The Curious Kiwi Capitalist podcast is about the New Zealand capital markets and the people in them. I speak with New Zealanders who have real insight into NZ capital markets. We talk about history, about how they got here, how they think our capital markets can be better—and anywhere my curiosity takes me. It is for investors and capital allocators, business owners and investment bankers, financial advisers and wealth managers, venture capitalists and angel investors, finance students and their professors... it's about the NZ finance industry. See mcgechan.co.nz.
Crowd Funding with Simeon Burnett of Snowball Effect
Episode 8 of the Curious Kiwi Capitalist Podcast
28 January 2020
My guest for this show is Simeon Burnett of Snowball Effect, a crowd funding platform and private equity marketplace.
We discuss the crowd funding and equity raising landscape. Snowball Effect tends to work in the post-earnings post start-up stage of companies rather than the start-up and rewards part of crowd funding.
Simeon walks through how Snowball Effect helps connect entrepreneurs to investors. We get into the weeds with their process including screening, wholesale investors, documentation and the like.
We finish off with his career in corporate finance at Fonterra before he started Snowball Effect.
Simeon held a number of different corporate finance roles at Fonterra, before cofounding Snowball Effect.
* Snowball Effect* Episode Show Notes
Transcript: Crowd Funding with Simeon Burnett of Snowball Effect
Transcript to come.
Venture Capital with Lance Wiggs
Episode 7 of the Curious Kiwi Capitalist Podcast
12th December 2019
My guest for this episode is Lance Wiggs, Manager of the Punakaiki Fund, a Venture Capital fund.
We discuss the New Zealand venture capital landscape and how a venture capital firm operates. Lance takes a different approach to most VCs in how he has structured the LP side of the Punakaiki Fund with capital raising from wholesale and retail investors over time rather than a smaller number of instituional investors up front. This is partly due to the shortage of NZ venture capital investorssomething we also discuss.
We finish off with his career path including assisting TradeMe with valuation and his time at Yale.
Lance Wiggs is a Principal of Lance Wiggs Capital Management, the Manager of the Punakaiki Fund. In 2013 he co-founded this $50M VC fund for investing in high growth technology companies in NZ. It is an innovative approach to the venture capital gap in New Zealand. He is a director of many companies, most/all of which are fund investments.
He has launched Pacific Fibre, advised TradeMe on valuation on the Fairfax sale, and has worked at McKinsey in Washington DC amongst a wide range of roles he has undertaken overseas.
* Lance Wiggs* Punakaiki Fund* Episode Show Notes
Transcript: Venture Capital with Lance Wiggs
Tax Reform including Capital Gains Tax with John Shewan
Episode 6 of the Curious Kiwi Capitalist Podcast
25 September 2019
My guest for this show is John Shewan—former chair of PWC, and serving Adjunct Professor of Victoria University and independent director.
In this episode we discuss:
* Why the Capital Gains Tax (CGT) 2019 recommendation failed* Lessons from tax reform through the decades including:* the rebellion against Muldoon’s tax rates,* wide support and importance of the broad-base / low-rate approach,* always talk about tax in terms of tradeoffs and how taxpayers will be no worse off e.g. Sir John Key selling the GST and income tax rate changes together,* unless there is a crisis then incremental tax change with compromises is the best approach,* the government needs to actively sell their tax changes or others will take over messaging.* The strengths of a land tax especially if accompanied by decreased income tax and increased entitlements (super & WfFTC)* Government and demographic spending requirements putting extreme pressure on personal tax rates—bracket creep is now resulting in low income levels paying a 30% rate.* Either income tax or GST rates will need to increase within 10 years unless the tax base is broadened e.g. through a land tax or investment property CGT.
John Shewan has had a long career in accounting, business and now academia. He is an independant company director, former chair of PWC and serves as an Adjunct Professor at Victoria University.
He sat on the Buckle Tax Working Group in 2010 (“A Tax System for New Zealand’s Future”, Victoria University of Wellington) and has been a tax practitioner throughout his career.
He is a past Chair of the Tax Education Office and the National Tax Committee of the New Zealand Institute of Chartered Accountants. He was awarded the CNZM in 2010.
He is truly not just NZ’s top tax expert but also brings intellectual firepower together with practical shrewdness to our business community.
