Compelled to comment on the post below from Alarm Clock which was taking a look at investment levels across start-ups developing robotics technologies.
“Venture capitalists tend to be fairly conservative people – despite their reputation for risk taking. Consequently, few robot-makers have received venture funding as many VCs put the likelihood of robot products succeeding on a par with anyone conquering jet-pack transportation”.
Well, not so at No 8 Ventures.  The Martin Jetpack hit world headlines in July this year.  What’s more, we are excited about the prospect of introducing a very cool robotics company soon.

After keeping our investment secret for 4 years, it’s great to have the Martin Jetpack out in the market. The interest has been amazing: front page of the New York times, the Today programme, Fox News, 2 pages in The Times and on and on. Now we need to use some of that interest to raise some more money for the company and get on with building the flight envelope safely: height and speed. Pity we are such a small fund!

The new Limited Partnership Act 2008 came into force on 2 May 2008, which provides New Zealand with an internationally recognised regime to underpin investment in the venture capital and private equity industry.  This welcome legislation is the result of 5 years lobbying and development across our industry.  A summary of key aspects of the Act can be viewed on a dedicated section of the Companies Office website.

I was asked on my recent trip to New Zealand about the US IPO market. Somewhat fortuitously I received an email from America’s Growth Capital with a good summary. Here is the rub:

The U.S. IPO market thrived in the 1990s, averaging more than 500 IPOs per year over the entire decade. However, as we entered the new millennium, the once vibrant IPO market drastically shrank, not only because of the implosion of the Internet bubble, but also due to the following reasons: i) the market cap threshold of targeted investments for mutual funds increased as these funds ballooned; ii) the most active IPO underwriters either disappeared or moved up-market; and, iii) overzealous regulation and costly litigation significantly deterred both executives and private equity players.

These factors led to the dip in IPO volume that we saw from 2001 – 2003; however, the U.S. market has clearly rebounded with a strong finish in 2006. In Q406, 89 IPOs were priced- the highest quarterly total the market has seen in recent years. 228 IPOs were priced in 2006 on U.S. exchanges, compared to 202 in 2005, an overall increase of 13%. So far in 2007, 48 IPOs have priced, compared to 40 IPOs at the same time in 2006 (as of March 16). The tech IPO market saw 41 deals priced in 2006, the same number as in 2005. Tech IPO filings increased by 35% from 2005 (51) to 2006 (69). Expect substantially more tech IPOs in 2007-2008 compared to the post-bubble doldrums of 30-40 IPOs a year.

We believe that this increase can in part be attributed to an influx of private companies that sat on the sidelines during unfavorable market conditions and are now considering going public. Most are successful later-stage companies with $30-100 million in revenues. While many of these companies need capital for growth or liquidity, they may be unwilling to raise another round of private equity due to unattractive private valuations and often onerous liquidation preferences. In other cases, these companies do not yet want to sell to a strategic acquiror or have not generated a compelling offer. In early 2007, there is now an abundance of private companies that are proven with strong market penetration, established customer bases, and demonstrable growth and profitability (or near-profitability). However, these private companies do not meet the minimum IPO criteria as determined by the bulge bracket banks and traditional large fund IPO investors.

Some comments from me on what Kiwi’s can do to drive their start-ups to new levels. At the end of the day I believe that NZ’s lifestyle is not a negative influence on entrepreneurship. In fact, it’s an advantage as this post from Rod points out.

We need a deeper shift in thinking and approaches to occur. I also don’t think that this should be viewed in a negative light but rather as part of the natural evolution of entrepreneurship in NZ.

I haven’t met a great entrepreneur that doesn’t think they could be working harder or smarter. I’ve met plenty of Ok entrepreneurs with lots of reasons why they didn’t go the extra mile.

New Zealand’s lifestyle is a competitive advantage. New Zealand entrepreneurs should revel in it and use it to attract talent. What we shouldn’t do is confuse working long hours with productivity and output. While there is no short-cut to building great companies, they do require a combination of working hard and working smart. Platitudes aside, it’s the smarts we have to build. Plenty of Kiwis are willing to work hard.

We also need a shift in the DNA that can only come from experience and role models. As new bars for creating value get set, a new generation of Kiwis will rise to that bar. Look at what we have seen in the past few years with Aftermail, 42 Below, TradeMe and Endance. These entrepreneurs will excite and inspire more to follow in their steps.

Longer-term we need to get more entrepreneurial training and skills into our Education system. And that Education system needs to encourage students in disciplines like engineering, sciences and software development. If we don’t do that we will face a worsening skills shortage that can’t easily be corrected through immigration policies.

New Zealand is at a really exciting juncture. The Internet is a terrific leveler, getting about the planet has never been easier, and new models and standards for entrepreneurship are emerging in New Zealand. There is lots to be positive and excited about.

