No 8 Ventures looks overseas for funds

By DANIEL RIORDAN

Technology investor No 8 Ventures is going international as it tries to raise as much as $50 million for its second fund.

This time, overseas investors will be targeted as well as the domestic punters who contributed to the first fund of $27 million, which invested in the last of its nine portfolio companies late last year.

No 8 partner Peter Allport said the first fund raised money only from local investors - apart from fellow partner Jenny Morel's mentor, US venture capitalist Pitch Johnson - because it was unproven in the industry.

Now, with a track record, Allport and Morel feel confident enough to reach out further.

The new fund has a working title of No 8 Ventures 2002. The partners are confident they will secure at least $30 million.

It took about six months to raise the first fund, focused like its successor on technology. All nine investments survived the tech wreck in good shape because, Morel says, they never lost sight of old-fashioned investment fundamentals, such as the potential to earn revenues and profits.

Allport said it wasn't possible to say how much the first fund was earning for investors, because so far there had been no exits.

Among the first fund's investments are Tacit Group, which last month secured backing of US$10.3 million ($23.05 million) from a United States investor in a transaction which values the Takapuna firm at $69 million.

The new fund will target pension funds, institutional investors and wealthy individuals.

Allport and Morel are being joined by a third partner, an executive with a listed US company. They expect to announce his identity in a couple of weeks, once the requirements of US securities regulations have been met.

Ahead of fundraising, the firm has added to its investment committee expatriate Kiwi Andy Lark, the vice-president global communications and marketing for Sun Microsystems.

He joins Christchurch entrepreneur Dennis Chapman, Hugh Fletcher and investment banker Alastair Scott, who replaces Neville Jordan, now running his own venture capital firm, Endeavour Capital.

Morel said returns from US venture capital firms remain healthy despite the tech wreck.

Panelists at the Venture Capital Association's annual meeting in San Francisco last week predicted another six months of write-downs and more business failures before the industry rebounds.