Thursday, 31 July 2008

Dating 'eligible persons'

It's time to get personal.

Recent postings will show that I am on a funding round. It's part and parcel of the 'going global' strategy. And I am learning fast.

It's one thing to find a potential investor in NZ. It is another to identify if they are 'eligible'. The rules determining this are laid down by the Securities Act 1978. To participate and be 'eligible', investors need to be either:

a) persons who can provide certification by an independent chartered accountant that they have net assets of at least NZ$2 million or had a gross income for each of the last two financial years of at least NZ$200K per year, or

b) persons who can provide certification by an independent financial service provider that, as a result of having experience of investing money, they are able to assess the merits and certain other matters in respect of investment such as etc. etc.

The rules make sense. They do provide some level of investor and investee (not sure this is actually a word) protection. However, a quirk in New Zealand's taxation system arises. Because individuals and trusts are taxed at different rates, my own guess is that some potential investors under Category a) will be asset rich (via a trust) and cash poor. That's how tax planning sometimes works. So we are digging deeper into this.

In the Great Depression of the 1920's, the signs said, 'Can you spare a dime?'. I'm working on the 2008 equivalent. The Securities Act 1978 adds a whole new dimension.

The new TechNZ

The TechNZ launch in Auckland on Tuesday provided a good insight into the Foundation of Research Science & Technology's thinking. It also confirmed the Bay of Plenty's 'sub-region' status.

There are only going to be two types of investment in the future. Firstly, Technology Investments and secondly, Skills & Capability Investments. So it is goodbye to the mind-boggling range of different investment and grant products available before.

The second major change is the management of the application process. For Pingar, as an existing TechNZ client, we will continue to be managed by Shane, our FRST relationship manager. For any new Bay of Plenty company wishing to apply for a TechNZ investment, they will need to approach our Regional Technology Partner, Innovation Waikato. This appointment will be up and running by September 1st. I understand that an Innovation Waikato rep will be in the Bay for one day a week to act as the local liaison.

The basic thrust of the Forum was very positive. It will be interesting though to see how the Foundation and TechNZ get their message out into the field. For planners in the Bay of Plenty looking at creating a local Innovation Park, it also makes interesting reading.

Monday, 28 July 2008

Crossing the Divide - (Update)

The extract below is lifted entirely from Claire McEntee's excellent article in this morning's Dominion Post. I apologise Claire for the plagiarism. It does answer (sort of) my previous posting. Timing as they say, is everything.

'The economic downturn is dampening venture capital investment in New Zealand, according to industry figures.

Mark Robotham, general manager of New Zealand Trade and Enterprise's Escalator Service - which helps young companies raise funding, says more firms are struggling to raise capital as a result of the downturn.

Government-backed Venture Investment Fund chief executive Franceska Banga says companies looking to expand beyond New Zealand may struggle to raise the required capital.

"For those companies that received initial rounds of investment in the New Zealand market now looking for the next $10 or $15 million to grow into global companies, the global market is quite challenging in the short term."

The majority of the investment occurred in the first half of 2007, with just $99 million invested in the second half as the international credit crunch took hold.

Venture capital firm No 8 Ventures director Jenny Morel says the downturn will have an impact on start-ups' ability to raise funds. "People are taking a wait-and-see attitude and there's been a flight to cash and fixed interest investments."

But New Zealand Venture Capital Association executive director Colin McKinnon believes the slowdown in venture capital investment is due to the fact that most of the six venture capital funds that receive co-investment from VIF are no longer investing in new companies.

Those funds have passed the five-year mark after which they can no longer make new investments. "We are not affected by economic cycles as much as we are affected by the evolution of the industry in New Zealand."

Angel Association chairman Andrew Hamilton says angel investment tends to be less affected by market conditions as it is longer-term investment, but funding figures are slightly down because the market has become more cautious and deals are taking longer to work out.

There were 14 angel investment deals in the first half of this year, compared with 19 in the first half of last year, he says.'

Crossing that Divide

Last week, I received an email advertising the $Unlimited Investment Challenge 2008. This is an event jointly organised by UK Trade & Investment and Unlimited Magazine.

Last year, Pingar was shortlisted. The experience we gained was substantial. It focused us on a number of issues around our own investment readiness. I would recommend any New Zealand business looking to raise investor funds to take part.

Over the past few weeks, I have been at the sharp end of a number of investor presentations. Certain parameters have emerged and these have been consistent.

