By ROB O'NEILL
Merchant banker Grant Samuel and Associates is entering the Australasian venture capital market, seeking $96 million from institutional and professional investors.
GS Technology Management will handle the fund, targeting information technology and telecommunications investments.
The management division is a wholly owned subsidiary of Grant Samuel Group.
The fund's information memorandum says venture capital investment has become an important alternative asset class.
While it is high-risk, it also promises high returns through accessing investment opportunities at an early stage.
The fund will focus on start-up and early-stage investments in Australia and New Zealand, though it will not avoid later stage investments "where appropriate returns are available."
Up to 25 per cent of the fund may be invested outside the region.
The board of GS Technology Management, however, does not include any New Zealand-based representatives.
"I don't think you generally look to the directors to generate deal flow," said GS Technology Management executive director Warren Lee yesterday.
"Deals will come through the footprint in the market that Grant Samuel already has.
"Also, in time we'd like to develop good working relationships with either venture capital or early stage funds in the New Zealand market."
The management team will include Auckland-based Grant Samuel executive Peter Jackson.
In Australia the fund has established relationships with several technology incubator programmes.
These are a potentially important source of deal flow, said Mr Lee, but building such relationships in New Zealand is still on the to-do list.
A seed fund has been established and the first round of fundraising will close next month. Another round will start later in the year.
The company would not disclose the amounts the fund was seeking from each round.
Mr Lee, who was in Auckland last week, said the New Zealand market was very different from Australia's.
"The market doesn't seem to have got the internet fever, which I think is a very good thing. I don't think that has done New Zealand any harm.
"Hopefully you'll have missed the irrational period."
He said the great opportunity in New Zealand was a result of the small market size. Many developers were already designing products and services with an eye to the global market.
GS Technology Management will accept up to $24 million in oversubscriptions.
The minimum capital raising is set at $30 million and minimum subscription is just over $1.2 million.
Banker entering venture market
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