Kiwi Tech Startups and Venture Capital with Robbie Paul

Paul Spain:
Greetings and welcome along to the New Zealand Tech Podcast. I’m your host, Paul Spain. And great to have Robbie Paul with us, who’s the chief executive at Icehouse Ventures. How are you, Robbie?

Robbie Paul:
Good, yeah. Great to be here.

Paul Spain:
Yeah, Great to catch up. Always lots going on in the world of venture capital and tech startups. So really looking forward to hearing the latest from you before we jump in. Of course, a big thank you to our show partners to One NZ, Spark 2Degrees HP and Guerrilla Technology. We appreciate their support of not only the New Zealand Tech podcast, but what they do in tech and innovation ecosystems across New Zealand. Well, let’s jump in. I guess it proved me quite good to start with. A bit of an overview for those who don’t know.

Paul Spain:
What is Icehouse Ventures? What’s the relationship with the Ice House? How does that whole picture fit together?

Robbie Paul:
Yeah, sure, Paul. So Icehouse Ventures is a venture capital firm that invests in New Zealand companies, primarily software, hardware, medical devices, gaming, fintech, you name it. Some of the companies we’ve been behind are Crimson Halter, partly Sharesys, Mint Innovation, Dawn Aerospace, Tradify, who sold last year and 352 in total, growing by sort of a couple a month. So always adding new promising entrepreneurs to the mix. Our mission is very simple. We want to get out and find and invest in and support New Zealand’s brightest entrepreneurs. And we start investing from day zero or negative one or negative 100 forever, as long as possible.

Paul Spain:
Yeah, yeah. So walk us through a little bit about, you know, how you, how you got started. What were those kind of the earliest days of the Ice House ventures? Because there was that, I guess, connection with the, the Ice House, which is, I guess in those early days was something of a kind of a startup accelerator. Would that be sort of the. I’m not sure if that’s quite the right terminology, but certainly, you know, these days they’ve probably changed shape and, you know, you’ve evolved from, you know, probably a part of that in the early days, was it?

Robbie Paul:
Yeah, that’s right. 2001 was when the Ice House was established. It was established to sort of advance entrepreneurship and business in New Zealand. And it started with a. These owner manager programs, which were sort of Stanford MBA inspired programs that would bring together people running large established New Zealand companies and get them in a group and teach them and train them, inspire them and help them grow and run their businesses. That still goes. And they’ve run, you know, hundreds of those programs with thousands of owner managers and many other permutations where they get more deeply ingrained with typically large, established New Zealand focused companies. And they do that really well.

Robbie Paul:
A few years later the incubator started, which was for startups. And a few years after that the angel network started and, and then many years after that the funds management business started. And I joined in 2008 when it was an angel network and an incubator raised the first fund in 2013 and that was half a million dollars. And now we’re just shy of half a billion in venture capital to invest.

Paul Spain:
Wow, that’s good. Now, for those who don’t understand what an angel network is or angel investing, maybe you can just break that down as a part of the picture.

Robbie Paul:
Yeah, I have to remember not to use too many different terms. Angel investors are individuals that are high net worth and choose to invest their money or some small portion of it into early stage companies and do so for equity. This is not a loan. They’re buying shares in a company and typically do so with the intention of also helping the company to achieve its vision and grow and become really consequential. And if that happens, then a lot of good things happen. People make money, entrepreneurs learn, new products are built, industries are disrupted, problems are solved. And New Zealand was very unique and I think I’m very lucky to have been around in the time that I’ve been because the angel ecosystems in other more established markets had a lot more complexity and competition to deal with. There was many more family offices, there was many more corporate VCs, there were many more venture funds, there were many other sort of versions of investors that could have invested in startups.

Robbie Paul:
And from an entrepreneur’s point of view, New Zealand I think was disadvantaged and slowed down a bit because it didn’t have that vibrant sort of capital ecosystem that it does have today. But in 2008, 9, 10, when I was first involved, the angel networks were a very large proponent of the investment ecosystem. And the result was that Ice Angels and myself got to interact with lots of really cool companies in the, in the early days and get pretty established in the market.

