NZVIF's seed fund investment too early to predict returns, CEO Franceska Banga says
The government-backed New Zealand Venture Investment Fund says it's still too early to judge the performance of the Seed Co-Investment Fund, which backs early-stage firms alongside angel investors.
The NZVIF invested $5.4 million in the seed fund in the 12 months ended June 30, up from $5.2 million a year earlier, it said in a statement. That takes its cumulative investment to $29.93 million in 115 companies since the fund was set up in 2006. Some $61.5 million has been co-invested in the fund by 14 angel partners.
The fund's most recent success was the sale of local cloud-based computing firm GreenButton to Microsoft in May, which NZVIF chief executive Franceska Banga said at the time that it offered a "very healthy return" without being more specific. In the 12 months ended June 30, 2013, NZVIF sold investments worth about $207,000 through the seed fund, down from $989,000 a year earlier, according to its 2013 annual report. It sold seed fund investments worth $294,000 in the 2011 financial year.
Banga last week said it was too early to predict the fund's overall performance, with most of the companies at the early stage of their development.
"We have, however, seen some healthy returns from exits from HaloIPT and GreenButton," she said. "The rule of thumb is that most companies will fail, but a few very good performers will bring positive returns overall across a portfolio."
In May, Angel Association chairman Marcel van den Assum, who was also part of the successful sale of local software firm GreenButton, urged angel investors to broaden their portfolios if they wanted to improve their chances of a return, with too many backers relying overly on a small number of ventures.
NZVIF valued its seed fund investment at $19.39 million as at June 30, 2013, including $4.55 million impairment charges, according to its 2013 annual report. Of the 96 firms it had backed at the time, 26 were fully impaired.
The government has budgeted some $5.25 million for NZVIF to invest via the seed fund in the year ending June 30, 2015. A further $2.33 million was set aside to manage the operational costs of the venture investment and seed funds.