Punakaiki Fund. From left to right: Chris Humphreys, Lance Wiggs and Sandy Maier
Speaking at the Punakaiki Fund launch in Auckland earlier today, Lance Wiggs says the frustration he felt when raising money to build the Pacific Fibre submarine cable was part of his motivation to start his New Zealand technology investment vehicle.
Wiggs partnered with Chris Humphreys to launch Punakaiki. The pair say they intend to invest mainly in early-stage New Zealand internet, technology and design-lead companies. He says ideally they would have elements of all three.
The Punakaiki Fund has registered a investment statement and prospectus for an initial public offering. Although the fund aims to raise $20 million, it has the the ability to accept oversubscriptions taking it to a total of $50 million. It already has $7.7 million in pre-registration funds.
Punakaiki’s minimum investment is $2,000. Wiggs says this positions the fund as suitable for those New Zealand investors looking to put money into the technology sector. “It gives access to an asset class that the public doesn’t usually see”, he says.
Early stage sweet spot
Wiggs says the fund will invest in a range of categories, but the sweet spot is for early stage companies looking for between $500,000 and $2 million. There is also scope to invest in companies with potential, that have been around for a while but have yet to take off.
He said he and Humphreys have the freedom to operate fast in this segment and streamlined procedures are in place to make sure when opportunity knocks there’s no delay. When an investment involves more than 10 percent of the total fund or $2 million or something outside New Zealand, the pair have to go to the board for approval.
Wiggs says he wants Punakaiki to become the investor of choice for the rising generation of founders looking to start innovative businesses in New Zealand.
The board includes Wiggs, Sandy Maier and former Bell Gully partner Wayne Hudson. Punakaiki is structured so that shareholders can vote to remove the board if the fund doesn’t perform. Wiggs says there is a relatively low management fees and the fund’s performance fee is based on its market value – which doesn’t kick-in until the fund is listed on the NZX. He says this is expected to happen within three to five years.
Comment: Raising early stage finance is difficult in New Zealand compared with many overseas countries. Often founders have to draw on their own funds or relay on family members, which can starve their businesses of the capital needed to grow.
Although there is government money, this can be difficult to tap into and can impose a strategy straightjacket on management.
Likewise, small investors struggle to find suitable local opportunities to get behind New Zealand innovation. For these reasons alone, it’s good to see to see Punakaiki established.