Paul Spain:
Yeah. Now you mentioned family offices. You know, some might not be so familiar with the family office, but they’ll be part of, of the group that would, would invest with you today, right?

Robbie Paul:
Correct. Yeah. A family office is typically just a, a managed group that looks after the assets of an individual family or sometimes multiple families. And usually those are associated with individuals and families that have vast wealth and where it makes sense to start to have management brought in house. And, and so yeah, we’re very lucky. I mean, we have all of our funds to date have been just from wholesale investors. There’s about 2,900 of them and then there’s about another hundred family offices or so that have invested, as well as kiwisavers and other institutions.

Paul Spain:
Yeah, that’s great. So you really very well connected across the wholesale investment community in New Zealand?

Robbie Paul:
I think so. I mean, we’re lucky. I don’t think we’re out there sort of changing people’s minds. I think there’s a very small subset of individuals that have the wealth but also have the propensity to invest in this space and that’s who we want to connect with.

Robbie Paul:
Right.

Robbie Paul:
I think if you know commercial property really well, just stick at it.

Robbie Paul:
Right.

Robbie Paul:
Like. Like if you’re not comfortable with technology and with the sort of entrepreneurial ambition that comes with startups, don’t bother.

Robbie Paul:
Right.

Robbie Paul:
But there are people in all different walks of life that do like innovation and they do like trying to change the world one company at a time, and they do love supporting the next generation of entrepreneurs and those are the people that we have in our community. So it’s sort of self selects, which means that I’m surrounded by this group of really interesting and motivated and ambitious people.

Paul Spain:
Yeah, that’s really good. Now, if we look at the, I guess the traits of the companies that you’ve invested in, what would be the things that have really, you know, really sort of stand out to you that. Particularly those that have. Yeah, you’ve got involved in the earlier days and then, you know, I guess because you do invest, as you say, from very early on, right?

Robbie Paul:
Yeah, that’s right. And I’ve actually been looking at this recently, so, you know, 352 companies that we funded, 74 of those companies have failed, 33 companies have delivered positive returns. And so the question I was trying to ask and answer is, can you observe any differences, right, like between the ones that weren’t successful in that war? And the one data point that sticks out is that the ones that became successful at a much higher rate. You could triangulate back to why those individuals started those companies.

Robbie Paul:
Right.

Robbie Paul:
So Fadi Mashriqi is studying wireless power at the University of Auckland, a world leader in wireless power research. He starts a company, it becomes power by proxy, you know, sells to Apple. Pretty obvious why he ended up in the business he ended up in.

Robbie Paul:
Right.

Robbie Paul:
That is not as true in the 74 companies where there were failures. Right. And so I think, yeah, especially at the initial starting point, we like to look for people who have very unique perspectives on the world that are informed by real pain or real problems or real experiences or real research that they’ve been involved with for a long time. Second thing is just sheer resilience. Like, you know, failures happen. It’s a fact, get over it. And that’s. Hopefully most people can get to that point and accept that.

Robbie Paul:
What’s more difficult to intellectualize is that most of the companies that have succeeded and sold had one or many visceral dances with death, right? Where they, they didn’t have any cards, they were back against the wall, they were out of money, you name it, and they came through and succeeded either in a short period of time or a long period of time. And so then the question is, okay, well, I’ve backed a company, it’s going through hell right now. Is this the moment where they survive to become successful later on, or is this the moment where they don’t? And at least my experience now with the 350 companies is you have to be very led by the entrepreneur on that basis.

Robbie Paul:
Right.

Robbie Paul:
Venture capitalists are not running companies.

Robbie Paul:
Right.

Robbie Paul:
They are investing in teams that need to pull off the impossible and work super hard and front up to challenges. And we’re just there supporting them. So it really does fall back on the entrepreneur. Do they want to give it another go? Do they back themselves or not?