According to the professionals, despite the global 'credit crunch', there is a lot of liquidity in the NZ investor marketplace at present. There are also a number of good investment opportunities. That's all positive. On the flip side, the number of deals actually being completed is very small. That's not so positive. It's all a bit tad confusing.

NZ investors have never been big on risk. The recent fall in property prices and the ongoing collapse of confidence in the finance company sector appears to have increased the aversion to risk. 'De-risking' an opportunity is now 'de rigour'. The problem is this can also devalue the potential upside. Bland is not always good.

It would be interesting to get a better take on the deals that have actually been completed this year in the ICT sector. Do they have any themes in common? The problem at present is not just a lack of data in this space. I guess the lack of actual deals does not help.

Securing investor funds is no easy task. The lessons learnt at the upcoming $Unlimited Investment Challenge 2008 can only help.

R & D Focus

Over 250 people from over 170 businesses and R&D organisations are expected to attend the TechNZ - Innovation for Business Growth event tomorrow in Auckland. I will be one of them.

The programme includes:
• R&D snapshots session – representatives from Lanzatech, High Modulus and Endace about how they’ve used R&D to transform their businesses.
• Keynote speaker Neville Jordan, Chairman and Founder of Endeavour Capital, will talk about how he transitioned from entrepreneur to venture capitalist and now supports the next generation of science and technology companies.
• An interactive panel discussion about harnessing R&D talent and using innovation to grow your business featuring Phil O’Reilly from Business NZ, Claire McGowan from the Biopolymer Network, Andy Hamilton from The IceHouse and Craig Armstrong from New Zealand Trade & Enterprise.
• Hon. Pete Hodgson, Minister of Research, Science and Technology, will officially launch the revamped TechNZ programme.

For Pingar, research & development is a critical part of our business plan and model. Phase 1 leads to Phase 2 leads to Phase 3. It is a constant ongoing commitment. TechNZ and The Foundation for Research, Science & Technology are important partners in this. Tomorrow's conference is welcomed.

Thursday, 24 July 2008

Bollard re-works the BP

After 5 years, the New Zealand Reserve Bank has finally reduced the key OCR rate to 8%. Quite what relief it will bring to NZ consumers is debatable considering the global cost of credit.

For Pingar however, it is likely to have a significant benefit. A lower OCR normally translates into a lower exchange rate. With most of Pingar's earnings expected to come from the UK over the next 12 months, that is good news. The high NZ$ screw has been loosened.

Bollard's accompanying statement was also more dovish than perhaps expected. More cuts are on the way. For exporters, this cut has not come soon enough.

Trimax Calling

A great write-up in last night's Bay of Plenty Times about Trimax Mowing Systems, and its MD, Bob Sievwright.

I have heard Bob's story before. Basically, he is a serial exporter, spending perhaps half the year offshore. He is a great example of what can be achieved from Tauranga. His mowers can be seen around parks and sports fields in both the UK and the US.

Trimax are also a client member of the NZTE Beachhead program. They have clearly benefited from its support, particularly in the North American market.

Bob Sievwright's commitment to building offshore markets was recognised last Friday night when he picked up the 'Services to Export Award' at the Bay of Plenty's Bank of New Zealand sponsored gala dinner. Not that he could pick up the award personally. He was offshore doing what he does best.

Sunday, 20 July 2008

The 'Local' Market

On Friday, Jacqui and I sat down with an Auckland-based consultancy to look at sales opportunities in the 'local' market. The provisional outcome was interesting. And not all together surprising.

When we looked at the 'enterprise' space in New Zealand, we focused on the obvious: Government and Corporate. Government, in all its forms, accounts for approximately 40% of NZ's total GDP spend. It has clear needs which business analysts can identify. It also has a process or series of processes which companies like Pingar need to address. The words 'agile' and 'flexible' do not come to mind.

The corporate space is far less well defined. When we looked at the key obvious verticals; banking, financial services, utilities etc., one consistent theme emerged. Many of 'New Zealand's' leading corporate players are in fact Australian-owned subsidiaries. If Pingar's positioning within these enterprise networks is to be seriously strategic, then the decision-making process is more likely to be based in Sydney or Melbourne than Auckland or Wellington.

How then approach this trans-Tasman reality? My own take is based very much on my European background. I view NZ - Australia as being a single market. Not perhaps in a geo-political sense, but certainly from a commercial one. There might not be the political / economic framework in place yet, but the stark reality is that many of the key corporate decisions taken effecting NZ business are taken across the ditch.