* LinkedIn* Appointment as Adjunct Professor at Victoria University* Episode Show Notes
Transcript: Tax Reform including Capital Gains Tax with John Shewan
Bruce: What are we trying to do with taxs here in New Zealand?John: There’s really three major objectives with taxes aren’t there. The first one and the primary one is to raise the revenue that government needs to run the country, and to put it in context in the year to 30 June 2019 government’s expecting to collect around $84 billion in both Direct Tax and GST and other indirect taxes and another $5.8 billion and ACC, fire service levies and fines and other revenue.So that’s the primary focus, but two other really important aspects of text redistribution of wealth tax does have a role in that the primary means of redistributing wealth is through the wealth transfer system, but obviously progressive tax rates achieve that as well and then thirdly an increasingly there’s a focus on corrective and behavioral taxes. Things like taxes on tobacco and alcohol and now we’re looking at taxes around environmental waste etc. So those are the three primary objectives and one of the most important messages I try and convey on tax policy is let’s work out what aspect of that we’re talking about before we start talking about the...
Long-Term Private Equity with Ian Frame
Episode 5 of the Curious Kiwi Capitalist Podcast
13th September 2019
My guest for this show is Ian Frame, retired CEO of Rangatira Investments, a long-term private equity firm.
In this episode we discuss
* what is a private equity firm, what’s their fees, investors and strategy* the difference between classic private equity (PE) firms and long-term PE firms* what sort of investments they’re after and their investment horizon* stock market crashes, investor cynicism and regulation* venture capital and angel investing* and much more..
Ian Frame was the CEO of Rangatira, a long-term private equity company, for 11 years up to his retirement in 2014. Rangitira was one of the earliest private equity firms and Ian was one of a line of extraordinarily talented CEOs who have made it one of the most successful PE investors in NZ.
Originally an engineer, he was one of the first New Zealanders to get an MBA and worked at DFC duing the ’70s before joinging Downer in an international role. He worked for investment companies often in a CEO change management role. He has retired in Taranaki but still is involved in angel investing.
Ian Frame (LinkedIn)
“Long-Term Private Equity with Ian Frame” show notes
Transcript: Long-Term Private Equity with Ian Frame
Bruce: Firstly, what is private equity?Ian: Well in New Zealand private equity really falls into probably three categories actually. The first there are a number of private equity firms that go and raise capital from superannuation funds and other large institutional parties and they will invest that money on their behalf of the institutions. The private equity firms take a management fee.And usually they have to pay the funds back to the institutions within five or seven or ten years. The second category are those that invest similarly but they have their own equity and I’m talking about the likes of Rangatira, Todd Capital and similar family funds. Most of them will have maybe up to 200 million of funds to invest and they invest longer term. Because they don’t have to repay the money they can afford to hold on to their investments and ride out the cycles.The third category in New Zealand comprises a large number of family businesses, includeing virtually all of the farming sector, that run businesses based on capital provided by the family and the money they have accumulated from those businesses over the years.Bruce: In the case of the first category the what I’d call perhaps erroneously as a classic private equity firm, they would have the limited partners: the superannuation funds, the endowments perhaps, wealthy families and individuals and they would invest that money into a fund and then the private equity firm would get a management fee and a performance fee. What’s the management fee and performance fees that they tend to get?Ian: Well they vary but generally speaking they would take a 2% fee per annum on the funds invested and then they will take a percentage like 20% of the gain over and above a fixed return.The fixed return maybe eight percent per annum so they have to achieve that over the life of the investment and then if there’s a surplus above that then they’ll take 20% of that surplus. So that’s what’s known as a 2 plus 20 arrangement. There have been times when that’s been common a...
Entrepreneurship & Early Venture Capital in NZ with Richard Higham
Episode 4 of the Curious Kiwi Capitalist Podcast
27th August 2019
My guest for this show is Richard Higham. Richard is one of the top business academic practitioners in New Zealand history. He has not only experienced but researched and studied entrepreneurship. He has run his own firm, consulted to corporates about entrepreneurship, and saw the start of venture capital in NZ before “venture capital” was even really a word.
Now in his eighties, he is still going strong, as you’ll see he is the master of the rhetorical question and pretty much ran this interview himself!
