Five ways to improve New Zealand’s investment ecosystem
- Sort out the power balance so entrepreneurs – those people who risk everything and put their lives on hold for their dream – don't feel their investors' time is more precious than theirs. Founders, you shouldn't need to wine and dine the people with money, if you do then something is wrong.
- Get realistic about what exit multiples (and start-up failure rates) look like. Nine out of ten start-ups fail and given the maturity of our ecosystem, investors should be happy with modest returns (four* is still a gazillion times better than the bank).
- Give up expecting Xero level returns from every start-up we see. See above, you make maybe one percent with your money on term deposit, sure investments in start-ups are risky but expecting 10* return across your portfolio is insane.
- Understand that start-ups take time, like years and years to an eventual conclusion. I know that buying your new Audi is important to you, but if you expect your investments to slot nicely into your car plans, think again.
- Ban wine and cheese from demo days – they should be about investors getting to know founders, not about who has the best contra deal with a wine company. Yeah, this one gets me hot under the collar.
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