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Veteran technology investor Jenny Morel hopes to launch a new $100 million venture capital fund in a bid to revitalise what she claims is a moribund market for start-up businesses.
A decade after she founded one of New Zealand's first venture capital firms, No 8 Ventures, Morel says
the industry is in dire straits and urgently needs more money to ensure increasingly savvy Kiwis realise their global ambitions.
She hopes to team up with ex-pat New Zealander Andy Lark, who is now head of global marketing for Dell, to run the new fund and is not ruling out bringing an Australian investor on board.
But she warns that the fund is unlikely to go ahead unless it reaches its $100 million target, as many fledgling companies have reached the stage where they require larger sums of money to have any hope of achieving their goals.
Five weeks ago, Morel stunned the local VC community by revealing that for the past four years her firm has been secretly funding the world's first practical jetpack.
The Martin Jetpack was unveiled at the end of July at the world's biggest consumer airshow in the United States, where it caused a sensation.
According to Morel, its Christchurch-based inventor, Glenn Martin, now needs around $20 million to put the jetpack into commercial production.
"I don't know how to put together that kind of money in New Zealand so we're assuming we're going to finance it in the US and once you make that decision, they say: 'Well why are you doing this in New Zealand?' We haven't been pushed on this yet but it certainly is going to be an issue."
Morel admits the jetpack is one of the most unusual projects but she insists there are plenty of other start-ups that investors should feel comfortable about.
Seven years after launching its own $160 million Venture Investment Fund (VIF), the Government has invested around half that amount in 45 businesses, mostly in the IT, biotech or agricultural sectors.
That money has been at least matched by the private sector but many private sector funds are no longer looking for new investments and Morel fears the flow of new money could soon dry up.
The Government revealed in this year's Budget that it is considering giving VIF another $40 million.
But industry figures say the main problem is the reluctance of big institutions, such as the New Zealand Super Fund, to take such risks.
Fund managers acknowledge they have so far been unable to point to many spectacular deals.
Matt Whineray, general manager of private markets for the Super Fund, says it has invested more than $43 million in two private equity funds but "at this stage of our investment programme, we have not reconciled the relative risks and expected returns of investing into venture capital".
Whineray says the fund will consider such investments "when appropriate".
VIF chief executive Franceska Banga says she has no doubt taxpayers will eventually see a healthy return on their money, despite the downturn in the global economy. But she admits the industry is only a quarter of the size it should be.
"The message from the Australian market to our institutions is: 'Just get started. Stop mucking around and just start.' Because until they actually bite the bullet and get engaged, they won't know what they don't know. It's just conservatism at the moment."