Paul Spain:
And so when you look at those scenarios where companies you’ve invested in have had their back up against the wall, as it were, what does that tend to look like? Are there sort of similarities of how they’ve responded and got out of those sort of difficult places, which I guess can come through challenges in the economy, challenges in the specific market, challenges with their customer base, challenges internally. But often a pretty big element of that is financial challenge. Right. Ultimately, that’s what tends to lead things to come to a grinding halt quite quickly.

Robbie Paul:
Yeah, you’re right that it is a culmination of things that have to come together for an entrepreneur to give up. Right. I think startups and entrepreneurs and frankly the investors that support them are way more patient and resilient than most people would expect.

Paul Spain:
Yeah.

Robbie Paul:
You realize that the average time for those 74 companies to fail was six and a half years.

Robbie Paul:
Right.

Robbie Paul:
Like, I think it’s portrayed in the world as sort of an entrepreneur, you know, gets up, tries an idea, raises money and it doesn’t work. They just throw the towel in and that’s just the most ridiculous thing ever. It’s just not true.

Robbie Paul:
Right.

Robbie Paul:
And Then the other, you know, view is, oh, you know, public markets are down. Have entrepreneurs given up? It’s like, are you kidding me? This is not how they operate.

Robbie Paul:
Right.

Robbie Paul:
They need to be taken down as a result of, yeah. A customer falling through, a product not working, a competitor encroaching, and then as a result of maybe some of those things, shorter cash Runway or the inability to hire somebody or the inability to go to a, a certain event or the inability to close somebody. And then because of that, you can’t raise as much money. And on and on it goes. So they don’t wave the flag lightly. To answer your question, the ones that, that come through, I mean, I wish I could pick up a pattern, but usually it is by finding people who believe in them. Either customers who will pay early, pay more, pay in advance and give them a chance, or investors to give them that extra Runway to get through.

Paul Spain:
And when you’re, because it seems like you’ve said yes to a lot of companies, when you look at those that you’ve said no to, what are the most common traits?

Robbie Paul:
Well, look, the only ones that I care about, right, Because I think a lot of firms like to talk about sort of their top of funnel. You know, I’ve talked to a thousand companies and as a result, that should, that should suggest that I’m picking the right ones. And, and it’s like, well, actually, I don’t care about how many we talk to. I care about the ones that do have the features that we want, right? Like phenomenal founders, huge markets that are growing, real obvious technical moats that they could build, you name it. Like, do we get to talk to those companies?

Robbie Paul:
Right.

Robbie Paul:
Equally for companies that we decline. I don’t take pride in just like saying no to lots of companies because guess what, it’s way easier to be a cynic in this business than it is to be optimistic, right? Because you’re more likely to be right if you are negative than if you are positive. And that’s true.

Paul Spain:
And some of those ones that you say no to are going to go on and do really well, right? You’re not going to pick them. You’re not going to pick them all, all the time.

Robbie Paul:
Totally. What a career. I mean, you can’t, you don’t, you don’t, you’re not flying the plane. You can’t pick winners. You know, you’re going to say no to some really great ones. So what exactly do you do as a, as a vc and when I, you know, when you go through that thought process, it’s like, well, there are a few things I can control, right? I can control my desirability as a source of capital.

Robbie Paul:
Right.

Robbie Paul:
What do founders think of us as a potential investor and how I approach investing, how rapidly I invest, or what terms I accept or do I follow on. There’s lots of things you can control. But you’re right, there’s going to be companies that you are completely convicted in and you’re wrong and that, and the opposite will also be true. And so I don’t look at the ones that we just say like, I mean, there’s blanket red flags, right? If, if a founder seems dishonest, apathetic about the mission, just trying to make a quick buck, has the wrong thoughts on sort of how they’re going to use the capital, has no sort of intellectual edge, then those are all easy nos. But it’s never that simple, right? I mean, think about some of the really great companies like Cami and Aura that have emerged and take yourself back 10 years and compare what that business was, those businesses were then to what they are today. And, and you could see why it would be easy to say, oh, this is a difficult business. But yeah, obviously you would be wrong if you’d made that call.

