 Kia ora koutou, no mai haere mai. Ko Erika Austin Tokungua, we will start this session today with a karakia as we transition the energy of the virtual space into our formal sessions. A karakia is a non-religious blessing and is a practice of our indigenous people of Aotearoa, the Māori people. Pākatakatehau kete'uru, pākatakatehau kete'tonga, kia ma'kinakina, kia uta, kia ma'tāratara, kia tāi, e hea akeana te arakura, e tio, e huka, e houhu, ti hei, mōriora. Greetings to you all. My name is Erika Austin, community activator at Edmund Hillary Fellowship and the host of the session. The Edmund Hillary Fellowship EHF is a community of 500 bus innovators, entrepreneurs and investors committed to Aotearoa New Zealand as a base camp for global impact. Our vision is that Aotearoa New Zealand inspires global leadership and solutions for future generations built on principles of tangatatatiti and values of Sir Edmund Hillary. In this session, we will hear from fellows, Sean and Christy, and they will be covering a topic on demystifying early stage fundraising, avoiding common mistakes. As you can see on the screen now, the seven reasons why your start-up isn't getting funded. We are here to explore some of the questions around why businesses are not getting funding, where do they go for funding, what are the motivations for funders, and what are they looking for? New Zealand market versus offshore market, generalists versus specialist. And first, some housekeeping rules. As we all kind of tune in into this virtual space, it would be really great for you to stay muted as a start, but feel free to put in your questions into the chat. And during Q&A, we will have a space for you to ask questions by unmuting yourself and putting your hand up to indicate. And some of you may have to leave at various times and that is okay too. And Christy and Sean will be taking the virtual stage for about 40-45 minutes, followed by the Q&A. Before I hand over to Christy and Sean, I'd like to share a little bit about them. So, Christy Reynolds is an EHF fellow, angel investor and company director with deep experience investing in start-ups and working with ambitious New Zealand SME businesses that are poised for international attention. She has 25 years of commercial experience developing businesses internationally throughout the Asia-Pacific region, across a range of industries from SMEs to MNCs, including founding her own export business, which she ran for 80 years. These experiences have helped to inform her understanding of the unique challenges faced by business owners who are invariably constrained by limited resources, thereby impacting their ability to scale their businesses internationally. Sean McGrale is a committed social entrepreneur and impact investor based in Tamaki Makoto Auckland. As an EHF fellow, an investor fellow, he propels entrepreneurs to create world-changing businesses with a focus on UN sustainable development goals like gender equality, clean energy and fair work. Prior roles include managing director of Golden Sea, where he supported women-led start-ups and co-founder of Paint Night, an award-winning social impact company that became one of the fastest-growing private companies in the US. So, thank you both so much for taking the time today. Let's start with Christy. Do you want to say hello and introduce yourself? Hi, everyone. It's a pleasure to be here. I'm looking forward to having this conversation with Sean. We have both had an entrepreneurial background and as well as investors in the space I've now been investing in the start-up scene for about eight years. I love working with founders and helping them navigate their capital raise process. So, looking forward to sharing with you all today. Go, Sean. Thank you. Thanks for having me. So, most of my early-stage investments were in the Boston area supporting women-led businesses with Golden Seeds and now I'm in Auckland. And I think today's conversation is going to be robust about comparing both markets, what we're seeing and whatnot. So, without any delay, let's jump right into it. So, we thought we'd start off by talking about what are some of the different ways that people can raise capital. And the most common is bootstrapping. So, you know, you use your credit cards, you take mortgage out on your home, or you can reach out to family and friends, bank loans, venture debt, grants, philanthropy. And there are also programs like that are run by accelerators and incubators that can provide funding as well. Another one, which is more recent development in the last sort of five to eight years, has been the crowdfunding space. And there are a lot more businesses offering resource that way. And then, of course, there's angels and angel groups and venture capital. And those two are going to be the two that Sean and I really focus on today. Then you've got private family offices, private equity for later business. You know, when your business is more established and then looking at ultimately initial public offerings is another capital source. So today we're going to be focused more on angel and angel investment and venture capital stage of the business. Yeah. And just to jump in here, because of Shark Tank and Dragonsden, that angels and venture get a lot of attention. But we really wanted to put this slide up here because a lot of entrepreneurs kind of forget about these other sources and they can be really great. So that's why we want to start there. So why do some people strike gold and others find it more difficult? Well, we just wanted to give you a sense of what is actually happening. These statistics are focused more on venture capital rather than individual angel investors investing. So the actual total amount is likely to be a little bit higher than this or a lot higher than this. If we look at New Zealand venture and early stage capital investments, last year it was at 319 million into 222 companies. A year before in 2021, it was actually at 380 million into 224 companies. So the number of companies