NZ venture capital community still rebuilding, Silicon Valley VC head says
New Zealand's institutional venture capital community is still recovering from the global financial crisis six-and-a-half years ago, although so-called angel investors are in better heart, according to a visiting venture capitalist from Silicon Valley.
Palo Alto, California-based Garage Technology Ventures' managing director Bill Reichert told BusinessDesk the local venture capital community isn't at critical mass, and is still recovering from the GFC. In contrast, he says the angel investor sector appears to be vibrant, although it would benefit from greater pooling of resources.
"My impression is the institutional venture capital community has still not recovered from the meltdown and that just put a huge dent into building the institutional venture capital community," Reichert said. "Nevertheless, there seems to be a very vibrant angel community here."
Last year, Angel Association chairman Marcel van den Assum urged his fellow investors to broaden their portfolios rather than backing one or two firms in the hope of a big pay-off.
Garage Technology Ventures' Reichert said the question for New Zealand angel investors was whether there was enough collaboration in the investing community.
"In a situation like this there should be more pooling of resources and focusing of attention around the most likely success stories," he said. "The whole nature of the market economy says let a thousand flowers bloom, but if you don't have enough water and you let a thousand flowers bloom most of them will die."
Adiba Barney, chief executive of SVForum, a Silicon Valley non-profit organisation aiming to foster the high-tech region's ecosystem, said New Zealand's entrepreneurs and early-stage start-ups need a champion to help create an environment where they interact with each other to develop a thriving community that feeds off each other.
She's optimistic the local scene has found that in government agency Callaghan Innovation, which has been tasked with helping fund the road to commercialisation by subsidising research and development and supporting a group of incubator programmes.
"Creating those kinds of opportunities are really important, that's why what Callaghan Innovation are doing is very, very important - much more so than you'd imagine," Barney said. "When it's too spread out and you don't have someone bringing it all together and being the champion for it, it makes it harder."
Reichert, who is a beachhead adviser for New Zealand Trade & Enterprise in North America, said the reality for most New Zealand entrepreneurs, is that when they want to go global they will have to leave the country to do so.
Reichert and Barney are travelling to New Zealand's main centres meeting entrepreneurs, investors and business leaders to help support Callaghan's incubator programme and provide local businesses with a connection in Silicon Valley.
(Disclosure: BusinessDesk receives funding from Callaghan to assist in the coverage of the commercialisation of innovation)