JAMES & WELLS SEM­I­NAR SE­RIES TO SHOW BUSI­NESSES HOW THEY CAN AT­TRACT IN­VEST­MENT

Idealog - - IDEALOGY / JAMES & WELLS -

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.

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