Paul Spain:
Yep, yep, yep. Who would be the two biggest well known names that you said no to? Can.

Robbie Paul:
I mean, those two are pretty real.

Robbie Paul:
Right.

Robbie Paul:
And well, I have to approach that with caution because if you have sort of like your anti portfolio, it presumes that you would absolutely have had access, you know, to the rounds. And I don’t want to imply that that was a certainty, but we definitely, we definitely talked to, you know, Cami back when they were notable and, and you know, what a spectacular business they’ve built in, in educational software. Yeah, that’s true. And, and the commonality between Kami and Aura and then some of the great companies that we have backed is that the entrepreneurs have gone the distance and they have evolved into really great company builders and leaders.

Robbie Paul:
Right.

Robbie Paul:
And so I think the most important part of whatever your due diligence approach may be is really trying to determine the sort of heart and mind of the entrepreneurs because the business is just, and the potential customer of today, it’s very difficult to assess at seed stage.

Paul Spain:
Yeah, yeah, I think that is one of the challenges and some of the companies, I hear about their stories of sort of early on and you’re trying to join up the dots and work out how can this, this be, you know, a great profitable business and, and you know, Cami might Be one of those where you, you know, you. You look at it and, yeah, the PDF software for use in schools and you’re kind of thinking, well, you know, hold on, that doesn’t sound like a, you know, a place where you can charge a lot of money and so on, but actually such a massive addressable market and Covid became a very incredible time for their growth. Right. And, yeah, I wouldn’t have picked that. And there’s. For me, anyway, that’s quite a common thing. You can kind of look and you can see the real challenge in what they’re doing, but you have to be able to sort of see past that and pick the other factors and recognise that. Well, we.

Paul Spain:
When one of these companies gains traction, although it might not look like an obvious one from the outset, it might well be further down the track.

Robbie Paul:
Or if you think about the propensity to invest in something would come from understanding what they’re working on, knowing their market, knowing their customers, being able to comprehend their complete technology roadmap. If those things are true, there’s no opportunity. Because if those things are true, the opportunity would have been exploited or has been exploited and you’re too late.

Robbie Paul:
Right, right.

Robbie Paul:
And so wrap your head around that one. I mean, if you’re. You need to be investing in things that are creating markets or changing markets or need to benefit from a change in market, and that’s a difficult thing to predict early on.

Paul Spain:
Yeah, yeah. You know, tell us about some of the, you know, companies that people be fascinated about. You know, Dawn Aerospace, you know, how does an opportunity like that sort of come, you know, come to your doorstep and, and how do you wrap your head around how feasible it is for a business like that to get off the ground, as it were, which they seem to be gone from strength to strength, but sometimes there’s still quite a long period of time before these businesses end up profitable as well.

Robbie Paul:
Right, yeah. Don is the exception to one very specific rule, which is that we basically don’t invest in companies that cold email us or cold call.

Robbie Paul:
Right.

Robbie Paul:
Because if you’re an entrepreneur, you need to have the tenacity to be able to get one introduction. Especially in a market like this, everybody’s pretty accessible. You can get my mobile number in two seconds if you need it. But more importantly, you should have somebody call and give a recommendation. And so that’s a red flag. If we just get a cold inbound, it’s like, it’s not good. Except when it was dawn and they actually sent an email to the wrong address. But somebody on the team sort of stumbled across it and forwarded it over to Jason, who was the partner, and Barnaby.

Robbie Paul:
And I remember them sort of coming racing around back into the office like, hey, actually these guys are really legit and they’re very bright and they’re very sort of Kiwi in their humbleness because they. There’s plenty of companies out there that have raised hundreds of millions of dollars that call themselves space tech. And you have to ask them two questions. Have you ever been to space? You know, and the answer is usually no. Or if you have, have you actually made any money from it? And the answer is almost always no. And in Dawn’s case, the answer was yes to those very early in their journey, you know, which is remarkable. And I think a lot of people know them as the space plane thing because that’s very visible and it’s beautiful and so on. That’s not actually their core business, or it hasn’t been.

