KEY POINTS:
Stock-market jitters, a possible US recession and the credit crunch are reverberating around the world. But for Kiwi venture capitalist Arama Kukutai it's business as usual.
"The world's got to feed itself, it keeps getting bigger," Kukutai said.
There were 6.3 billion mouths to feed in 2003, which
was expected to rise to 8.9 billion by 2050, he said.
Kukutai, 40, is joint managing director of San Diego-based agbiotech and medical devices venture capital firm Finistere Ventures.
Kukutai and co-managing director Jay Brumfield, 46, were in New Zealand last week hunting for new ideas and visiting sister firm Finistere Partners, which typically took the lead with local opportunities.
Finistere Ventures has about US$35 million ($44 million) with about 65 per cent invested, while Finistere Partners closes off a $30 million fund in the next couple of months.
Brumfield said global economic conditions making headlines worldwide were not affecting Finistere.
"Now in the agricultural world people are thinking about food shortages, they're thinking about the need for [alternative] forms of energy so ag is kind of rising in [the] level of importance and getting to the same level as these human health care areas because people are seeing big impacts on their wallets and also maybe on their lifestyles," Brumfield said.
However, despite the growing need for sustainable production, recessions can hit stock markets, making it harder to find an exit strategy through initial public offers or through mergers and acquisitions.
Finistere would typically be among the first professional investors, committing up to $5 million to a company.
"In a perfect world you would want to exit your investments anywhere in a two- to seven-year timeframe, at the absolute most," Brumfield said.
Kukutai said agriculture had not been the sexiest sector for venture investment and so competition was limited, "In that regard we're a big fish in a small pond." But the environment was changing.
"It's been incredible over the last year watching the explosion of interest in so-called cleantech and renewable energy plays by the venture community," Kukutai said.
The US had committed its agricultural water reserves, Kukutai said.
"So if you want to grow more crops either the crops themselves need to be engineered to be more efficient or you need to find ways to recycle and reuse water that you haven't worked out how to do before."
There were a billion acres of engineered crops planted around the world, which included characteristics for less water use, Round Up resistance, and salt and drought tolerance.
New Zealand had world-leading technology in dairy and pastoral sectors but the commercialisation networks to take ideas out of science into products and markets was more challenging from a small scale market.
Kukutai, who was born in Wellington, said the visit to New Zealand included the Waikato Innovation Park, where the development of companies aimed at exporting from day one was impressive.
"They're not looking at servicing the domestic market here, they're looking to access international technology opportunities," he said. "Who knows at some point they may need capital and partners in the United States to do that."
At least US$25 billion of venture capital was deployed globally last year, with 65 per cent on the west coast of the US, he said.
The renewable energy and clean technology sector was now the second largest category after pharmaceutical.
It was rare to find all the working parts of a high technology product at one location and many research organisations here were learning that they had to partner, license and swap technologies to build a complete package.
"If you've built half a bridge to somewhere then you've got arguably half the value but also no value because no one pays for half a bridge," he said.
The value created to the owner of the intellectual property included a proportional holding in a company with benefits of being a shareholder, scientific and knowledge exchange and upskilling of staff.
"I think certainly in our discussions with AgResearch and HortResearch and other CRIs I think there's a growing recognition these things are necessary. I wouldn't say for a second they are easy."
There was nothing to stop world-class technology being created in New Zealand and migrated to the rest of the world, while maintaining local research and development.
"But chances are if you want to raise a lot of capital, build a management team, get distribution, do partnering you're going to have to just logically do that closer to your customers."