International and local Australian and New Zealand venture capital managers are said to be queuing up ahead of the new NZ$300 million (A$ 285 million) NZ Government seeding initiative tabled in this year’s budget. The NZ Superannuation Fund, which will provide governance, administration and NZ$240 million to the project – said “several local and international VC fund managers… have expressed initial interest in the scheme”.
The NZ Super statement last week says an informal industry consultation on the VC fund-of-funds is slated for next month ahead of the enabling legislation expected to be in place before the end of this year. All of the VC money should be invested within five years, the statement says, and returned (plus or minus earnings) to the Government in 15 years.
According to the NZ budget proposal, the Government-owned NZ Venture Investment Fund (NZVIF), headed by Richard Dellabarca, would select a range of VC managers to invest in local businesses looking for between NZ$2 million to NZ$10 million to spur growth.
“NZVIF, the Guardians (NZ Super directors) and Government officials want to ensure appropriate consultation with industry stakeholders around implementation of the program and will be setting up an industry round table to undertake this post August once the legislative process is largely underway,” the NZ Super release says.
The NZ$300 million VC fund will divert $240 million previously earmarked for NZS contributions with the remaining NZ$60 million coming out of the NZVIF budget. Currently, the NZVIF manages about NZ$250 million through the main Venture Capital Fund and a smaller Seed Capital Fund.
“Under the proposed model, the Guardians would monitor NZVIF’s performance in line with the best practice approach it has developed to manage relationships with other local and international investment managers, as applicable to the New Zealand venture capital market,” the NZ Super statement says.
NZ Super currently has commercial relationships with more than 30 local and offshore investment managers. Prospective managers will also need to bring along other private sector money before receiving any handout from the mooted government VC fund.
As well as providing a capital bridge for cash-strapped “high growth early stage companies”, the government project could attract new “domestic and international” fund managers to the VC sector, the NZ Super says.
– David Chaplin, Investment News NZ