A STQRY of our t i mes

Tak­ing ad­van­tage of a US-tech sec­tor awash with cash, Welling­ton­born start-up Area360 raises $5.5 mil­lion from US-based ven­ture cap­i­tal­ists and opens its US head­quar­ters.

Idealog - - FORWARD - BY HENRY OLIVER

“THIS IS THE best time to raise money ever,” Stew­art But­ter­field told the New York Times re­cently. But­ter­field is CEO of Slack, an in­stant-mes­sage-based team com­mu­ni­ca­tion com­pany, whose val­u­a­tion rose from $US1 bil­lion to $US2.8 bil­lion in lit­tle over a month ear­lier this year.

With low in­ter­est rates, Sil­i­con Val­ley bil­lion­aire in­vestors boast­ing on talk shows, and me­dia re­ports of uni­corns (star­tups val­ued at over a bil­lion dol­lars) and de­ca­corns (those worth $10 bil­lion or more), it’s not sur­pris­ing the US is flush with wannabe tech in­vestors.

And there isn’t just money around for US com­pa­nies. Last month, Welling­ton start-up Area360, creator of STQRY ( pro­nounced ‘story’) – an app pro­vid­ing dig­i­tal guides for mu­se­ums, zoos, gar­dens and the like (in­clud­ing Auck­land’s Kelly Tarl­ton's Aquar­ium, pic­tured) – an­nounced it had closed a $5.5 mil­lion Se­ries A in­vest­ment round led by Seat­tle-based ven­ture cap­i­tal firm Madrona Ven­ture Group.

Area360 had pre­vi­ously raised $400,000 from lo­cal in­vestors such as Gareth Mor­gan and Alan Gour­die, but the Se­ries A fund­ing will help the com­pany es­tab­lish its US head­quar­ters »

(also in Seat­tle), and ex­pand into new mar­kets (ini­tially in the US and Sin­ga­pore, and then Europe), and new in­dus­tries (air­ports, casi­nos and hos­pi­tals).

Area360 co-founder and CEO Chris Smith, who was born in Seat­tle, but moved to Welling­ton to at­tend Vic­to­ria Univer­sity, says rais­ing cap­i­tal in the US was a com­pletely dif­fer­ent ex­pe­ri­ence.

“In New Zealand, you’ll know the one or two peo­ple you want to get in­vest­ment from and you put all your en­ergy into mak­ing that one man­ag­ing part­ner fall in love with you. In the US, you al­most play a vol­ume game. You’re out there do­ing three or four or five pitches a week, nail­ing as many as you can, be­cause if you can get sev­eral terms sheets [ven­ture cap­i­tal in­vestor ex­pres­sion of in­ter­est con­tracts] in at once, then you can play them against each other to get the best deal you can.”

In pitch­ing to ven­ture funds in Seat­tle and Sil­i­con val­ley, Smith dis­cov­ered that de­spite the cloud bring­ing us all to­gether, most in­vestors still want the com­pa­nies they in­vest in to be US- cen­tric, either in terms of lo­ca­tion of the ex­ec­u­tive team or the op­er­a­tional fo­cus.

“If you’re based in New Zealand, they [be­lieve] they won’t have any con­trol over how things are done in the busi­ness,” he says.

Chip Daw­son, CEO of In­ter­na­tional Busi­ness Man­age­ment and a long time an­gel in­vestor in New Zealand start-ups, agrees. In­creas­ingly, in­vestors want to add value by help­ing shape the com­pa­nies they in­vest in, he says.

“They can in­flu­ence you if you’re close by, but very few will get on a plane and come down here. You have to be there when they want you.”

Quentin Quin, gen­eral man­ager of NZTE’s cap­i­tal team, says Sil­i­con Val­ley VC and an­gel in­vestors tend to be less risk-averse than their Kiwi coun­ter­parts, mak­ing them a good fit for tech star­tups. Still, the early-stage in­vest­ment cli­mate is im­prov­ing in New Zealand, Quin says, as lo­cal an­gels see the financial re­turns be­ing achieved over­seas. This al­lows NZ com­pa­nies to de­lay in­ter­na­tional fundrais­ing.

“So when they do have to go into the US mar­ket, their tech­nol­ogy, or their busi­ness model or their chan­nels are a lit­tle bit more sub­stan­tial, so they’ve got a bet­ter story to tell.”

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