operation has a direct relationship with Taiwan's Industrial Technology Research Institute and expects its Taiwanese and mainland China relationships to "open access to new networks and markets for fund managers and the high growth companies they invest in."
The fund is identifying a range of New Zealand companies in areas including medical devices, diagnostic tools, agri-tech, clean tech and renewable energy.
GRC's New Zealand arm, previously known as Pan Pacific Partners, already has investments in New Zealand firms Zephyr Technology, a medical diagnostics device launched into the US market, and Lypansos, a pharmaceutical company developing a novel oral treatment for eczema through an earlier VC fund, Iglobe Treasury.
GRC's Taiwanese and Beijing teams are predominantly Chinese investors who founded their operation after spending time in Silicon Valley, California. GRC has taken earlier investments to sharemarket listings.
"They liked the look of a lot of the deals we were discussing," Bishop told BusinessDesk. "They understand that New Zealand good at innovation but that companies need help with manufacturing and design and scale-up, and recognised a lot of what we have is very scaleable in the China market."
The US$35 million commitment to invest in New Zealand originated deal was "a minimum commitment out of New Zealand."
GRC hoped to attract New Zealand capital to future funds.
If it reaches its US$100 million target, the GRC Sino-Green III fund will be one of the largest supported by NZVIF, said NZVIF's chief executive Franceska Banga.
"That will give it the capacity to make the larger investments which are needed for growing companies looking at offshore expansion."
NZVIF was formed in 2003, managing venture capital funds totalling $260 million.