FUNDING YOUR PROJECT

Mark Renner and Phil Taylor

SOURCES OF MONEY

• Friends and Family

• Bank

• Professional Investors/Funds

PROFESSIONAL INVESTORS

• Angel Investors

• Venture Capital

• Private Equity

ANGEL ORGANISATIONS CAN HELP FILL CAPITAL GAP

Stage Pre-Seed Seed/Start-Up

Early Later

Source Founders, Friends

and Family

Individual Angels

Funding Gap between $500,000 and

$2,000,000/$5,000,000 (depending on region)

Venture Funds

Investment $25,000 to $100,000

$100,000 to $500,000

$2,000,000/$5,000,000 and up

SOURCE OF EQUITY FUNDS – TYPICAL YEAR

Classic VCs

Seed Funds

Angels

Friends & Family

Startup Companies

0 100000 200000 300000 400000 500000

Series 1

Series 1

New Company Formation

MARKET IN NEW ZEALAND

• $300 million invested into 100 companies• Of the 100 companies:

• 79 are exporting• 29 have received investment from offshore investors• 23 emerged from either universities or Crown Research Institutes, and 19

have been part of business incubators• Auckland is home to 53 of the companies, with Christchurch hosting 16• 9 have been sold and 7 have been written off or liquidated• 28 of the investments were into seed stage enterprises, 56 were into start-

up companies, 15 into early expansion companies, and 1 company at the expansion stage

INVESTOR MINDSET

• Profit

• Risk

• Valuation

• Almost no pre-market company will be worth $1m

• 1 or 2 of every 10 investments brings most of return

• Hard to tell which companies will return

• Angels looking for 10 to 30X potential

• 30% of all exits in 2010 were in bankruptcy

STATE OF THE MARKET

• Its hard to raise new money

• But money is available

• Investors active in this space:

• Endeavour Capital

• BioPacific Ventures

• University commercialisation arms

• NZ Venture Investment Fund

• Angel Associations

DEAL FLOW STATISTICS – ANGEL GROUPS

• Prescreening 1 in 4 to screening

• Screening 1 in 3 to DD/present

• Due Diligence 1 in 3 to investment meeting

• Investment 1 in 2 raise money

• OVERALL 1 to 4 in 100 who apply receive investment

INVESTOR TERMS

• Type of Security

• Preference shares? Liquidation Preference.

• Convertible note?

• Board seat

• Protective provisions

• Drags/tags

• Pre-emptive rights

• Exit