From Fund Strategy to Portfolio Spotlight: NZVC's Latest Updates
Kia Ora friends!
Fund update
Public market valuations of high growth stocks have undergone major corrections this year, particularly in the US, where the Fed remains determined to fight inflation via successive rate hikes. This has also seen a 9% appreciation of USD against NZD YTD. We wanted to give you an update of how we are planning to execute our fund strategy in this new macro environment.
While the early stage valuations remain relatively unaffected, we know that the critical test for our portfolio companies would be their ability to raise money in the coming months. We have been pro-actively advising our founders to build as much of a funding cushion as possible and reduce expense to stretch out their runways.
Of the 27 startups we are invested in, so far we haven’t seen any imminent runway issues. Only 35% of the total fund’s capital has been deployed so far which gives us plenty of ammunition to invest in the future rounds at attractive valuations (aided by weaker NZD). Our strategy remains to build a portfolio of about 40 startups with 50-60% of the total capital, and invest the rest in future rounds of successful portfolio companies. That strategy becomes even more relevant in the changing environment where we don’t want to be overly exposed to any single startup from the very first check. We will pick the 10-15 best companies of our portfolio and invest 40-50% of the capital in their follow-on funding rounds.
Here are some current fund raises from our portfolio companies that give us confidence in our founders:
🚀 Our portfolio company oVRcome is in the middle of successfully closing a NZD 1.375M round with some excellent investors in the digital health space. We are happy to add to our investment there.
🚀 Our very first fund investment Pyper Vision is raising a NZD 4M round at a 1.6x valuation of where we invested. Most of the round is subscribed and speaks to Emily’s ability to execute and get investors on board. We are adding to our investment in the company.
Startup of the month: Upstock
Upstock is a global wholesale market place that connects buyers and suppliers in an easy to use app. The startup is founded by a rockstar team of Philip Fierlinger (Xero co-founder and Head of Design) and Duncan Ritchie (Xero CPO) who have hit upon a problem that is still solved manually with paper and pencil. Besides providing a beautiful and intuitive interface, Upstock creates the network flywheel effect by allowing suppliers to find and promote to new buyers, and buyers ordering from new suppliers with minimal effort.
Starting in NZ the company has processed $28M in annualized GMV in 2021 recording 30% growth MoM. Australia is the next target as they complete a $4.5M pre-Series A round. We are excited to join this amazing team in their vision to bring the wholesale market ordering into the modern era.
NZVC EHF Welcome Event
We are excited that New Zealand has finally opened its borders and that EHF has scheduled the welcome events for August and October. Given that most of you will be entering NZ in October, we decided to hold a portfolio day where you can come together, and meet each other and also all of our portfolio companies. We're planning a half-day event where the first part is meeting the companies, the second part a mix and mingle + dinner. We are planning to host this event on October 27th, the day before the EHF welcome event starts in Wellington. Most of you will be flying into Wellington on the 27th already in anticipation of the welcome event on the morning of the 28th, so doing something together the prior evening should work out well.
Please let us know if you will be able to make this event so we can have a headcount.
Best regards,
Mark Pavlyukovskyy, Ajay Gupta, and Glen Anderson