New investors urged to focus on collaboration, syndication

WELLINGTON: An inability to collaborate and build syndicates for investment is holding some investors back, specialists say.

Some newer investors and fund managers are finding it difficult to get a foot in the door when it comes to backing the best and brightest business startup ideas and businesses coming out of universities and incubators.

A recent industry meeting of private investors raised concerns about the small pipeline of commercialready science and technology opportunities coming out of universities.

‘‘I think it’s sort of relatively lazy thinking, actually — I think it’s the idea that a lot of these things that just kind of come up and be presented on a plate, there’s a lack of understanding of perhaps what it takes to do some of that deep tech stuff that is better understood by more sophisticated investors,’’ Auckland University UniServices commercialisation director Will Charles said.

‘‘In the last month alone we’ve had three companies get venture financing and we’re sitting on a couple of deals we’re hoping to close within the next two months.’’

Mr Charles said some newer investors were too competitive and failed to understand the importance of collaboration and syndication.

‘‘I think overseas investors understand the value of syndication . . . whereas if there’s only one, then that’s harder for that company to develop networks because nobody can know everybody,’’ he said.

New Zealand Private Capital executive director Colin McKinnon said collaboration was key to developing.

‘‘We’re evolving in the venture industry and the new players will have to get used to syndicating,’’ Mr McKinnon said.

‘‘It’s an important part of the process that we’re certainly encouraging.’’

Mr Charles said another stumbling block for investors was the lack of talent available to develop a good idea into a global success.

‘‘Not many people recycle out of [big corporations] and go into smaller companies,’’ he said.

‘‘If you’re in Silicon Valley you’ll find that a lot of startup people have had maybe a couple of years or three years at a Hewlett Packard or a Sun Microsystems or Google and then they leave those companies to join startups.’’

New Zealand did not have that level of talent heading up small firms with big potential, he said.

That was one of the reasons international investors had been successful in partnering with the best and brightest.

Networking was a big reason startups favoured big international investors, he said.