being invested in hasn't changed very much, but the amount invested last year was slightly lower than on the previous year. So which are the sectors that are getting most of the capital? Well, software seems to be still the main winner in this space. And then looking at deep tech, other areas such as clean tech, health tech and space tech. So that's just, we just wanted to kind of give you a bit of a flavour of where is the money going? What is it being invested in? Sean, anything else you want to add to that? Yeah, just to kind of let founders out there who might be frustrated when they're talking to a lot of investors, if they're not in these categories. It is a bit higher of a hill to climb when you're going after and trying to find an investor if you're not in these spaces. So if you are in these spaces, it'll probably be relatively easy to find, raise money, whereas if you're not in it, it's just a bit tougher. So we sympathize with that. And then here, you know, this is just one of the things a lot of entrepreneurs think that a brilliant idea is going to take them all the way and all they need is a light bulb. But I always try and use the analogy that businesses are more like a puzzle that you need a lot of pieces to come together. So that's, you know, a business model and moat and market share and whatnot. And a lot of founders sort of fall in love with the idea instead of building a team and how am I going to execute and make this idea a reality. So I just wanted to make sure that people understood that like an idea is not going to get you all the way and get you the funding. I tend to break down businesses into four categories and business ideas into four categories. One is a bad business that's actually most ideas fall into this category of it'll just never make money. It's not really solving a problem. Unfortunately, there's a lot of those out there. Then the next category is the side hustle. This might make you, you know, 10 to $150,000. It can maybe generate enough money for you, but it really can only support a founder. So as angel investors, a lot of people come to us and pitch some ideas that are really more of a side hustle and they really can't scale. Then there's the lifestyle business. These are nice businesses. I think of like a nice pizza shop or a hair salon or something like that. There's enough money there. It's a good business can put a roof over your head, put your kids through college, but there's not enough meat on the bone to have investors. So, you know, you should still move forward with that idea, but going after and talking to investors, they're not going to be interested because it really can't scale beyond say 10 million in revenue. And there won't be enough cash being thrown off to, you know, sort of feed the investors and a lot of investors will realize like the return on investment here. Most of it's going to go into your pocket and not into theirs. And then a really small percentage of businesses are what fall into the category of what I would call investable businesses. So this category meets a couple criteria. It can scale beyond 10 million in revenue. It can grow 20% year over year and have 20% plus profit margins. Those are just sort of some rules of thumbs rule of thumb of that investors are looking for. And those businesses can scale big enough that there's enough cash being thrown off, you know, five or 10 years down the line that it can not only feed the founders and sustain them, but also there's enough cash being thrown off for investors as well. Then I'll let Kirstie take this slide. Okay. And I just want to mention that if anybody has any questions with regard to the particular slides that we're on, please put it into the chat and Erica will share those questions with us. Then we can try and answer them on the fly. So how does start-up funding work? Well, when you're in the idea phase, you know, it's you, you've got no revenue. You're putting in 100% of the equity. And so at that, so there's very little leverage there, but you might want to leverage by adding a co-founder in which case then you can might share the equity 50-50. You do half the work each and you put in the same amount of money. Then another phase is like the friends and family. You can go out to a family member who actually decides to put in some money into the company in return for a small equity share of the business. So this is really when you are committed because you've taken on external funding. Then the next phase is angel investment. You've maybe got some proof points, but you're still at what we would call precede stage where it's still an idea. You've got a basically a bit of execution. You're wanting to raise a little bit of money to maybe build out some of the tech. And you might be offering investors 20% of the company for say $400,000 on a $2 million pre-money valuation. So this reduces your equity share down now to 38%, both you and your co-founder. And you've given up a share to the angel investors. Then the next stage would be series A. You've actually proven, but you need some more capital in order to be able to continue the growth of the business. And so your valuation rises slightly. You're getting in a little bit more money to really execute on the business. And that again reduces your equity shareholding in the business. Then you go to series B and this is again more capital being injected into the business. And just in the same way as series A, the types of investors that would be looking at this would be angel, VC, possibly a family office. So again, this is a stage where you're almost passing over the control of the company to not to the investors, but to the group. So you've potentially got less than 50%. And this is something that we're very aware of as investors. We want to make sure that the founders are well set up if they are going to take on external investment. And there are differences between the US and New Zealand in terms of expectations. It's much better for a founder to have over 50% or co-founders to