Icehouse Venture' new $75 million IVX fund will see it sticking with companies it would formerly have "waved off into the sunset" after they moved beyond their early-stage phase, chief executive Robbie Paul says.
And he adds that his firm's investment portal means investors can buy in for as little as $50,000.
That's hardly Sharesies territory, but it's a lot more democratic than the $500,000 minimum that applies to many venture capital funds.
Some $50m has been committed to Icehouse Ventures X (the X stands for "extended", Paul says) with another $25m expected to be raised over the coming months.
Backers so far include Sir Stephen Tindall's K1W1, Sam Stubbs' KiwiSaver fund Simplicity, Hobson Wealth (managed by ex-Fisher Funds chief investment officer Warren Couillault) and more than 100 individuals.
The new fund has so far invested in eight companies, and plans to put money into around 30 in total. Over time, that will be concentrated down to a handful of investments. "We'll continue to put money into a small subset of those companies," Paul says.
Investments so far have included IVX participating in smart-cow company Halter's recent $32m raise, as it joined other existing investors, including Peter Beck, in putting more money into the Waikato firm (the Series B round was led by Blackbird Ventures).
IVX has also been involved with $10m raises by the Sam Morgan-backed video advertising firm Shuttlerock, which has now grown to have more than 100 staff and (with Movac and others) tradie job-management platform Tradify.
A third example is Sir John Kirwan's digital wellbeing platform Memetemia, which received Icehouse Ventures seed funding in 2019. Two months ago IVX contributed to its $6m round alongside ACC's Impact Fund and ethical KiwiSaver fund manager Pathfinder.
Icehouse has also put more money into Crimson Education.
All examples of firms where Icehouse would have, in the past, been exiting stage left at this point, Paul says. Now, with IVX it's buying more shares instead as the seed and Series A specialist now looks to "Series B and beyond."
Some 11 further investments are in discussion, Paul says.
The past 24 months have been something of a boom time for venture capital in New Zealand, with the pandemic failing to put the brakes on a new wave of investment. A report by PwC, the Angel Association and NZ Growth Capital Partners tracked a record amount of capital put into early-stage companies during 2020, while 2021 has seen a slew of Series B raises.
"The ]NZ] venture world is totally unrecognisable than what it was two years ago," Paul says.
"We no longer just the home of Xero. There's not just a willingness but a desire of offshore funds to back Kiwi companies."
The government turbocharged its venture capital co-investment drive by putting Super Fund money into the new $300m Elevate Fund managed by NZ Growth Capital partners.
"Elevate was as very pragmatic decision. Its matching funds give locals a lot more firepower," Paul says.
But the Icehouse Ventures CEO adds the key difference is that some 22 offshore funds in NZ companies during 2020 - "a magnitude higher than five years ago.'
And they're increasingly putting money into companies like Halter that have already proved themselves by landing earlier customers. Such successful local contenders "Don't have to shop around for capital. They don't go door-to-door asking for capital. Investors chase them."
And it's a hot market. Paul talks about one local company that "received six term-sheets [investment offers] in a week," and they don't even have a pitch deck yet."
Often, the investors doing that chasing are heavy-duty Australian or US funds, but Paul says IVX's advantage is that, as an early investor in many companies, Icehouse has insider knowledge, inside running and often simply the legal option to participate in new rounds of funding.
The Icehouse Ventures CEO emphasises that IVX represents an extension of his firm's investing strategy, not a shift away from backing early-stage companies, and that it has just begun another round of its "First Cut" programme that will see it investing in up to 10 startups.
The follow-on model is part of the increasingly competitive VC landscape in NZ. These days you need pro-data rights (from early rounds) to get priority entry to hot rounds later on.— Peter Thomson (@PeterJThomson) July 13, 2021