Robbie Paul:
It could. It could be. It could be. It’s their propulsion systems. And in the simplest way to think of it is if you’re a satellite, you ride a bus to space, you get dropped off and you need to get to your specific location to do that, you need propulsion on the satellite. And it just happens that Don had designed a very clever approach that became a globally recognized solution for propulsion systems. And now they’re in hundreds of satellites in space.

Paul Spain:
Yeah, it was quite cool being in their office on one occasion and seeing them actually testing out that stuff, firing them up and giving them a test. So they had the confidence of when they’re up in space, they’re going to work as expected. It’s pretty cool.

Robbie Paul:
Just a remarkable journey that they’ve been on in eight years.

Paul Spain:
Yeah, yeah. What other ones sort of stand out to you as being quite unique and quite interesting?

Robbie Paul:
I mean, this is a little bit recency bias, because I just gathered with the team last week and visited some of their customers, which was Halter. So Halter puts collars on dairy and beef cow and train them. So you can move them around, you can shift them, you can send them to the shed, you can do all sorts of things that otherwise required you to have, you know, hoarse voice and a loud bike and hours and hours of time following the animals around. And the sound bites from some of these farmers and how much it’s improved and changed their life was remarkable. And one lady, she was sort of laughing with glee that there was a winter storm which sort of prompted the need to move animals around to specific paddocks and um, her neighbor, who hadn’t adopted Halter, was out in the paddocks for three hours laying temporary fences in the snow.

Paul Spain:
Oh, wow.

Robbie Paul:
And she did it on her phone next to her fire. And I was very proud of, of that.

Paul Spain:
Yeah.

Robbie Paul:
We then drove down the farm and we went past a shed and they said that shed should be empty this time of year. And it was all their temporary fencing, all, all the sort of reels and the posts and all this stuff and it was full. And they just don’t, they don’t need it because once you can create sort of virtual fences, you don’t need to be out there laying those for crop management, for staying away from the water, for going to and from the milking shed. And the beautiful thing about Halter is, you know, those, those two farms we visited are not alone. Right. They’re in hundreds of farms. New Zealand, Australia, and now all over America in multiple states. And I think it’s just, it’s just one of these stories where we’re really seeing the, you know, the, the companies that were second guessed and were ignored and were, you know, sort of cut down, becoming very large companies.

Robbie Paul:
Like, you know, they won the Deloitte Fast 50 or they were named number one last year.

Robbie Paul:
Yeah, right.

Robbie Paul:
Yeah, they are a consequential company and they’re, you know, they’re like Crimson and they’re like Cami. They’re like Aura that a decade ago they were sort of nobodies, right. And run by kids and. And now they’re sort of the adults in the room. It sort of scares me, like I’m going to be old soon and you know, but yeah, it’s. Yeah, it’s a remarkable company that’s, you know, got great tech advantages, phenomenal team and just immense market.

Robbie Paul:
Right.

Robbie Paul:
Global.

Paul Spain:
And when you’re investing in a company like Holter, what are you able to bring to the table to help them? Because. Great. Having some really innovative technology, but obviously there’s a need to build out the right sort of team often to expand globally and to. Into a range of markets, you know, probably most commonly the US and you know, there’s I guess a certain level of networks and experience and so on that you can draw on. But you know, I guess what I tend to notice with the companies you’ve mentioned is generally they’ve got, you know, incredibly talented leadership who can achieve a lot, you know, on their own and so on. But I’m sure there must be some benefit from your networks and so on as well.

Robbie Paul:
I Think there’s lots that we can do and that lots of venture capital firms can do as long as you understand that the entrepreneurs are in the driver’s seat.

Robbie Paul:
Right.

