Lance Wiggs on NZ Venture Investment Fund

February 29th, 2016 at 7:00 am by David Farrar

Lance Wiggs writes at NBR:

The New Zealand Venture Investment Fund was set up 14 years ago with the best intentions – to foster an early stage investment sector in New Zealand by being a fund of funds. It’s had $250 million for VC and PE funds but only $129.7 million of that had been invested to June 2015 and $100 million of it is an underwrite facility.

NZVIF later added the now $50 million Seed Co-Investment Fund (SCIF) which co-invests alongside accredited angel investors. As at June 2016 it had placed $38.2 million of that. …

The VC fund portfolio reported $120 million invested into funds and a net asset value of $93.2 million as at June 2014. In June 2015, that was $129.7 million invested into funds and a value of $99.8 million. That means they added $9.97 million in cash but lost $5.17 million asset value, for an average rate of return of (1.74%) – or negative 1.74% – per year.

In comparison Punakaiki Fund has raised $12 million and has a net asset value of more than $16 million, as we did this in less than two years. We use the same IPEV standards for valuation and our IRR for the original April 2014 investors was over 50% per year when we last officially released data in November 2015. It’s quite remarkable to think that Punakaiki Fund’s value today is already a sixth of the value of NZVIF’s VC fund as at June 2015, and we have not received any funds from the NZVIF fund of funds nor had over 12 years of investing returns for the fund.

I don’t see a Government Venture Investment Fund as a great idea. When you are not risking your own money, you make investment decisions differently.

I’m an investor in Wiggs’ Punakaiki Fund. I invested for two reasons. The first is the track record of Wiggs, and the second is his own money is risk also.

I think angel and venture investors are great and an important part of the financial eco-system. I’m just not convinced the Government needs to be one of them.

Wiggs has a couple of interesting suggestions going forward:

Pass the entire fund to an existing government-owned professional fund manager, and if the government wants to invest in more funds or deals then the fund manager can allocate the funds. The Superfund is the perfect vehicle for this (ACC is an alternative), but the asset class is very small for either shop. One option is to move say two people from NZVIF into Superfund and have them managed there; or

Run a tender to ask for proposals to run the fund and pass the fund to the private sector. Select the manager based on the response in costs and evidence that new ownership would drive higher returns for the fund.

I like the second option.

Wiggs on League Tables

July 20th, 2012 at 3:00 pm by David Farrar

Lance Wiggs blogs:

A group of academics signed off on a letter against school league tables. The stated logic may work in an academic research setting but is inappropriate to apply to the real world. We should instead publish the measurements, improve the measurements and their context over time and, most importantly, focus energy and resources on understanding the issues and helping the schools at the bottom of the league.

Exactly. If data is not perfect, them people with a genuine interest in giving parents information and choice will focus on how to improve the data, not call for it to be suppressed.

Some of the more detailed responses:

The argument is that schools have high variability between each other and across years. It’s a combination of measurement error based on inconsistent and low samples and the national standards only measuring numeracy and literacy and not more holistic skills.

However to improve something we first need to measure it, and if we can’t measure it accurately then an approximation will do. In business that means using surveys of customers that have clear sampling bias, reacting more to customers who complain and even believing what we read in the papers. We know all of these sources are incomplete and have bias, but we can account for it somewhat, and are much improved by using the input. The online advertising industry is a lovely example, using a system for measurement that is clearly wrong to measure traffic, but while it is wrong, it is wrong for everyone, and it’s only the starting point for a conversation.

It’s far easier to start a conversation about the quality of a school when confronted with a combination of the socieoeconomic data about the catchment area and the National Standards results over time.

Exactly. Parents are not morons. Few are going to just look at a league table and say we’re going to decide solely on that. Information on how schools are doing with national standards will be just one of many inputs.

I understand the natural academic reluctance to never release data that is potentially wrong, and I see that in business sometimes where companies do not want to release an imperfect product. But while they are polishing the bezels yet again competitors are releasing their inferior but higher selling versions. Similarly we should release the data, and call on the power of academics, hundreds of thousands of parents and even students to provide both sunlight as a disinfectant and the right context.

The answer to bad data is good data, not suppressing all data.

While even a small minority, and this is not a small minority, wants access to our data, New Zealand has a policy and obligation to provide it. Arguing against releasing data is quite remarkable for a group of academics. It should be easier to understand school performance than to read about individual student’s private lives on Facebook.

Most academics support the Official Information Act as a wonderful thing. Educational academics seem to regard it as a bad thing.

Wiggs reviews party websites

October 12th, 2011 at 4:00 pm by David Farrar

Lance Wiggs reviews the party websites for the five main parties. Lots of constructive criticisms for them to consider.

Nothing to hide Air New Zealand?

November 29th, 2010 at 11:00 am by David Farrar

There are few bigger fans of Air New Zealand than me – both of their actual travel, and of their marketing.

However Lance Wiggs blogs that AirNZ are now introducing a credit card charge, if you pay online with one. As 99% of individuals do exactly that, it will be felt. It ranges from $4 to $20 for return fares.

I think this is a very ill considered move from Air New Zealand.

They have spent millions of dollars on a brand of having nothing to hide – of how when they quote a price, there are no hidden extras. And it is one of the things people do like about them.

And then they go and do something which is directly contrary to their brand – a fee that you won’t know about until you get to the pay now section.

Now when I see their ad about nothing to hide, I’ll think “yeah except for your credit card fee”.

Pacific Fibre

March 11th, 2010 at 2:10 pm by David Farrar

Absolutely thrilled to just get a press release from the newly formed Pacific Fibre:

Pacific Fibre, an early stage international fibre venture founded by a group including New Zealand businessmen Stephen Tindall, Sam Morgan and Rod Drury, announced its plans today, aiming to break the digital divide between New Zealand, Australia and the rest of the world.

Other founders include Mark Rushworth, former Vodafone Chief Marketing Officer, technology industry veteran John Humphrey, and strategy consultant and entrepreneur Lance Wiggs.

Pacific Fibre is engaging in early discussions with cornerstone investors and customers. The group is looking to secure funding and build a 5.12 Terabits/sec capacity fibre cable to be ready in 2013 connecting Australia, New Zealand and the USA – the initial proposal is a cable which will deliver five times the capacity of the existing Southern Cross system. …

The current proposed cable configuration would be 13,000 km long, and have two fibre pairs with 64 wavelengths (lambdas) each at 40 Gigabits/sec per lambda. The maximum lit capacity initially would be 5.12 Terabits/sec, but would be upgradeable to over 12 Terabits/sec as the emerging 100 Gbit/sec per lambda technology becomes reality. The newer cable and repeater technology that Pacific Fibre proposes to use will be substantially more easily upgradeable than that of existing cables.

Further competition and capacity on the international bandwidth front is much needed. Superb to see such a talented group of people come together to try and make it a reality.

I, for one, would invest in it. And look forward to the benefits another cable would bring.