have over 50% share before say a VC company would come on board. And I don't know, Sean, whether you want to mention anything about that. Yeah, I mean, I think sort of the title of this session is demystifying. And a lot of founders, particularly when they're in the early stages and are raising money, maybe don't fully appreciate that when they get to that series B, that one, they can lose control. And not every founder is destined to be the CEO that can take the company public. So a lot of founders at this point will maybe get shuffled out of the business, get put into an R&D role or something else. Which if you go down that road, you just want to do some soul searching and realize that you might build this for five years and then get pushed out by the investors. So that's sort of a downside that a lot of founders don't fully appreciate when they start down that phase. And then, you know, when you hear of companies exit and, you know, you hear a company sells in this example for 30 million. The founder might only get, you know, 6.8 million, I say only, but, you know, a lot of times you're only left with a small percentage after you've gone through these series of rounds that can really water down. You know, your equity in the company. Yeah. And I think there's something else here, which is really important to point out your cheapest form of capital was actually revenue. So it's actually incumbent on founders to try and generate revenue very early on in the piece because with revenue you've got cash flow and you need and then you're in a position not to have to take on external. Equity, which then has the potential to dilute you down further than perhaps where you want to be. So, and sometimes founders get so much on a chase of wanting to raise the next capital raise to fund the business and the next growth phase that they lose sight that they're actually there to make money and to generate revenue. And that's something else that we really want to stress here as well. Question here from James. What advice do you have for social enterprises or impact led businesses looking for impact? I mean, with social enterprises, they're going to go through a similar pathway. But I think they actually have it harder than say a non impact business, just because if they are allocating a certain profit, part of their profits to, you know, a certain cause, then it just makes it tougher for that business. So, as I was kind of saying before, you know, when we're in the angel, we kind of expect anywhere from 70 to 90% of our investments to go up and smoke and fail. And that risk factor goes up even higher with social impact businesses, but it follows the same pathway for this. So, I don't know. And I think, Jay, just like any business, often it's trying to find the aligned investors who align with your mission. And there are organisations that are focused more on impact investment that you could potentially go and have a chat with. So it's just about trying to align yourself with the right networks that have an interest in the work that you're doing. And that goes for whatever startup you're doing, whether it's food and beverage, whether it's deep tech, etc. It's the networks that you build up that become really important to try and identify the right investors. And I believe, Mark, that you've got a question that you'd like to ask us or a comment that you'd like to contribute. So I'll over to you. Yeah, I wanted to make a comment. I think what you've said so far is exactly right. But I would say in this question about equity ownership, there's actually what we would call a ditch on either side of the road. Having too little equity is a problem. Having too much is a problem because, and I've seen this happen, owners who want to maintain too much control actually alienate investors and board members. And I've seen this happen in a number of museum companies. I've seen more of them go the other way where they don't have enough equity. So you need to be sensitive to that. The other thing is that, as you get into, say, Series B, it is important, and Sean said this, to do a little bit of soul searching of what is your goal, is your goal that you have to be the CEO forever. That's a constraint in most cases. And often when you get to Series B, people do get diluted below their controlling position. But if they've done a good job and they have the right relationship with their board, their investors, they really still have security in their role. They just don't have numerical control. And we've seen a lot of US companies where the owners have created strange structures where they end up with control even if they don't have economic dominance. And those have not always gone very well. So it's a complicated question. The other thing I would say is the idea of driving early revenue is really applicable, particularly in SaaS kind of businesses. It's harder in a deep tech business. There's even a danger of a SaaS business chasing revenue. I have some of these in my own portfolio. They start doing services to drive more revenue. And in some cases, when they do that, they change the perception in the community of what they're doing. And investors don't like to invest in services business, so they don't scale. It can distract them. So there's a balance there. Maybe there's a balance in everything. And just to go back to Jade's question about social impact, going back to our original slide there of different ways to raise money. You may not want to go down the angel investor VC route. There are foundations. There are other philanthropists crowdfunding. Those might actually be a better route depending on your business and your industry. So I mean Mark brought up a good point. Like if you're in deep tech, you almost have to go down this route whether you like it or not because you need that cash. Because it's going to take you 10 years to develop your business anyways. But whereas a social impact business, you may be able to get away with other avenues of funding rather than looking for angel or