Brand Dynamics Digital Marketing Consultancy

Have setup a new digital business and digital marketing consulting firm called Brand Dynamics at http://www.brand-dynamics.co.nz.

Brand Dynamics helps businesses with their digital strategies be they business or marketing. We design and innovate at the business model level as well as the marketing model level. We look at the strategic thinking and the tactical doing of business with a focus on the digital space but also with the knowledge that good business and good marketing occurs in both the digital and analog (real world).

How many Angel Investors are there in NZ?

Might let you in on some cold hard facts about getting your venture funded in New Zealand.

I was enquiring about the actual size of the Investment market in New Zealand from someone who should have an intimate knowledge of this the other day. Well he's in the industry so he should know.

To my surprise i found that the active pool of angel investors consists of only about 100 individuals who are willing to invest in seed and early stage start up companies within New Zealand. At least those known within the private equity market.

Consider then the proclivities of this limited pool, some will invest in Tech start-ups, some in franchises, some in retail etc. etc. What you have then is just a small sample of active investors that are known to private equity brokers that might be willing to invest in your start up.

Although if your start up is in the height of fashion i.e Web tech at least you'll have a better chance of getting funded than a run of the mill T-Shirt retailer or Salad bar franchise.

For those of you considering going through the Escalator programme run by New Zealand Trade & Enterprise you might want to think twice, although the data on applications and progress through the system has been removed, the data used to show that only 5% of applications ever got to deal broking stage, of that 5% half will languish at that level (about 20 - 30 businesses) and not secure any funding, then quickly exited out of the programme lest they skew the good news figures.

Now bear in mind that it can take anywhere from 3 to 9 months (or even more) to go through all the hoops that the equity brokers set you, so that you're , in their eyes either investment ready or sufficiently "de-risked" to be presentation ready for potential investors.

Bear in mind your equity broker is also out taking workshops, doing private business or "considering" your next steps as well as researching other startups and then you get a good idea that perhaps you're business or concept needs to be very very patient as it travels along the poorly named escalator to shangri-la.

Don't forget the extra effort required for you to compile information memorandums, financial projections and all the other grab bag of investment ready documents that you're going to need and pretty soon you'll see that if you haven't lost your way to shangri-la you're about to die of starvation on the escalator express and those that do survive better be prepared for a trip across the river styx co-incidentally running across most of shangri-la or should i term it Esci-la?

You'll see some of the luckier ones languishing at Vcapital the elephants graveyard of missed opportunities. (Just register to get access to the list.) Although it isn't hard to see why one or two failed to attract interest. You may recall seeing some in Dragons Den notably the great looking Mountain bike Motorbike cross product, also an Escalator reject although they are still around luckily enough.

So if you do arrive at esci-la and reach the stage of being introduced to the "pre-qualified" head lamas you're probably going to be faced with a rather small group of people that may just look at your proposition assuming that they are:

1. Not already committed to other projects.
2. Curious about your industry sector.
3. Not frightened off by your financial history in trying to get your business of the ground.
4. In the frame of mind to look at proposals
5. Going to do some tyre-kicking and flex long unused investor muscles
   
6. Getting some analysis experience in being an angel investor

I can faithfully say i've met all of the above.

I can also faithfully say that the chances of your business concept getting funded by an angel are pretty remote if you can even find one and securing funding from VC's is pretty much a pipe dream unless you are already generating substantial profits.

Escalator is pretty good value at least for the people trying to help businesses get capital, it employs a whole swathe of brokers running courses and workshops, studying prospects and billing the government for services rendered. Shame that most businesses can't get access to all this money being thrown about to the middlemen administering the system and feeding at the trough of government spending.

I won't even start at the huge pool of money $80 million (or thereabouts if i remember correctly) or so earmarked for venture assistance by the NZ government that isn't being distributed. That sure is one smart puppy holding on to it making sure that the wrong people don't blow it all away.

On the other hand you'll be pleased to know if you are looking at $5 Million in capital people will be banging down your doors to give it to you, it's just a shame there aren't enough companies in New Zealand large enough to actually need that sort of money to expand.

Anyway i'll let you in on some tactics to get your concepts of the ground and which i've used myself instead of waiting for the illusory angels, business books never really tell you how tough it is to go down that road and your time is truly better spent pursuing other capital strategies.

I'll leave that for another post though.

Cable car challenge

My eye was caught recently by the rather curious judging and selection process for the Wellington Cable car challenge.

Congratulations must go of course to Eyemagnet the winners of the inaugural Wellington region specific Cable car challenge, a competition for start up or concept stage businesses.

Eyemagnet, a young start up company, aged around 4 years, with a head office in Auckland and branch offices in Wellington, Brazil,(and the USA) successfully captured the $50,000 first prize.

Eyemagnet was also fortunate by successfully capturing what may be a multi-million dollar contract in Brazil with the assistance from the NZ Minister of Trade just prior to the competition judging.

Lets just look a little closer at why the Cable car challenge was created and focus on what some would call inconsistencies with regard to entry and judging criteria.

Excerpts taken from www.cablecarchallenge.com & www.cablecarchallenge.co.nz

What’s the Cable Car Challenge?
Submit your best and cleverest business concept into this Wellington region competition and be in to win a NZD$50,000 prize package to make it happen. (My italics)

Terms & conditions
3: Applications made by an individual require that individual to be resident in the Wellington region (based on regional council boundaries). Applications made by a team require at least 50% of the team to be resident in the Wellington region.

8: All applications must pertain to new business creation, an early stage company or business development.

FAQ's
What is an early stage company?
An early stage, or seed stage, company typically is at the inventor stage where there is an idea, a concept, or even a product, but little or no income has been generated yet.

Can a business proposal enhance an existing, revenue generating business?
Yes. But the new plan must aim to considerably enhance the company’s future success.

Depends on whether you see the entry criteria applicable to business concepts and start-ups i.e. less than 2 years old or whether you read the criteria as applicable to all and sundry......

Admittedly the entry criteria and competition rationale are a little bit of a mixed bag.

Compare the previously stated entry criteria to a sample of the judging criteria and competition purpose:

• Improve access to early stage seed funding for start-ups.
• Commercial potential and profitability of the business, with high-potential, growth oriented businesses likely to be viewed more favourably.
• Market potential and whether there is a sustainable national or global market.
• Likelihood that the business described in the plan can achieve a sustainable, competitive advantage.

One might want to ask whether the entry criteria and judging rationale was deliberately left ambiguous so that political and marketing considerations were possible during the competition rounds. Or is it a case of too many cooks stirring the CMS pot?

This ambiguity would allow an entry that may not have met the entry criteria however ambiguously stated, but looked rather nice to certain people with a marketing bent, could possibly be chosen.

A decision that could certainly have been driven, whilst ignoring the fact a business has been around the block for a number of years and outside the accepted definition a start-up, by the co-incidence of the business announcing a major deal, thereby gaining more press coverage for it and the competition?

It certainly looks a bit strange awarding the prize to a company that is effectively a multi national with HQ's in Auckland and Brazil that may or may not meet the stated entry criteria of business concept or start-up and may or may not be a Wellington based company.

It would be nice to know whether the capital that was distributed was tied to investors wanting a slice of the action and getting it, or was it "no strings attached" corporate largesse?

One could also ask whether other competition entries were pulled as they posed too much of a threat to the pre-anointed choice when it came to the actual judging of the award with respect to those entries meeting the stated competition criteria more closely. Or were other entries simply unworthy?

Questions inside questions and about as illuminating as the decision making process of the CDC.

It's a wonder Telecom didn't enter.