So, will the Punakaiki Fund get to ‘Go’?
And, if so, how will it differ from the angel investment funds dotted around the country?
Originally hoping to raise between $20m to $50m, when the original close date of October 2 saw it unlikely to garner $5 million, the fund closure was extended to October 25.
The managers of PF will also drop its management fee to $150,000 from the original $300,000 proposal among other decreases in fees.
Punakaiki Fund’s purpose is to invest in early stage New Zealand technology, internet and design companies.
PF’s proposed director/manager, and internet commentator Lance Wiggs, partly blames the poor uptake for the offer on it coming to the market at the same time as the Meridian offer, with brokers dedicated to that process.
Now, this may or may not be the case.
But, especially at this much lower raise offer, it has to be questioned whether the PF is now a solution in search of a problem.
The angel investment scene is pretty healthy around the country, with 15 different member organisations around New Zealand having invested $220 million since 2008 (according to the Angel Association website, see at the bottom of the page).
Very often an angel investment in a particular company is syndicated among a number of investors, so there’s a spread of risk. The costs and fees associated with the investment are also relatively low.
So, if you’re someone with spare (i.e. can afford to lose it if the company goes bust) money, would you do it through an angel arrangement or the Punakaiki Fund? To be fair, PF in its disclaimer does point out its investments are also risky.
At $5m, the PF is only ever going to be able to make small-ish investments.
If it had managed to raise much more, then it might have been able to provide the $2-$10 million funding and further investment gap that many high growth companies find difficult to source in New Zealand.
Not being able to find that quantity of money is one reason many of these promising companies find they have to head offshore to secure the next stage of their growth.
All of which is a pity. It would be good for a publicly listed investment vehicle to be visible and successful.
So, good luck Punakaiki, and thanks for raising the profile of smart companies. It would be good to have you in the mix, but the omens aren’t good.