VC funding. I think there was one more question from Stephanie. Just making the statement that there's a lot of focus on SaaS investments. And what advice would you have around looking for investment in clean tech infrastructure space? So Stephanie, not sure whether you want to actually ask your question directly. Are you looking at that from an investor point of view or are you looking at that from a trying to raise capital point of view? I can't hear you. Sorry, can you hear me now? I can hear you now. It would be from a start point of view looking for funding. So I'll go back to my comment earlier, Stephanie. In the same that we talked with Jade, it's about actually understanding which investors are really interested in the clean tech space. And also connecting with organisations that are specifically focused on that clean tech. So Ed Sean's just brought up 25% of funding right now is going into clean tech. There are organisations like outset ventures and ice house ventures where we regularly see clean tech type solutions being presented for investors to consider. So definitely you shouldn't feel out on your own on that. There is a lot of interest in that space. Yeah, and just to clarify this slide too, it's 25% of the 34% that goes into clean tech. So you can do the math there. But there's a bucket of money there and then there are specific investors that are very interested. So if you're meeting investors just generally and you're finding that most of the focus is on, you know, 45% of them are going to be putting their money into software. There is a group of people. So it is about being selective of who you approach. And typically VCs, angel groups will actually put that on their website of where they believe the world will be in five, 10 years. And that will give you an idea of whether you should even approach them or not. The other thing and maybe Sean, this is a really good opportunity for us to sort of delve into this. We've noticed some differences and Sean and I have discussed this between the New Zealand market and say the US market, whereby in New Zealand, we are far more generalists because of the small size of our economy. So venture capital companies here in New Zealand tend to be agnostic with regard to sector and they tend to be looking more for what is the best deal that is being presented. Whereas in the US, you will get VCs that are focused specifically on clean tech or focus specifically on SAS or food and beverage or, you know, so there's a lot more specialisation in that regard. Sean, do you want to add anything else to that? I mean, you're exactly right. I think you're getting a little ahead. But you're absolutely right. In the US, a lot of angels and VCs like to bring their industry expertise. And so when they see a start up, they're like, oh, not only can I write a check, but I can actually roll up my sleeves for three to six months, work for free, and basically get, you know, this company really off the ground. And if they have a stake in it and they're going to see 10x, they can make the connections. They can say, you know, this person left one of our portfolio companies, but they're great in marketing and really kind of help you launch that. So that does happen more in the US than here in New Zealand. But I think this is a good launching point to get into our seven reasons why your startup isn't getting funded here in New Zealand. And these are sort of meant to sort of inspire you. I always find that I learned better from being told sort of the mistakes than being told the to do list. So this one, you know, just comes with being a small country on the edge of the bottom of the planet. Companies that we meet as angel investors, sometimes they only think about the New Zealand market. And investors typically have this number in their head of having a total addressable market of a billion dollars or more. Because the thought process is that you're going to get a small percentage of that to see if it's a viable path forward. So this is what I would say is the number one killer for a lot of the businesses that I see that I don't invest in is just the founder is thinking small, maybe only the New Zealand market and not thinking abroad. And so if you are in that idea phase, you want to show on an Excel spreadsheet how this business could at least scale to $20 million or more. And that is going to somewhat challenge you to think beyond the New Zealand market potentially. And ideally you want to show that, you know, this business at some point can get to 100 million or more in scale. So Kirstie, I don't know if you want to add to that. Yeah. So having spent 20 years of my career of helping to grow New Zealand businesses internationally. One of the things that I often see with companies that are trying to go international or export is that they are undercapitalized and under, you know, and they don't necessarily have the capabilities in house. So they're under resourced. And we have this conundrum in New Zealand because of our small population that we're often sending companies out into the big wide world before they have really developed the, you know, that level of intensity, that level of profitability, that level of expertise in a particular area. And so you're building it and on the fly as you're exporting. So they are just some things to be aware of because if you can develop a strong domestic base to start off with, which gives you a good income, then that's going to help fuel your international growth. But saying that when we're talking about angel investment, ultimately, and venture capital, we recognize that right from the start. And so part of what we're trying to do is fund your ability to be successful and to grow internationally right from the beginning. So businesses that are just domestically focused are less likely to get interest from investors over the long term because we recognize that it is a very small market. So just keep that in the back of your mind as well. I see a comment from Mark. Thank you, Mark, for those