In this show, we’ll discuss entrepreneurship and the early days of venture capital in New Zealand including:
* The king, the castle and le entrepreneur* Austrians and supply-side entrepreneurs* Drucker arrives on the scene leading to a bloosoming in books and research on entrepreneurship from 1983 to 1986.* Early venture capital in NZ* 2-6-2: 2 winners only* The Saudi king and Saudi Corp in NZ* Graeme Hart, his MBA and financial wizardry* Process vs poduct innovation* Large corporates find entrepenurship from within, they’re in the woodwork, somewhere though the “corporate immune system” then tries to destroy it* Death Valley and the going up the S-Curve* The assumption that 80% of small business were going broke is wrong, its probably only 30%.* Prospective entrepreneurs making up less than 10% of the NZ population of which only a few succeed* Otago University rugby Blooz Nooz.
Richard Higham still lectures at Otago University. The lectures are run at the same speed you hear in the episode, always a sprint, but always time for a student. I believe he was a pathfinder for many New Zealand entrepreneurs, not the least being Graeme Hart.
He studied at Oxford, as a young man worked at Imperial Chemical Industries, went to London Business School as a Sloan scholar, and worked at various times in the Auckland and Otago MBA programs, and consulted far and wide.
Richard Higham was my master’s thesis supervisor at Otago University as well as my favourite lecturer. Indeed, of the 8 courses I took, he ran three of them, all of them practical and useful today in representing or investing in high growth companies.
Richard has played rugby, and also has been heavily involved in coaching and leading the Otago University Rugby Club. If you played rugby at Otago then you will want to subscribe to his newsletter about Otago Univeristy rugby, the popular Blooz Nooz.
Richard Higham at Otago University
Blooz Nooz Otago University Rugby Club newsletter, subscribe by emailing Richard: email@example.com
“Entrepreneurship & Early Venture Capital in NZ with Richard Higham” show notes
Transcript: Entrepreneurship and early Venture Capital in NZ with Richard Higham
Bruce: Thanks Richard for coming along to this episode about entrepreneurship. Perhaps a little bit about the history of venture capital. I remember my time fondly here at Otago University in the courses that that you taught. Let’s kick it off by asking you about entrepreneurship. What is entrepreneurship?Richard: What is entrepreneurship?Well, it started off years and years and years and years ago in France. Where the entrepreneur built castles for the king and the King said I want a ...
Search Funds in Australasia with Alexander Simmons
Episode 3 of the Curious Kiwi Capitalist Podcast
15th August 2019
My guest for this show is Alexander Simmons. Alex is the founder of Voyager Equity a search fund. Search funds are completely new to New Zealand with no fund yet launched but with some interest from Kiwi searchers overseas. In Australia they have gained traction in the last couple of years with at least two funds succesfully acquiring businesses. Alex is the first Australian search fund to get investment for “search capital”, the traditional first tranche of investment in a fund. The other two funds self-funded their search and then got “acquisition capital” the second tranche of investment.
I have to admit I am very intrigued with this type of investment fund and have been involved with encouraging prospective Kiwi searchers in 2019. My hope for young searchers and retiring mid-market business owners is that this investment type takes off over the coming decade.
In this show we’ll discuss search funds in New Zealand and Australia including:
* what is a search fund?* search and acquisition capital* the search capital step-up and “Stanford terms”* search fund investors* research on search fund returns* searcher vesting* search funds vs private equity* investment parameters* what prospective searchers ask Alex the most* search fund accelerators and business schools
Alexander Simmons founded Voyager Equity earlier in the year, and it is the first search fund that has raised “search capital” in Australasia. Others have raised acquisition capital, an achievement in its own right, but no one till Alex had raised the first part of a traditional search fund. This makes Alex a real trail blazer in Australasian search funds.
Alex is English, who started his career at Bestport Ventures LLP a UK private equity firm that invests in growth capital and small buyout opportunities in the UK. He moved to Australia where he worked for Partners in Performance to get hands-on operational experience including in New Zealand. He started up his search fund Voyager Equity in 2019.
He has an MBA from INSEAD and a BA from Oxford. INSEAD has one of only a few search fund courses in the world.
Voyager Equity Alex’s search fund website.
“Search Fund Primer 2016”, Stanford Graduate School of Business.“International Search Funds – 2016 Selected Observations”, IESE, June 2016 in IESE Search FundsSearch Funds in New Zealand: what are they and a way forward (my views in a previous article)
Relay InvestmentsHarvard Business School Jim Sharpe, who I know is a supporter of Kiwi Harvard grads doing search funds.Search Fund Accelerator (Timothy Bovard, Boston)Second Squared Australian Search Fund Accelerator
“Perspectives on Search Funds“. A podcast series featuring all things related to search funds and entrepreneurship through acq...