Greg Mirams' initial foray into the investment world didn't go so well. The founder of animal parasite diagnostics company Techion Group was no stranger to capital raising, having set up, sold and bought back Techion. But when he tried to get investment for a new technology that could transform his business he was left out in the cold despite an intensive six-month courtship.
"It was crushing," he says.
Mirams was seeking $300,000 for Menixis, a start-up company he co-founded with nano-scientist and director of Otago University's applied science programme Stephen Sowerby.
Menixis holds the intellectual property to a new particle analysis technology developed over more than two years by Sowerby and Mirams. It could transform particle analysis in the field, replacing the need for microscopes or the skills to use microscopes to accurately identify and count particles, such as the number and type of parasitic eggs in a sample of animal faecal matter.
Mirams developed the technology to update Techion's internationally popular parasitic diagnostic tool Fecpak to make it easier and quicker for farmers to test and treat their animals in the field.
It will also bolster Techion's revenue by increasing its own monitoring and advisory capacities.
To Mirams the whole deal was a no-brainer. Why wouldn't you invest in a new technology that already had a customer not only willing but keen to sell it to its significant local and international customer base, built up over more than 20 years?
Fortunately Mirams had been introduced to angel investor Bill Murphy, who decided to champion Mirams' cause in his Bay of Plenty Enterprise Angel group.
"I just passionately believed we shouldn't let this opportunity to invest in some significant new primary industry technology pass us by," says Murphy.
Mirams pitched again, but was thrown when told the Angels liked the product, but wanted to roll Menixis' technology into Techion and then invest in Techion. "We wanted to secure the connect between the IP and the market," explains Murphy.
But that didn't work for Mirams.
He argued that first, Techion had multiple business activities, complex operations and an established shareholder structure; second, Menixis co-founders Sowerby and Otago Innovation would end up with a relatively small shareholding in Techion, which wouldn't give them as much incentive to continue to develop the technology; and third, the technology itself had far more potential than just animal parasitology (Techion's focus).
"There are potential applications for this technology in the area of microscopic analysis of any small particle including algal blooms, pollen analysis and in the petrochemical and forensic evidence industries, none of which I know anything about, so Techion just isn't the right vehicle for that. There's also this massive opportunity for improving the speed of human parasite diagnostics."
Murphy and his 13 co-investors at Enterprise Angels agreed and a novel deal was struck to invest in both Menixis and Techion to give Mirams the capital he needed to turn the technology into a commercially saleable product.
Mirams and Murphy say this deal could have implications for investors and companies. Both get the security of investing in growing existing revenue streams, plus the upside of investing in new and potentially even bigger revenue streams.
"My hope is this deal becomes a kind of blueprint for a new New Zealand growth model," says Mirams.