of you who can't see it. The other aspect of connecting with a specialist VC is that they can connect you to their network, which can be a huge help, especially when entering a new market. Yeah, totally agree. Oh, we've got another question. I love it. This is such an interactive session. Kim, thanks for your question. Can you speak to the balance of presenting the local versus global market potential that should be communicated in a pitch as a company with global IP? We often focus the narrative on the New Zealand impact first and the global as a next step. Would we ideally be starting the global expansion simultaneously? Yeah, a good way to pitch it or have your pitch is you might say, hey, we're starting in New Zealand as our beach head market. But then from here, we're going to go to Australia and then to the UK and then to the US. So you'd be able to show a path of how you're going to take over the world. And there's going to be some logic and reasoning behind that. So, but you want to make sure that you show that you are tackling a big market. And if you're currently not tackling a big market, that would be a challenge for you as the entrepreneur to be like, OK, this is why the investors are turning this down. And you shouldn't just be doing it for the investors. This will actually make your business stronger. And why investors sort of have these little checkboxes is because when you don't do that, there's a higher likelihood to failure. So even if you never go and raise money or never talk to an investor, you should still try and make your market as big as possible because it makes the likelihood of that your business will succeed that much higher. Lucy, do you want to jump in with anything more? No, I think you've covered it off well. So let's move on to the next slide. Yeah, do you want to talk to this, Sean? Sure. A lot of times when this kind of ties into going global, which markets you enter into after New Zealand will have a big impact. So there are tax, legal and regulatory hurdles. I see this a lot with medical devices. So in New Zealand, we have universal health care in the US. It's a very fractured market. And a lot of medical device companies that are finding success here immediately think to go after the big US market just because it's a much bigger opportunity. But Australia offers more streamlined. It is more like the New Zealand market for that. So just think about how you're going to go overseas. And that'll pick your strategy there. And then also there might be certain regulatory reasons that your product won't exist in that market. So cannabis is a good one. That in some markets it's available and in others it's not. And then whenever those regulations do change, that does offer an opportunity for you to enter the market is another one. So Kirstie, I don't know. No, I think you've covered it well. I've seen it many times when companies have tried to go in. We often call them in the export world non-tariff barriers. So there may not be a tariff which is precluding you or making your product more expensive to export into a market. But they can be these non-tariff barriers which are regulatory, et cetera, that just mean that it makes it so much more difficult to trade. And so New Zealand has in place with 99% of our partners free trade agreements. It's really important when you are looking to go into a new market that you're aware of those free trade agreements and whether your product or service or what you're looking to do is actually covered by that so that you're aware. The other big thing is and we often talk about the US is one country but it's 52 states. Well, same thing in Australia. We think of Australia as being one country but it also has different states with different regulatory arrangements. So it's about understanding how those can impact your business and selecting which market you want to go into. If you're going into the States is it just California and look at the population there and the number of big cities they dwarf New Zealand. So there are plenty of opportunities. You only have a finite level of resource so you need to choose carefully and do your homework before going into those particular markets in order to maximise the resources that you've got available to you and the opportunity. And for investors if you can show that strategic thought that goes into it. So if you're an alcohol brand where the alcohol laws are different state by state in the US but you can say I'm going after California because it's one state but has 19% of the US population. So that will show some strategic thought that you've actually spent time thinking about these things and will build confidence with investors. This is the problem solution mismatch. So I see this with a lot of social impact businesses where they take a global problem such as climate change and they say you know climate change is a problem and is it a problem. But then their solution is cauliflower ice cream right it's it there's a mismatch there of who they're solving the problem for. So you need to make sure that whatever problem you have in your deck is actually the problem of the customer the person who's taking money out of their pocket to pay for the solution. And there's different ways you know reasons for why people would pay for a solution for this. I'll just bring up one of our EHF fellows. Tim Moore has a company called Vortay. And you know his initial pitch was that he was saving the planet with this device that helps heating and cooling. But the solution that he eventually struck upon was for Coca Cola in Indonesia. So he was willing to drink warm Coca Cola. So with this device it allows the Coke to say cold and an eco friendly cooler that doesn't use as much electricity. So Coca Cola is willing to spend, you know, millions of dollars to solve that problem. So phrase your problem solution to make sure that it there's a there's a match there. So if that makes sense, but if you want to know it's great there. So another big issue is around how you term how