The New Zealand Venture Investment Fund, the Crown-funded start-up investor, has broken even or made money on 21 percent of its exited investments, which it says is in line with early-stage investment expectations.
The fund manager has exited 62 investments since its establishment in 2002, of which 13 have been at a valuation multiple of 1 or more, it said in a report released today. Of those, four have been at valuation multiples of 3 times or more. NZVIF's $40 million Seed Co-Investment Fund, which backs early-stage firms alongside angel investors, has broken even or made money on five exits out of 36, while the $260 million Venture Investment Fund, which invests in start-ups and young growth companies through privately managed venture capital funds, has eight successful exits out of 26.
"This is in line with early stage investment expectations, where most of a portfolio's value is derived from a handful of successful investments," chief executive Franceska Banga said in a statement. "Early stage investing is best-suited to investors with the financial capacity to absorb losses and continue to invest while waiting for the reward of success."
Last year NZVIF said it made a "healthy return" on the sale of its 8.4 percent stake in cloud-based computing firm Green Button, without being more specific. The fund manager sold $3.95 million of investments through venture capital funds in the 12 months ended June 30, 2014, and a further $2.58 million through the Seed Co-Investment Fund.
NZVIF today said 84 percent of the 95 firms in the seed fund and 63 percent of the 40 companies in the venture fund portfolio are valued at the fund manager's investment or better.
Banga said the NZVIF typically invests in small firms with less than $1 million in annual revenue. Seed fund investments average annual growth rates of 56 percent and venture fund investments expand revenue at a 37 percent pace. Of that, software firms drove gains, with revenue growth of 73 percent in the seed fund and 42 percent in the venture fund.
With the early-stay seed fund, the NZVIF has invested $147.5 million of follow-up capital since 2006 on top of the initial investments totalling $59.1 million, at an average multiple of 2.5 times across 109 deals.