apr-11.pdf (2.07 MB) - Crown Ownership Monitoring Unit

OperationsNZVIF has been operating in achallenging environment whereNew Zealand venture capital marketshave experienced a funding droughtover the past four years, with nonew venture capital funds beingformed. Co-investing into new fundsis NZVIF’s key lever for impacting onventure capital market developmentin New Zealand.Venture capital investment isinherently risky, and we expect andaccept that in a negative economiccycle NZVIF may find it difficult to find new co-investors (for both the VentureCapital Fund and the Seed Co-Investment Fund).During the year, NZVIF invested $10.7 million into 54 companies throughthe Venture Capital and Seed Co-investment Funds. Combined with privateinvestors, a total of $56.2 million was invested into these companies. Datashow that they are predominantly export-focused companies. NZVIF still hasconsiderable capital yet to be invested into young New Zealand companies,and their contributions to New Zealand venture capital markets will be ongoingfor a number of years.Financial performanceIt is difficult to judge the investment performance of NZVIF’s venture capitalfund investments until all the portfolio company investments have been exitedand investment proceeds have been returned to investors. A few key pointsrelating to NZVIF’s portfolios to date are:• One hundred and seven companies have received investment.• Across the portfolio, nine companies have been sold for an overall profit.• Across the portfolio, seven companies have been written off or liquidated.• Two companies in the portfolio now earn over $50 million and sevencompanies earn between $10 million and $20 million.• NZVIF has not achieved a positive return to the Crown based on currentvaluations of their portfolio.As NZVIF’s various venture capital funds approach maturity we should observevalue crystallisation in their investments. At that point we will be in a betterposition to assess NZVIF’s performance.Major investmentsNZVIF made significant progresstowards establishing a coinvestmentpartnership with theNational Development Fund ofTaiwan. This partnership shouldincrease the amount of capitalavailable to young New Zealandcompanies, as well as increaseventure capital networks andexpertise, and enhance accessto the Taiwanese and Chinesemarkets.There was significant investmentactivity throughout 2010/11 with43 companies receiving $5 millionof investment though the SeedCo-investment Fund during theyear. This takes the total number ofcompanies invested in through theFund to 63.Non-financial performanceNZVIF supported and contributedtowards the publishing of notableresearch during the year. Thisincluded the Young CompanyFinance index (bi-annual), theNZVIF Early Stage CompanyValuation Report and a reportof New Zealand Private EquityReturns 1994–2010 to profile theprogress and returns achieved todate by the wider industry.Corporate social responsibilityNZVIF is committed to providing aflexible working environment whichsupports individual professionaldevelopment, positive work-lifebalance and job satisfaction.page | 107