you project what your profits are likely to be. So you know you've got to have plans and what we notice is that often with women founders, they will be a lot more conservative with male founders. You'll get much stronger hockey stacks, you know, growth plans. So what we're really trying to say is strike a balance. Make sure that when you that you've done your homework that you've put together, you know, an Excel spreadsheet that you understand what the metrics are and what the true path and potential is for your business. It's, you know, we don't expect you to get it exactly right. But we want to see that you've actually thought carefully about how you can achieve these predictions and work with you to achieve that. So, Sean, do you want to add anything? Yeah, just I only wanted to touch on that 20% year over year growth that tends to be a number that investors will have. So some of the pitches I've seen, it's like, you know, 3% year over year growth. And the expectation is when you do raise money from an angel investor or a VC, they tend to want to see that you're going to deploy that money quickly and be able to get really rapid growth. You know, I don't know whether it's the New Zealand style of under promise and over deliver is maybe behind some of that sort of slow and steady growth, but investors typically want to see a more rapid growth. So it should at least on your Excel spreadsheet show that this can scale pretty quickly, but also don't go to the other extreme and say 2000% year over year growth. You won't be able to keep up with that or hire quick enough that the wheels come off the bus. I'm noticing all my punctuation problems here on the slide. So you can speak to this one. I think we touched on this already. So often businesses, we want you to think about the difference between being a generalist and a specialist. So if you've got if you are singularly focused on what you are doing and that you're not going to get distracted by lots of other things and you can really build a strong business. Well, saying that we recognize that New Zealand is a unique market and that it is small. And so often businesses will try and diversify in order to gather, you know, to generate more revenue, but that doesn't necessarily always risk because it can dilute your focus. So it's just about really understanding what your focus is and making sure that you're playing to your strengths. Another aspect about this is make sure that when you're in the early stages, you're not necessarily going to have the resources to employ people full time. So make sure that you outsource some of that. So you bring in somebody that can help with marketing or can help with the IT side of things. Bring that skill set in, but don't bring it in necessarily as a full time employee, but either on a contract basis. So, yeah, Sean, do you want to add to that? Yeah, just I mean, I don't know if this is a lot of New Zealand companies that I see that in the consumer space of say they have an underwear brand. And they often are like, we're going to have a manufacturing plant, you know, actually sell, we're going to open up stores. And each one of those are actually different business models. And they're trying to attempt to show that they're capturing more value in the value chain. But as an investor, I often say like, ooh, they might nail two out of those three of those businesses. But they might fail at one that will take down, you know, the whole business altogether. So I think if the simpler you can make it and use distributors, use consultants, really just get down to the core of the business and what you're good at, particularly in those early stages of the value prop that you have and offering that. The more likely are you are to see success and be able to raise money too. This one is purpose over purpose over profits. Social impact businesses are obviously trying to do well. But oftentimes I see that they're going to give away 100% of their profits to, you know, whatever their cause is or they do the Tom's shoes approach of buy one, get one free. And that's good. But you need to make sure that your business can actually sustain that. So it might be better instead of giving 100% of the profits to the cause, you give 10% of the profits to the cause because social impact investors are investors, not necessarily philanthropists. A lot of times the conversation kind of blends those together. So you want to make sure that the investors do want to see a return on investment. It will be patient capital, but at some point down the line they do want to see some sort of return. And if your business will never be sustainable, it is a nonprofit and you should classify it as so and go after philanthropy. And I just want to touch on too. It's okay to make a profit too. I think there is some cultural stigma to like fighting the good fight, doing some social impact and making a good living. You don't have to eat ramen noodles all the time to do good. So just want to touch on that. I don't know if you had anything else. No, I think you've covered it. I had there. You want to talk to this one? Sure. So the other thing is timing. You've got to think about why you, why now? Because timing can really make or break a business. Some good examples of that, for example, is Netflix. It couldn't have existed without high speed internet. If we think about Netflix initially started off posting out DVDs in answer to Blockbuster that had physical stores. And it evolved into this incredible service that we now, many of us use. So Sean's given some other really great examples. Chat GPT couldn't exist without NVIDIA's GPU. So the whole idea here is to understand sometimes your idea can be ahead of the market or it may be too late to the market. And the trend in the opportunity has taken off already. So just be aware of these things. Don't underestimate the timing of your business idea coming into the market. It's a really important aspect that we think a lot of, a lot of founders can miss. Over to you Sean. I think that was