$50m to help young firms

Fifty million dollars is up for grabs for young innovative companies.

The New Zealand Venture Investment Fund (NZVIF) has $50 million available for establishing new venture capital funds, which will invest into promising “high growth” companies.

NZVIF chief executive Franceska Banga told the National Business Review it is “unlikely” the full available amount will be used during this round due to its requirements of matching private capital, which can be challenging to attract in the current market.

“We would be very surprise if we committed all the capital in this round but we certainly expect that we will be able to commit a chunk of it in this current round.”

The $50 million fund is likely to be spread over the next three to four years establishing between two and five funds, which will assist up to 50 companies.

NZVIF is looking for proposals from venture capital fund managers with established management teams, confirmed capital commitments in excess of $10 million and a track record of venture capital investment experience.

Between $10 million and $25 million will be committed to each new fund.

“We will only invest if the fund actually has the capability and experience within the team. It’s very much driven by the quality of the team and its track record in venture capital investing and ability to attract private capital to invest alongside,” Ms Banga said.

While any sector apart from property, mining, retail and financial services, can qualify, NZVIF plans to establish at least one new venture capital funds that will focus on emerging technology companies requiring capital to expand.

“There is now a healthy pipeline of young technology companies looking to grow following consistent and significant growth in the angel investment sector in the past few years, Ms Banga said.

“These companies, typically, are at the stage where they would be looking for capital of $2 million to $4 million to start taking their product offshore.”

NZVIF is seeking fund managers with appropriate venture capital investment experience and knowledge of the New Zealand science and technology industry and investment opportunities, as well as internationally linked venture capital funds.

“[They] are not only a source of investment capital but can provide valuable advice and access.”

NZVIF’s venture capital programme was established by the government to accelerate the growth of the New Zealand venture capital industry. Six venture capital funds have been established under the programme to date.

The deadline for proposals for new funds is 5pm Monday, September 27.