Rod as an interesting post on “The Valley of Death”. I view this principally as a mental rather and physical issue. Contextually NZ businesses sit far from the rest of the world and therefore they frame everything in terms of distance. Distance begets an attitude of scarcity -”I don’t have enough because I am a long way from everything…” … “I can’t raise capital because I am so far from it…”

Because I sit in San Jose, CA, I frame everything in terms of proximity. I am close to capital and markets. I have lots because I am close to everything.

How do you change the mindset? First, act like you work and live in Silicon Valley. Switch to the timezone. Work the hours. Network via Skype, Twitter and other tools. Plan a week a month there. You don’t have to drink the crap coffee though.

Second, dream your enterprise as it was going to scale like a US business.

Third, if you think there is a Valley of Death it is likely you will fall into it. Imagine there is a highway instead and go ride it. This is critical. Most NZ businesses plan very conservatively in the hope of mitigating risk and failure. They do so so severely that they constrain growth and expansion, choking the company to death.

It is amazing how quickly all the physical and market issues start to vaporize when you shift your context, aspirations and frame of reference.

And, you need to turn-up. Some say that a great part of success is in turning-up. Most NZ businesses never break-in to the US market because they don’t turn-up.

Technorati : NZ

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.