it. And yeah, I think we can get into Q&A. Yeah, so we're happy to take any questions if people want to come off mute and or put your hand up and then we'll take them, you know, on a first come first serve basis. Tim, just clapping. Yeah, go on. Me. Can you, thanks Sean and Christy. Can you talk to a little bit specifically this, the ecosystem at the moment given the kind of general global disruptions that are happening? Can you speak to the landscape at the moment? Yeah, I mean, some of the, you know, the feedback of that I hear from entrepreneurs is, oh, investors have closed up their wallets. And there's no money being deployed. That's just not true. It's, there has been a decline. But as you could see from the numbers at the beginning, there's still $320 million that was deployed last year compared to the $380 million the year before. So it's a little bit lower, but there are still investors who are funding. And so there's money out there for good ideas. It might be a little bit more challenging. And there's obviously some group think that happens within the investment world. So if you put AI at the end of your company's name right now, you'll probably get a check. You know, whether that's a good investor that you want to have on your team or not is another question. But that does seem to be where the trends are for different things. But there is still money out there. And even if you weren't in those sort of hot items or sectors, it's just going to be challenging to find money in general. So I don't know, Kirstie, do you have a different perspective? I think that, I mean, we saw between 2021 and now 2022, there's been a drop of 61 million invested into the space. So, you know, that's a reasonably significant chunk of investment that hasn't, you know, hasn't flowed into the market. But we were also at 380 million. That was literally the highest level that we've ever had in New Zealand in that particular. So for 2021. So I think that it's probably not levelling out, but it's probably coming to a more sustainable level. The big changes that have happened in the New Zealand market over the last four to five years is we had a very active angel investment. Community, but we didn't have a very strong venture capital industry in New Zealand. And so, you know, you had MOVAC, which was really the start of our venture investment community back in the early 2000s. And we've had over the last three to four years, more companies come in from the US, from Australia, that have set up offices here and are specifically looking at trying to provide follow on funding. So it's just really about identifying which ones might be interested in the opportunity that you are wanting to fund. And do your homework. Make sure that you speak with a lot of investors. Capital raising is not easy. Talk to any founder. It is the hardest part of running their business. And they often say it distracts them from running their business. So you want to have a good team behind you that is supporting you on in this whole process. I can see three questions coming from Victor, Michelle and Jade. I probably, yeah, we can read through these and hopefully we've got time to answer all three of them. So from Victor. Hey all, I'm Victor from Nigeria. So I'm in the middle of a discussion between a dev shop and tech expert as regards him coming in. But the shop is more about baseline offer and expert is very concerned about projections. How do you think this should be handled? It's a great question. I mean, typically, depending on what you're building, you know, a tech expert usually is, you know, either front end, back end databases. And a dev shop would offer a lot more depth depending on how big their team is. But you might have a better chance of getting the tech expert to take less cash in exchange for equity. So if they wanted to be your co-founder, that would be an option as well if that's some expertise that you don't have. And you can give potentially a percentage of the company. It doesn't need to be 50%. But that would help you if you're pitching for money from investors. You know, to have them know that somebody on your team was able to help you execute that might increase your chances of getting some funding. The other thing that I would say about that, I have worked with teams where they've had both external as well as internal development. Often it's a transition. They might start off with external development and then move into as cash improves within the business, bring that in house. I've also seen it work the other way whereby the talent that was employed first off wasn't of the calibre that was required. And so they then move to an external development team. So it's really, it comes down to what you are trying to do and the resource that you're looking at and who has the best expertise and balancing the cost of having it external against having an internal resource. OK, so Michelle's question, you have mentioned civil gender differences in the approach. Can you speak to this and how women can address it please? This is like a big issue for women and minority founders and that Kirstie and I are going to have another session in October just on this topic alone. I think one of the best things that female entrepreneurs can be aware of is just when they're getting asked gender questions of things like, you know, away from your family and things like that that you might not get asked. And so just be aware of the unconscious bias of investors and always steer them back to the business and what you're offering instead of sort of getting in the weeds there. But it's a big topic to cover. Kirstie, is there anything else you want to touch on here? I think, yeah, I mean, it's a it's a subject that you and I both really passionate about. So please join us in October. We've set a tentative date of the 25th of October for a follow up session on to support women founders. So we will be diving a little bit deeper into the subject at that session. But I echo what Sean said, when you have difficult