ArcAngels and Angel Association New Zealand have welcomed the launch of My Food Bag co-founder and former Telecom chief executive Theresa Gattung’s new venture capital fund, which aims to raise capital from women, for women entrepreneurs.
Cecilia Tarrant is the chair of ArcAngels, a New Zealand-based angel organisation that focuses on funding women entrepreneurs. She says she’s thrilled by the initiative. “Boosting the pool of capital for entrepreneurs is vital for New Zealand’s ecosystem of start ups to grow,” she explains. “As an organisation, focused on women-founders, we are delighted to hear Theresa Gattung, one of New Zealand’s preeminent business leaders has launched an initiative to fund women entrepreneurs, supported by women. Having a venture capital fund will help expand the capital and mentorship female entrepreneurs need to develop their businesses.”
A member of the Angel Association, ArcAngels was established to invest in early stage businesses led by women, and is dedicated to building the capability of investors in New Zealand. “It is important that there is a sustained effort to increase the investment pool in New Zealand, focused on women,” explains Tarrant. “There are fewer women investors in New Zealand’s angel networks, as low as 10 percent of members. Research tells us there is a direct correlation to the low investment in women founders because women are more likely than men to invest in women-led companies.”
- Check out an earlier interview with Theresa Gattung:
The news is especially welcoming in light of October’s MYOB Women in Business Survey, which shows that women now make up 44 percent of small to medium business owners in Aotearoa. The number is up from 30 percent in 2012.
Angel Association New Zealand (AANZ) executive director Suse Reynolds also stresses the importance of helping women entrepreneurs raise money to turn their business ideas into reality. “Early stage, high growth companies are always looking for capital,” she explains. “Without capital the growth path is exponentially slower.”
Speaking to the New Zealand Herald, Gattung said the idea for the venture capital fund came after attending the Emerging Women conference in the US last year and meeting entrepreneur Vicki Saunders, founder of a start-up that aims to help fund the next generation of female entrepreneurs called SheEO.
The idea for SheEO is based upon communities of women investing in a venture capital fund. The money can then be used to support other female-led businesses. More specifically, the business model involves about 1000 women investing $1000 each, for a total of $1 million in funding given to 10 start-ups. Saunders has ambitious plans for SheEO, with a goal of women in 1000 cities taking part – and Gattung is determined for Auckland to be included.
As Gattung said in the Herald: “There are already one or two smaller venture capital funds or groups of women in New Zealand but this is on a much greater scale. And it’s not just wealthy women who have big lumps of money to put in, it’s open to anyone who has $1000.”
Although more women in New Zealand are owning their own businesses, securing funding remains incredibly difficult. Saunders cites that women control about 39 percent (equivalent to US$11 trillion) of financial assets in the world, but only six percent of venture capitalists are women. If that’s not bad enough, the number is actually declining; in 1999, about 10 percent of venture capitalists were women, according to US firm First Round Capital (a company which has helped provide funding for companies like Uber).
And that’s not even the worst: the company also says that while women start their own companies at twice the rate that men do, just 2.7 percent of venture funding goes to companies with female chief executives.
The new venture capital fund for women also comes alongside other positive news in the sector. Movac Fund 4 has recently raised $105 million to invest in the next generation of iconic Kiwi technology companies, with about $75 million of that underpinned in investment commitments from institutional investors including Ngāi Tahu Holdings. The balance comes from the New Zealand Venture Investment Fund, leading New Zealand family offices, community trusts, and private investors.
Movac Fund 4 will be investing in established New Zealand technology companies that are seeking capital to accelerate their growth. These companies have an established record of sales, a team in place to grow the business, and the ambition and potential to scale their business internationally.
Movac managing partner Phil McCaw thinks there’s a lot of potential. “We are really encouraged by the commitments from all of our investors, and in particular our new cornerstone investors who have recognised the significant investment opportunity that exists in the New Zealand technology sector right now,” he says. “Importantly, we have a strong pipeline of potential investments for Movac Fund 4. We have already been meeting with and conducting due diligence on various opportunities, and are very impressed by the quality of the companies that we’re seeing. We anticipate that we will make Fund 4’s first investments prior to Christmas.”
Ngāi Tahu Holdings chief executive Mike Sang also has high hopes. “We are looking forward to our new partnership with the Movac team and the added diversity the investment brings us from its focus on investing growth capital in the technology sector.”
Movac Fund 4 remains open for investors until it closes in April 2017.