That reality will impact on Pingar's 'local' sales and marketing model. And so Australia is now becoming a significantly more important piece in my mindset. The challenge as we move forward is to determine how best to manage this piece. Can it be managed from NZ or do we need to consider a more permanent presence on the ground in Australia? My guess is that things will happen in that order: NZ-managed first and then formal office in situ second. And probably within a pretty tight timeline.

Of course, one of the complications with current NZ / Aus economic and tax regimes is that they are not based on a true single market. That is a major challenge. It does not however change the basic relationship betwix head office and branch office at the business level. Key strategic decisions will always be made by HQ.

The obvious benefit of adopting the 'single market' mindset is that the market increases from just over 4 million consumers to almost 25 million. Scale and opportunity become more real. Planning around this piece is just beginning.

Landed

Following the NZTE Beachhead presentation on Wednesday, my focus is now on developing the opportunity it has created.

Certainly, my meetings in Auckland on Thursday and Friday had an extra zing. (Not sure 'zing' is actually a real word, but I think it conveys the mood). So too the response. It is what Pingar's partners wanted to hear.

A couple of connected, but unrelated emails also arrived Friday. It's a little difficult to know if some of the dots out there are talking or engaging. Their timing however means another trip to Wellington is on the cards.

And so to the UK. It's now almost three months since I was last in London. Three months since I last sat down and face to faced with Pingar's partner's there. As this blog has indicated in the past, much of Pingar's long term sales and marketing pitch will be run out of London. The reasons for this are well rehearsed. Scale and opportunity are to the fore. A return trip though is now due. (Memo to self: Email Shane).

My next post is going to look at sales and marketing opportunities closer to home. That is part of the re-focus post-landing.

Tuesday, 15 July 2008

Beachhead Landing


I have posted blogs before about NZTE's Beachhead Program.

Tomorrow I enter the Lion's Den. Well actually, Lionel has assured me it is not that bad! I am traveling to Hamilton to present Pingar's case to the NZ Beachhead Board. I cannot really say much more than that at present. It is an important part of our strategy to develop our presence in the UK. This is not so much 'market entry', this is more 'market expansion'.

And then it's Auckland bound. For not one, but for two days. Ever since we launched 'Stay in the Bay' two years ago with Priority One, my diary has conspired to keep me out of it. Needs must however, so it will be great to catch up with Dave & Angela who are kindly providing the bed for the stay.

And then it really is back to Tauranga. Next week looks like I could be spending more time in my home town than usual. Let's though see what Outlook has to say about that at the end of the week.

India Spices up Tauranga


Registration this morning was at 7.50am. It was a full house.

There is something about India that simply inspires. That was the message that was taken away by the many businesses attending today's NZTE India Market Forum.

I have been to several NZTE sponsored Market Forums and this was one of the best. It helped by having the high-powered India delegation in attendance. The scale of their ambition and the opportunity they broached spoke spades for more active engagement between New Zealand business and India.

As well as contributing to the workshops, I benefited from the session. An opportunity to access quality India content for Pingar was offered. I will take it. Market Forums are a great way to introduce business to different offshore opportunities. They are held throughout New Zealand. Check NZTE for details.

Sunday, 13 July 2008

India Calling


Tauranga businesses are getting a taste of India on Tuesday.

NZTE are organising an India Market Forum and I have been asked to run one of the workshops. The purpose of the day is to provide an opportunity for prospective and current business exporters to India to both engage with prominent Indian business leaders as well as established local players in the Bay.

Timing they say is everything. Right now, India is very much on my mind. I am working with the management team at HBI Software in Bangalore on future strategy.

We first opened our doors on Ulsoor Road in 2001. Much has changed since then; not least the very specific move 'up the value chain'. I remember well in the early days how Indian IT companies were seen primarily as 'coders'. That is history. Today, Indian ICT companies manage whole projects from top to bottom. They compete head to head with global consultancies for multinational contracts. Indeed many of those global consultancies such as Accenture and IBM Services now have their own significant operations in India.

The focus of my own workshop is built around 'managing a business in India from Tauranga'. In truth, the challenge is not really that much different from running the same business from London, New York or the Valley. In New Zealand, it is only the perception that is really different.

Managing the Business Plan


One of my biggest challenges at the moment is managing opportunity and expectation.

Over the past month, Pingar has received a fair amount of media exposure in New Zealand. That is good. Against that, different partners of ours, particularly offshore, have identified new opportunities in new markets. On the face of it, that is also good. For now, the jury is out on that one.

