Early-stage capital is an essential part of the private economy ecosystem. Early bird investors could get the worm. A number of these opportunities live on the Syndex platform.
Xero was once a small business, Pushpay was once a start-up. Today's big businesses started small. Their innovation and passion was instrumental in their story - so was capital.
Early-stage capital is a subset of private equity and speaks directly to the investee company’s growth stage. We can surmise a transition from a ‘project’ to a ‘business’ has occurred, but that the company could still be in the market research or development stage. This type of capital raising is still in angel/seed territory, but puts its capital feelers out into a wider catchment of investors - those who have a higher risk appetite, but not at the level of seed funding.
Investors that are looking for small companies with exceptional growth potential, or companies that have grown quickly and appear poised to continue to expand may be attracted to these opportunities. Usually, this assessment is based on data, but it’s common for early-stage businesses to have trouble collecting and reporting data, leaving scant information on which to evaluate. Clearly, this introduces additional risks for investors to weigh up.
Big news was the recent announcement that New Zealand’s Vend has sold for $455m. This is a company that started in 2010 and charts an astronomical rise. Early capital raises, outside of friends and family, were via Milford Active Growth Fund, a series B funding round and a 2015 venture capital fund inclusion. These are all early-stage raises and those who invested now have their pockets filled.
The next ‘Vend’ is out there, indeed New Zealand has a history of strong startups, and investors play a vital role in this ecosystem. Without early financing the ideas and innovation factory of NZ doesn’t percolate, machinate or cultivate. Without early financing New Zealand doesn’t get to shine on the world stage, nor does our private economy experience its potential growth.
The experience at Syndex is that there is an investor community intent on supporting businesses, noticeably the growing pool of early-stage growth companies. Within the community are investors offering mentorship or other skills as well as, or instead of, capital.
Investors find an appropriate place within their investment portfolio for these higher-risk opportunities, but funds exist to spread the exposure. Funds can provide passive or newer investors an alternative approach to building their portfolio, as well as providing active investors unique access, visibility and follow-on investment opportunities across a diversified group of companies. Recent listings on the Syndex marketplace have been Enterprise Angels, Icehouse Ventures, Pacific Channel and WNT Ventures. The diversity of companies can give exposure to deep-tech, clean-tech, food-tech, space-tech and more. The recent Icehouse Ventures 100 fund II invests into 100 startups over three to four years, resulting in exposure to a wide variety of industries, company stages (pre-seed to Series B) and business models.
The managers of these funds can also offer support to these companies through their early stages, helping them to become investor-ready, providing access to expertise and introducing them to the investment communities with an appetite for early-stage investment.
Looking to global markets, interest continues for the US household names listed on the Syndex marketplace. These come with supersized evaluations, renowned scientists, advanced tech and large scale predictions. Elon Musk’s SpaceX and Impossible Foods (plant-based food-tech) are such curiosities.
The full article with early-stage capital listings is here.