These big-thinking Kiwi entrepreneurs are a tonic for the miserable economy

Saturday, 17 August 2024

ANALYSIS: The great, good and well-heeled of angel investing gathered at Auckland’s Spark Arena for a high-glitz showcase of entrepreneurs that was a tonic for the miserable economy.

High mortgage rates, rising unemployment, and financial distress for households have the country in a bleak mood.

But even the most pessimistic soul would have found it hard not to feel tinges of optimisim as eight entrepreneurs made their pitches at the Icehouse Ventures Showcase for investors’ backing to back their big ideas.

These were people aiming to take their world-leading technology to the world to make millions, in several cases, billions of dollars, and in many cases, to do so emitting a lot less carbon than the companies they hope to displace.

There was Jonathan Ring from Zincovery, a company on a mission to decarbonise the zinc industry with its patented process to recover zinc during the recycling of steel on which there is a corrosion-resisting zinc coating.

The current process for reclaiming zinc during recycling was massively carbon intensive, he said, leaving zinc as “the only major industrial metal that has a higher carbon footprint when it is recycled versus mining”.

“We can produce zinc with 95% fewer emissions, and at 45% lower cost,” he told the crowd.

The company was close to completing its current $10m round of money-raising to build its first large-scale plant overseas.

It’s margins were so high, its large-scale commercial plants would pay itself off in less than a year, he said.

Lanzatech’s Dean Simpson called Zincovery as “next industrial success story out of New Zealand”.

It was rousing stuff, though this was a “pump night” for the companies to impress angel investors, and as one of the seasoned investors in the room said; it’s one thing planning a plant on paper, and it’s another thing delivering it.

But this was not a night for naysayers.

This was a night for Jessie Stanley to pitch Good Grub, a company raising money to open its first facility in South Auckland to turn food waste into high-quality protein for livestock feed and pet food using the South American soldier fly.

The grubs of these “really sweet” insects would be fed in high-tech vertical farms on food waste, and ultimately be euthanised, and turned into nutty-tasting protein powder.

Vessev’s hydrofoil boats would soon be rolled out to cut fossil fuel use on passenger boats like charter vessels and small ferries.

Co-founder Eric Laakman called the company’s boats “disruptively efficient”, making electric vessels viable.

A trip from Auckland’s waterfront to Waiheke Island and back cost $8 in electricity. The “chase” boat that filmed that run used $140 in petrol.

“That’s profound,” he told investors.

The water was choppy, but the test boat hydrofoiled across it as if it were a millpond.

There are some 33 million vessels in the world, he said.

When they are replaced, Vessev hopes they will be with its vessels. It has a partnership with Fullers360, which runs ferries on the Hauraki Gulf.

One of the Vessev vessels was a star of the show.

Around it the elegantly dressed, finely-coiffured angel investors circulated, talking quietly with each other with the air of people confident in their wealth and their power.

Revenue and Climate Change Minister Simon Watts was there talking research and development tax breaks with the angels. He got some friendly, but blunt advice on that. This was money that did not fear to speak plainly to power.

This was where the money in Auckland was on Thursday night last week, its importance underlined by the red carpet at the door.

The entrepreneurs were required to deliver Steve Jobs-style stage performances, walking the stage, talking into lapel mikes, joking, folksy in style. Some personal anecdotes were expected, and they were delivered, mostly with the polish of frequent retelling.

Some of the entrepreneurs were nervous, or too way too technical, but that was charming too.

Surgeons are supposed to have ice in their veins, but Nandoun Abeysekera, founder of a company called Avasa, stumbled over his words a bit while making his pitch.

He shouldn’t have been nervous. He’s earned the right to a bit of self-confidence. He’s developed a “coupling” technology to rejoin veins and arteries during microsurgery much more efficiently, and with a lower failure rate than the current hand-sewing that surgeons have to perform.

He took the brave step of showing one of the devices in use during animal-testing. The angels had just finished their first courses in a meal consisting of lamb and beef.

“This may not be the most welcome visual after your dinner,” he joked.

Avasa was raising $7.5m, and hoped to have approval from the US Food and Drug Administration next year for use in both life-saving surgery, and the massive American plastic surgery market.

Open banking company Emerge had the Angels groping under their seats for $10 Emerge cards as if they’d dropped their platinum cards.

Co-founder Jovan Pavlicevic says Emerge already has 200,000 customers, having secured a massive share of the youth account market, which the big banks have not done very well serving at all.

Open banking is the phrase used to describe clever tech companies delivering app-based banking through people’s phones, more cheaply, and with better functionality.

It’s been big overseas, with the likes of Starling Bank in the UK.

One of Emerge’s backers is Altered Capital, which helped Starling get off the ground.

Emerge’s next target was to take small business transaction and credit card banking off the big banks.

“Emerge is New Zealand’s first challenger to an utterly stagnant, uninspiring, yet incredibly profitable banking landscape,” Pavlicevic said.

“We’re moving New Zealand into the future.”

It was a pump night, so no-one would expect him to name competitor open banking disruptors like Dosh, which has announced its plan to become the country’s first digital-only bank.

Pavlicevic hinted that Emerge would become a bank too.

The talk of the tables on the night was which of the companies was most likely to make it big. Start-ups have a very high failure rate. The Angels knew it. Every angel was given an “investment interest” form to hand in at the end of the day.

They were to put their tick beside the names they thought had big futures, and would be willing to put money into.

Would they like Kwetta, the smart vehicle-charging station tech that Z Energy and Aussie fuel giant Ampol are partnering with?

Would they like DevRamp, which has developed a system to sell to software developers worldwide, with around 18m companies in its target market?

Would they like Basis, which makes smart panels for homes to run their electricity consumption through, replacing the dumb “switchboards” and “fuseboxes” that link homes to the grid in New Zealand and around world?

“In the rest of your life, you might have an Applewatch. I do,” said chief executive Alex Cappy. “You might have a Tesla. I don’t. You might have a Nest thermostat. I did.”

But, in our homes we have 1905s switchboard technology.

The motto of the Showcase might have been “Go big, or go home”, which was one of the sayings of angel investor Ray Thompson.

Basis was going after a very big market, indeed with its smart panels.

“There are about 2.2 billion homes, globally,” Cappy said. “Each year over 40m new homes are built, and they will need switchboards.”

About 5% of the world’s homes get upgrades each year. Many would also need new switchboards.

“In the way that when Apple launched the smartphone, it changed everything we expected from a phone, and created a new ecosystem, the smart panel will do the same to the traditional switchboard,” she said.

“This is an inevitable future,” she said.

Basis has patented technology, and will launch its panels onto the market early next year, after having piloted its panels in homes already.

It is in the process of raising $15m to $20m to launch in New Zealand, Australia, the United Kingdom and later some European markets.

The Showcase was capitalism at its most photogenic best, with rich people deploying theirs to grow the economy, make the world a better place, and make households better off.

Tick for ambition. Tick for the planet. Tick for social acceptability.