It’s time we heard the same said of NZ’s start-ups!

Several organizers noted that Silicon Valley’s original success as an innovation center was largely because of business and social networks developed over several decades in a community of venture capitalists and technologists.

The Net’s level playing field
Now, they said, with the Internet supplementing and replacing traditional face-to-face social networks, Silicon Valley might be losing its competitive advantage.

“The epicenter was Silicon Valley, but that has created a wave of innovation that has now reached the entire world,” said Yossi Vardi, an Israeli entrepreneur and investor who financed his son’s development of ICQ, an early Internet chat program later sold to America Online.

Also, some interesting stats on Skype:

Like many participants here, Zennstrom voiced the opinion that Internet-based commerce would accelerate in its disruptive effect on traditional businesses. Skype, for example, now says that it carries 4.4 percent of all worldwide long-distance calling.

Yes! The WSJ also has some other thoughts -subscription required. I look at lots of business plans in my other life as a VC. My main message keep them simple and focus on illuminating the idea. Only include data you really understand. Some highlights:

• Matt Coffin, founder and chief executive of LowerMyBills.com, a Web site sold to Experian Corp. in 2005 for $330 million, says he used a 10-page PowerPoint presentation that he spent four to six months gathering research for instead of a formal business plan when pitching his idea to investors in 1999. He succeeded in raising $4 million in venture capital by convincing them that the market for people needing a one-stop place on the Internet to refinance was ballooning.
• Tim Petersen, managing director of Arboretum Ventures, a health-care venture-capital firm in Ann Arbor, Mich. says he generally prefers getting five-to 10-page summaries of business ideas or PowerPoint presentations over lengthy business plans.
• Benson Honig, a professor at Wilfrid Laurier University in Ontario, Canada, says his research of 396 nascent entrepreneurs in Sweden from the late 1990s also found no correlation between business planning and profitability. Instead, his study found the biggest predictor of success to be knowing customers in advance. Mr. Honig says he teaches “contingency planning” to his students — or thinking about a business as constantly progressing, changing and making decisions based on the market climate — instead of traditional business planning.

The WSJ also includes links to some relevant research:

Plans and Performance

Study: “Pre-startup formal business plans and post-startup performance: A study of 116 new ventures” by Julian E. Lange, Aleksandar Mollov, Michael Pearlmutter, Sunil Singh, and William D. Bygrave (all Babson), June 2005.

Summary: The study compares the success of 116 ventures started by Babson College alumni between 1985 and 2003, using performance measures such as revenues, employee numbers and net income. Researchers found no statistical difference in performance between those businesses launched with formal business plans — roughly half of the 116 — and those started without them, and concludes that “there is no compelling reason to write a detailed business plan before opening a new business” unless the entrepreneurs needs to raise substantial amounts of start-up capital. Instead, the researchers say start-up entrepreneurs should generally just make some financial projections, especially cash flow, and open the business.

You’ll need a plan to get funded but it’s like the old saying about memos “I didn’t have time to write a short memo, so here is a long one”. Make the time.

Technorati : No.8 Ventures, Start-up, VC

Welcome to the N0 8 Ventures’ blog. This, our first foray into the blogosphere, is about two things.

First, sharing thoughts, content, links and more. We come across a wealth of information as we go about evaluating investments and assisting the companies in our portfolio. This is the perfect vehicle with sharing that information more broadly. If you’ve got ideas for a business and want to share them, drop us an email.

Second, and more importantly, it is about igniting a(nother) conversation on entrepreneuring and venture capital in

New Zealand . Together these become the most potent forces for generating wealth and economic success.

We also updated the N0 8 Ventures home on the Web. Take a look and give us your thoughts on what you would like to see more of. Thanks to the team (esp. Jon) at Marker (the new Outfit) for their work on the blog and site.

– Jenny, Mark & Andy

Technorati : N0 8 Ventures, VC

Welcome to the N0 8 Ventures Blog.

The N0 8 Ventures blog is all about creating value in young companies through entrepreneurship, investing and venture capital. These are our views and do not necessarily represent those of our investors or portfolio companies.

We like Charlene Li’s blogger code of ethics and have adapted them.

1. We will disagree with other opinions respectfully – we hope you will do the same.

2. We will tell the truth. We will acknowledge and correct any mistakes promptly.

3. We will not delete comments unless they are spam, off-topic, or defamatory.

4. We will reply to comments when appropriate as promptly as possible.

5. We will link to online references and original source materials directly – if we forget to do so, or do so incorrectly, let us know and we will get it fixed

One last thing, this is not the forum to submit a business plan – use the link at the top of the page to do that.

Technorati : No 8 Ventures, VC, venture capital