KEY POINTS:
While something like 85 per cent of all venture capital in the United States is now being funnelled into cleantech, there is plenty else going on in New Zealand to get investors excited.
Cleantech makes up only a small percentage of the startup businesses that have attracted the attention of VC and angel investors here.
According to information collated by the Government's Venture Investment Fund, around one-third of the deals struck since the beginning of 2006 have been in software and services. Pharmaceuticals, biotechnology and life sciences are the next biggest group, followed by capital goods, diversified financials, and healthcare equipment and services.
"There's actually not a lot happening in New Zealand in cleantech," says No 8 Ventures partner Jenny Morel.
Nearly two-thirds of the businesses to have received funding are based in Auckland, with Wellington, Dunedin and Christchurch accounting for about another quarter between them.
Despite their relative youth, many have already expanded globally. And some local entrepreneurs have also gone on to found their own overseas-based companies.
One such example is Artimi, one of several venture capital-backed semiconductor companies developing next generation wireless chips using ultra-wideband radio technology.
The technology's applications are intended to be Wireless-USB, which basically replaces USB cables with a wireless connection between electronic devices.
They also use next generation High-Speed Bluetooth that potentially allows up to 1GB of data to be transferred in 20 seconds, rather than just under an hour by the present generation of Bluetooth technology.
Artimi's solutions are expected to be used in wireless projectors and external hard disk drives by the end of this year, and by next year should be available in camcorders, digital still cameras, monitors and digital televisions. They are expected to be available in mobile phones in another couple of years.
The company has so far raised $57 million from VC firms in the United States, Britain and Europe, and its co-founder, Richard Dellabarca, is in the process of launching a second start-up to address a potential niche in the wireless infrastructure eco-system.
Dellabarca, a Kiwi who has commerce and law degrees from Auckland University and an MBA from Cambridge, is these days based in Britain. He was back in New Zealand recently to attend Morgo, the annual shindig Morel holds for some of this country's best and brightest entrepreneurs.
Investment banks have suggested to Artimi there are a significant number of semiconductor companies that might be interested in acquiring it, he says. Alternatively, a stock exchange listing might be considered in the longer term if the company is successful.
As you would expect, there are pros and cons around the venture capital fundraising process, he says - the over-riding pro being that VCs provide substantial capital when few, if any, other investors would.
But his advice to anyone looking for funding is much the same as that offered by others who have "been there, done that".
Among his top tips are:
Start preparing at least six months before you actually need the money, as it could take longer than you expect.
Dealing with a broker can be expensive and might not be worth it unless they can access investors you can't.
* It is definitely worth hiring a lawyer experienced in the field of capital raising.
* Do your research on who's who among VCs and whose fund, and partner within that fund, will suit you best.
* If looking at overseas VCs, bear in mind that some are precluded from investing offshore.
* Don't tell VCs how lucky they are to have met you - tell them how you're going to make money for their fund.
* Keep your presentation extremely brief (you've got to hook them in the first five minutes) and outline exactly how you're going to make them money.
* Make sure the valuation you get is in line with the industry and will allow everyone to make money.
* The best time to fundraise is when you don't need it, as any negotiation will probably go down to the wire in terms of your cash position.
* Bear in mind that fundraising is almost a full-time job in itself.
While many local VC firms have stopped looking for new investments while they concentrate on their existing portfolios, at least one local fund still has its feelers out.
Pioneer Capital has so far raised $66 million, around two-thirds of which has come from institutional investors. A further third comes from wealthy individuals and families.
Over $23 million has been co-invested with the Government's Venture Investment Fund - the largest investment made by VIF since it was established.
According to Pioneer director Randal Barrett, all its investments are performing well and have strong rates of growth. One example is software firm Orion Healthcare, which is growing at 40 per cent a year, and had revenue of $53 million last year, says Barrett.
Orion and Jade are jockeying for the title of NZ's largest software company, and Orion is widely tipped as likely to eventually list on the NZ stock exchange.
