Grow how?

Business owners need money, markets and management to get ahead, but without connections you’re not going to get anywhere.

Mark Vivian laughs when asked what it was like to be the one looking for money rather than being approached for investment. “It was bloody awful,” he says. “When I look back now to the first investor pitches we had, we were horrendous.”
Vivian is a partner with the well-known Wellington-based angel investment firm Movac. To date the company has made more than 25 investments in early stage companies and was born from its founding members successful investment in Trade Me. But when Movac decided to set up a third fund to invest in young growth companies, the gamekeeper turned poacher.

It was an eye-opening experience, admits Vivian, but one which has helped hone the advice Vivian and his partners give their investee companies when they send them out and about looking for investment, new markets or new partners to help them grow.
Movac’s third, post-seed fund closed successfully halfway through last year with $42 million in the bank.  
Vivian shared his experience of the other side of the fence with other angel investors at the Angel Investment Summit in Wellington at the end of last year. Unlike many private equity or listed company investments, angel investors tend to be far more involved with their investee companies: often finding themselves in the hot seat when it comes to attracting capital or overseas partners to help launch their investee company’s products.
There are three things any company needs to succeed, says Vivian: capital, skills and networks. But networks are the most important as they can result in capital and skills as well as open up any number of potential customer or partner doors.
“Networks add capability to the management team,” he says. “New Zealand companies often spend a lot of time and effort trying to [break into new markets]. But if they can find someone who’s done it all before, it can save them a huge amount of time, effort and money, and reduce the risk substantially.”
Vivian says he’s staggered by how little some Kiwis appreciate the importance of an introduction. He recalls one Kiwi company which had a meeting with computer giant Sun Microsystems, now part of Oracle. The meeting could have opened up a whole world of markets for them, he says, but the people from the Kiwi company dressed casually, turned up late – because they hadn’t bothered to read the instructions – and went to the meeting with little idea of what they actually wanted or why they might be important to Sun Microsystems.
“Often we just don’t appreciate how busy people in big US corporates are. Any reason to delete someone from their database or their diary and they’ll take it.”
When Movac went looking for capital, Vivian and his colleagues learnt quickly how important it was to make their network work for them. They introduced a state-of-the-art CRM (customer relationship management) system so they could actually monitor who’d spoken to who, what was said, where it was left and who needed to be followed up and when; they got out of the office and spent a lot of time meeting contacts face-to-face, especially in other cities in New Zealand and overseas; and they realised the value of truly nurturing new and old contacts and not being shy to ask for help.
At first they were a bit hesitant, admits Vivian, but as time went on they made sure they always left a meeting with some sort of commitment from both sides to do something, as well as a few new contacts to follow up.
It was also crucial to tap the people who know people, says Vivian. “Certain people in every market are social hubs. We deliberately made a strategy of getting to those people and doing it quickly.”
After every meeting Vivian and his colleagues would also critique each other and their presentation, honing it so it was better each time.
The most important thing is to stay positive, says Vivian. “If we’d given up the first time or the 100th time we heard ‘no’ we would never have got here. So we didn’t hear the word ‘no’ we just heard ‘not yet’.”
A number of people who invested in the end, Vivian had met two, three or even four times. “Others who are still saying ‘not yet’ we’ll get them for fund four or five,” he laughs.
When Movac started fundraising, it had a database of about 20 key contacts. Now it has more than 500 worldwide. But its network is about a lot more than raising money, says Vivian. “Money is the really finite thing. There’s a whole series of other things a network can bring, like experience, other networks and connections. Your competitors will be able to find equal amounts of money, if not more. But do they have the connections or networks that you have to open doors?”