JAMES & WELLS SEMINAR SERIES TO SHOW BUSINESSES HOW THEY CAN ATTRACT INVESTMENT
Intellectual property firm James & Wells has been on the road a lot lately, travelling the country to teach New Zealand businesses how they can turn their innovations into gold.
First things first. What James & Wells’ cross-country roadshow was not: representatives from the firm standing behind a podium in a mid-range hotel conference centre (admit it: we’ve all been there) telling business owners what they should have been doing already to stay ahead. What it was: a series of hands-on, informative sessions where the audience could actually engage, ask questions and seek expert advice. Oh, and the speakers also happened to be business people who have already achieved a great deal of success, and shared stories about how they got there.
Take James Beale of Oriens Capital. “Do your homework before going out to the market,” he said of how to go about raising capital. “Really understand your strategy.”
That’s something many people have probably heard before, but it’s important to remember.
NZTE’s Mike Hanna calls it “getting your house in order first”. As he says, “It’s all about getting your shop ready to receive capital. Have you got the correct procedures in place, the business models, the market sizing, the team? Investors look for a lot of different drivers when they look to invest in a company.”
He also stresses the need to “mitigate red flags.” In order to do so, according to Hanna, it may be a good idea to seek outside advice. “We see a lot of founders at NZTE who are great technologists, who are great in their sector, but they don’t understand capital raising. It is definitely a skill. And the more you read up on that skill and get help, the more successful you’ll be and the more likely you’ll be to receive investment.”
Snowball Effect’s Simeon Burnett says he sees two main obstacles for companies trying to raise capital: companies not being able to articulate their story and not having robust financials, which includes understanding monthly cash flow and managing finances.
Given that Andrew Pryde works for ANZ, he has a particular familiarity with understanding finances and capital raising. “From a bank’s perspective, when companies come to a banker seeking growth capital, they need to articulate their story. They need to explain what they want the money for. Typically, a bank will understand the customer, but they’ll want to understand the need for the additional capital.”
As a follow-up, Pryde says a company should also be able to provide a bank with financial statements – including future projections. This, he says is “so the bank can take a view on what it’s going to look like in three years’ time.”
Waterman Capital’s Lance Jenkins says he sees another challenge: engaging in the initial conversation about capital raising, and making sure both sides understand it. “To engage in that partnership, we need to spend time and energy having multiple conversations.”
Those are some things that need to be done to help raise capital. But what about organisations that are at the proverbial coal face that are doing it on a regular basis? They were at James & Wells’ roadshows, too.
Sequent’s Graham Grant says his company launched a programme about 10
years ago to make sure it is always ready for potential investment. “We felt it was just good practise and good housekeeping to be in that state of readiness.”
Grant adds that about two years ago, the company tweaked its systems and processes even further. And it wasn’t just financials – it was also looking at what intellectual property (IP) agreements it had to make sure no-one could rip-off their IP and make money from it. But he does emphasise the need to have your finances in order. “You can have a great story, but if the evidence isn’t there to support your story, it becomes a bag of holes.”
Being ready for investment and to raise capital could be more critical than ever – especially since Colin McKinnon, of the New Zealand Private Equity & Venture Capital Association, says there appears to be an appetite for investment in New Zealand companies. “New Zealand’s private equity and venture capital environment is very strong at the smaller end, around the angels and venture capital funds,” he says. “We’ve also got a very strong and vibrant private equity ecosystem, with a lot of funds that are investing in midmarket companies. Where we’re short of funding in New Zealand is in the five to ten-million-dollar, later-stage venture capital. But in recent times there’s been a lot of interest from offshore.”
It may sometimes get pilloried, but McKinnon says Aotearoa’s famed “six degrees of separation” is also an asset. He says businesses and entrepreneurs can more easily build a personal connection with potential investors since they might already know each other or know some of the same people, making it easier to raise capital.
Loveblock’s Erica Crawford says when her company was sold, one of its key assets was the name – which was heavily protected by IP. That’s the advice she has for other businesses and entrepreneurs, too: the importance of having IP, and being able to use it to make money.
Get your financial house in order. Make sure you have IP. That’s the advice of James & Wells’ Carrick Robinson – no matter what your end goal is. “It is critical to have IP when it comes to raising capital,” he says. “For a lot of businesses, intellectual property is the only primary asset they have. If they don’t have that intellectual property properly defined and protected, then it will be very difficult to gain investment. Investors are going to want to see what they’re investing in. If that’s the only asset, the intellectual property, then that needs to be really clearly defined and protected wherever possible.”
Here’s the thing about events: they begin, and then they end. Again, that’s exactly what James & Wells’ roadshow was not. Meant to be the beginning of an ongoing dialogue, networking was a strong component of the roadshow. And that’s not just networking among the participants: it was also about networking with James & Wells, too.
Considering intellectual property is their business (along with patents, trade marks, designs, commercialisation and litigation), it sounds like a pretty good connection to make.
Independent intellectual property firm James & Wells champions innovation and the people who create it. To learn more about how they can help your business, visit jaws.co.nz.