questions come up, which are not oriented towards the business, but are more oriented towards personal how you're going to manage, or they might be, you know, please can you justify or demonstrate, you know, you you just bring it back to the business, you bring it back to what you are on a mission to achieve. And you focus on the numbers, you focus on your plans and make that question irrelevant. Yeah. And there's a lot online of promotion versus prevention questions. So, you know, I know we didn't do a good job here in the one minute or a few minutes that we have, but you probably want to look at those and how to address those questions. And we'll cover more more of that often in October. The research was originally done by. She's now Dr Dana cans. She was doing her she was studying at Harvard and doing her PhD, and had identified when she was a founder that she was receiving different questions from her male co founder. She ended up doing a deep dive into why that was, and that was the basis of a lot of the understanding around promotion and prevention questions. And it's appropriate that as investors, we're aware of these so that we can make better informed decisions as well and direct better questions both towards male founders as well as female found women founders. We don't want to just presume that men have all the answers and ask them promotion questions. We need to actually tackle them to with some, you know, more difficult questions as well to demonstrate that they really do know their business. I'll actually jump to Stephanie's question and I'll come back to yours. Jade to wrap us up. I have heard a warm intro is better than a cold email when approaching investors is there a database of events networking opportunities to meet investors in New Zealand and if anyone else and the call have other links and other, you know, resources please stop them and the chat as well. Yeah, I mean, there's startup grind out of the grid AKL. They have like monthly events. There's also flying Kiwis is an angel group that I think it's every Thursday at grid AKL in Auckland has what are sort of office hours where you can go and pitch them and that's that might be a good starting point. Angel investors generally want to be found particularly angel groups. So that's a good way to get in front of a bunch of angels. I'll jump in there and I would also contact the Angel Association of New Zealand. We've got a great there's a great team there, and they regularly organize events which are geared towards helping founders connect with investors, but also helping you promote your business so they'll run deep dive sessions they'll run and I forget all the names but they'll run on a regular basis different sessions that allow you to connect with different people and so that's another option. I sales ventures is also a really good resource for companies that are wanting to pitch. They should, you know, talk with the team there. And if the business meets the criteria, then they will then enable you to present to their investor groups. They will so have the funds available there. So they're different organizations that do different things. And it's the Angel Association is certainly a good one for helping you understand where the opportunities lie in the marketplace. There are angel groups throughout New Zealand that are summer more active and summer less active, but at least you get to connect with some people on your region depending on where you are. And it's same in the US lots of Angel groups, same in Australia. Lots of Angel groups there as well so depending on where you are in the world. I'm just conscious of time. I will wrap the final question from Jade into this. So has there been any intentional collaborative investment across EHF community as investor fellows, but also just some live comments to wrap us up for the session. The word intentional, there's been cross collaboration between EHF fellows and I've invested in different funds. I'm sure Mark Bergman can talk about EHF fellows that are in his fund and I've invested in some of the EHF startups, but I don't know if it's coordinated. So the tough thing with the EHF investor fellows is everybody sort of has their view on where the world is going and what they're passionate about. So for myself it's female founders, but for somebody else it might be AI and another person it's biotech and another person. So it's tough to get sort of a rallying around a single topic about what they're passionate about. Kirsi, do you have any input there? Yeah, I agree with you. Again, that's just different. Different people have different investment mandates and that's why you have to kiss a lot of frogs to find the prince or the princess. It's a lot of conversations with a lot of people over time but that's the richness and the fun as well. I love looking at different business opportunities and working with founders. I know somebody said NZVC is founded by EHF fellows, that's correct. We've had a number of funds which have been set up by EHF fellows here including Mark Bergman's one who was with us earlier. So thank you everyone for attending. I hope this was really helpful and I'll pass it over to you, Erica. Yeah, I just want to say thank you, thank you, thank you to Sean and Kirsty for taking this time. But also we've got again a follow-up session on the 21st of October at the same time 12pm in ZT. So save that date, more details to come. And also thank you all so much for joining this session. The recording will be uploaded to our website very soon. So the last thing I wanted to mention, if you have an idea or topic for a live session, please let me know. We'd love to make these sessions more relevant to you and your communities. I've been just dropping in my email address erika.ostin at ehf.org to co-create future sessions with you. Close with a karekia. Tuia i runga tuia i rara tuia i roto tuia i wahu. Tuia i tehere tangata, ka rungo te po, ka rungo te aw te i hei mauri ora. Ngamahinui kaki te ano. Kia ora. Kia ora. Thank you. Thank you.