The 2010 Influencers: Trading up
Original Trade Me investor and incoming president of the Angel Association Phil McCaw is one to watch, our judges reckon
Tuesday, July 27 2010 || Influencers || BY Mark Revington
Mention Sam Morgan and people immediately know he’s that guy who started Trade Me and exited with a whole pile of cash.
Mention Phil McCaw and you’d likely get a blank stare, unless you’re talking to someone in New Zealand’s small investment community.
McCaw is an original Trade Me investor, a pioneer of the New Zealand angel investment sector, and incoming president of the New Zealand Angel Association — which makes him one to watch, according to our judges.
“He’s had a huge influence in the angel community,” says Greg Cross.
Trade Me was a fantastic exit, says McCaw. Never seen anything like it, but give the angel investment sector some time.
“The reality is, it takes a long time and when you throw a global recession into the middle, you need to add a couple of years to be able to see results. We’re still a couple of years away from proving and a lot of that proof will go back to whether the right choices were made from an investment point of view.”
McCaw and his partners established Movac shortly before Trade Me was sold, set up a seed fund “and tipped around $15 million in and over the past four years we’ve been working to actively invest that”.
Finding companies to invest in four years ago wasn’t as easy as they thought. They wanted to focus on Wellington IT companies, says McCaw. That lasted about three months. Then they widened the net to look at IT startups across the country. “That lasted another three months, and that’s not being derogatory about the opportunity pool. It’s just where things were at. Then we said, ‘okay, let’s invest in anything that looks good’.”
Movac, which looks for startups with the potential for rapid, massive growth, has invested in 12 companies through two funds. It has around $2.5 million to invest from the second fund and is actively raising a third fund.
The magic combination for investors is a great entrepreneur or team alongside a great idea, says McCaw. “Getting those in parallel doesn’t happen too often. We had to hunt and hunt.”
But as the early-stage investment community got organised over the past four years, through groups like New Zealand Angels and Ice Angels, there has been development in the entrepreneurial community as well, says McCaw.
The gap now, as Bill Payne says elsewhere in this issue, is at the venture capital stage. As a result, angel groups are being asked to fund startups for up to $1 million, and sometimes up to $3 million.
This year McCaw went to the annual summit of the American Angel Capital Association in San Francisco and the inaugural Asia-Pacific Angel Conference in Singapore. Both were characterised by the networks angel investors had developed. “The top-tier investors all know each other and when you get investors of that calibre working around a venture it becomes quite self-fulfilling in terms of success. Look at the early-stage investors in Facebook. He had the créme de la créme of US entrepreneurial investors around him from day one.”
The good news is that West Coast Americans love New Zealand, says McCaw, and many are looking at actively investing in New Zealand — looking to buy property and invest in interesting projects.
“We just didn’t see this coming at all. There’s an opportunity right now to entice these groups to invest in young New Zealand companies. They bring a network and ideally provide a beachhead for our companies to move up to the West Coast.”
Cloud computing with its ability for companies to quickly scale is an ideal opportunity. All Movac’s web investments are hosted in the cloud.
McCaw, who spent almost 10 years with Deloitte, reckons early-stage investing is the hardest job he’s ever done, particularly when taking an active role in growing a company.
An investor’s job is to make sure startups achieve their goals and don’t run out of money. “And they’re always running out of money and not quite achieving their goals. That tends to create pressured, tense moments quite regularly. What is great is that you are working with such talented people, hopefully starting to achieve great results and offering some benefit in the products or services they bring
to market.”
The 2010 Influencers
• Who are they?
• Science's renaissance man
• Ones to watch and back-room influencers
• Who influences the Influencers?
• Net influence
• Wise counsel and outside the tent