A recent Bay of Plenty Times article summed up the situation quite neatly. It described me as being 'a hamster on the wheel - the wheel is going faster and faster, but he is still hanging on'.

I now have a deep sympathy and understanding for hamsters. The Pingar Business Plan is by nature a moving feast. Right now, it is almost liquid. The article outlining Microsoft's view of Pingar in the EdgeWatch newsletter explains why. It is opportunity PLUS. The challenge today is to manage the expectation that that opportunity brings.

The Silence is Broken


I'm glad to be back online. And posting once more.

It would be nice to think that my 7 day 'silence' was down to the fact that there was no internet connectivity on the quiet Fiji beach, the one with all that white sand. Fanciful perhaps, but sadly not true.

Last week was just damn busy. Throw in 1,000 kilometers driving and you begin to get the picture. Wall to wall appointments, dawn till dusk and beyond. And the week ahead looks like being the same. By turning my focus back to 'local', I have added hours to the working day.

What I have discovered however is much of what I was looking for in London, in LA and in the UAE, actually exists in the Bay. I just did not know where to look. So Frank, Nick, Peter and others have opened up new doors, new opportunities. The silence is broken.

Sunday, 6 July 2008

Powerset and Microsoft


I had expected to read rather more than I have done over the past few days about Microsoft's acquisition of Powerset last week.

Whilst there has been much media speculation about Microsoft's strategy towards Yahoo!, there does not appear to have been as much focus on Microsoft's own developing search strategy. Their recent acquisition of FAST Search together with last week's purchase of Powerset actually positions Microsoft towards the forefront of contextualised and semantics search. It is clearly developing a technology base that looks beyond the Yahoo! story. I think this strategy is right.

Why spend tens of billions of dollars on Yahoo! when the company has the ability to develop next generation search technologies using its own (post acquisition)resources? The speed it is now beginning to engage in this space should surprise no-one. I expect more of the same in the next few months.

Engaging Tauranga


I think I am going to change my mantra.

Over the past few months, a lot of my focus has been on 'things global'. That perhaps reflects the fact that since December, I have been out of the country for almost three months. In that time, Pingar has begun to establish itself in the UK, built on the foundations of its relationship with the UK Trade & Invest Global Entrepreneur Program and of course been accepted into the Microsoft Startup Accelerator Program.

In seeking to constantly think 'global', I had almost totally stopped thinking 'local'. A series of meetings over the past two to three weeks has I hope begun to address that.

It is easy to forget the opportunities that exist in the Bay. Perhaps it is the diet served up of constantly depressing economic news that helps disguise some of these opportunities. Ironically, it is perhaps the plight of failing finance companies, a falling stock market (NZX) and the general malaise in the property market that are creating some of these new opportunities.

I have been speaking to people who are now becoming 'creative', thinking outside the square and beginning to look at a different set of investment opportunities. Entrepreneurs outside these traditional investment sectors, take note. There is a shift in focus.

Later this week, I will be in Auckland speaking to others who are adopting the same mantra. There are opportunities opening today that have not been available to ICT businesses for some time. De-risk the opportunity and the potential upside now offers real value. And not only for the traditional angel sources. There are a whole new set of individuals who are looking to review their traditional investment portfolio. For potential high growth businesses, the opportunity today is real.

Thursday, 3 July 2008

Cool Cucumber


Western Bay of Plenty ICT Cluster members are on a media roll at present.

Last night's Bay of Plenty Times Money supplement carried a large feature on Cucumber Software, a leading web development company in the Bay.

Jodie Topping, General Manger, speaks about how the company has grown over the past few years to become an established player in the field, listing key clients such as ABN Amro Craigs, Zespri and Design Mobel. With offices in both Auckland and Hawkes Bay, Cucumber typify the dynamic approach being taken by a number of local Bay-based software businesses.

It's a great article. Hat then doffed to the crew located above The Harbourside.

Wednesday, 2 July 2008

Tauranga CoC CEO


Strange goings on in Chapel Street, I think. An email arrived last night from the local Tauranga Chamber.

"Greg Bold CEO for the Tauranga Chamber of Commerce has today announced his resignation.

Greg leaves the Chamber to pursue some personal business investments, and said “It is disappointing to be moving on so soon, but there are times when opportunities present themselves and need to be taken."


I have never met Greg before. I wish him all the best, but do ask 'why'?