Robbie Paul:
And, and we don’t wield some sort of magic wand that can change the trajectory of a company. But you know, when you’re building a company, you don’t know how much necessarily you should pay your CRO, right. You don’t know what a good board pack looks like. You don’t know who a good lawyer is necessarily to flip into the US if you need to set up up there, right. Fundraising strategy. Like there’s actually no better person to have on your side than a VC who can tell you the actual sort of psychological game that you need to play to raise more money. And so I like to think of the way that companies get support. One is with like bespoke industry stage geographic specific people, right.

Robbie Paul:
Who can help those companies with whatever the specific needs are. Our goal is to help find those people. And obviously we have a very large network of sort of well intentioned people who can play that role.

Robbie Paul:
Right.

Robbie Paul:
The other is sort of ubiquitous needs that are common across Dawn Aerospace to an edtech startup, to a fintech startup, which are those things about setting up an ESOP or hiring or pay or directors or you name it. And that’s where we can answer questions and provide guidance with data because we have 350 companies. So it’s not an anecdote. And the last thing you need if you’re an entrepreneur is like a bit of nostalgia and a bit of like, you know, survivor survival bias and a, and an anecdote here or there and you know, somebody waxing on about whatever it is that you know they did.

Robbie Paul:
Right.

Robbie Paul:
You just want the answer. And, and the best thing is to be able to get the answer from other entrepreneurs who have no agenda and who are just a little bit ahead of you.

Robbie Paul:
Right.

Robbie Paul:
And so that’s sort of our third sort of initiative which is really to help entrepreneurs learn from and connect with each other. And people think that entrepreneurs sort of like hang out. I mean they don’t, they, they don’t have time and they’re leading their teams, they’re trying to please their customers, they’re trying to think about the future. Then they got to try to be good family members, they want to maybe have a friend and then 10 nights out of 10 they have to speak at an event or you know, inspire a high school or whatever it is. And that is, it’s the reality. But it’s unfortunate because actually time with other entrepreneurs can be really impactful. And so we invest very heavily in building a community where they’re not talked at, but they’re able to engage and answer the questions for each other with no agenda. And I find that’s really helpful.

Paul Spain:
Yeah, yeah, that’s really good. And I’m kind of curious around the challenges that we have within the startup space in New Zealand. In the past, raising funds, raising capital has often been referred to as a sort of big problem. By my mind that seems to keep improving as time goes by. It gets easier to raise capital locally. I’m sure not everybody probably agrees with that because there are some areas where it’s probably much harder to raise capital than others. I know it was one of the things Peter Beck used to talk about was how hard it was to raise capital locally. But I think if you look at Rocket Lab, it’s probably a reasonably unique beast within New Zealand and even globally to a.

Paul Spain:
A big degree. So, you know, you can understand some of, some of these conclusions that, you know, people will come to. And, you know, I guess, yeah, each circumstance is a little bit different. But, you know, what do you see as the challenges that we have today? Is it tax? Is it being able to attract the right sort of talent? Is the capital, you know, still a really big, big challenge? You know, where do those challenges sit?

Robbie Paul:
I mean, capital is definitely not a challenge. I would probably provocatively almost say, you know, if you think any of the macro challenges that I could potentially name are going to be the reason your company don’t survive, doesn’t survive, then you’re, you’re wrong. Like, because for entrepreneurs, they’ve got much larger challenges trying to build new technology, trying to hire a team, you know, trying, trying to convince the first customer to buy and trying to do all those things at the same time that you have to be raising money and sort of leveling up and sort of spinning all those plates. And, you know, I would also say for every macro challenge, distance, right, not enough talent, government policy, capital, right. There’s exceptions of companies that have just gone straight through. You know, they knock down all those barriers and they’re, they’re totally fine. So I, I don’t want to downplay that it’s difficult, but I would probably say it’s more difficult building your company than all these, than all the other things that are, you know, sort of contributors to the tailwinds that are nice to have but not, not required. And, you know, I would also reframe it as, like, Think about the opportunities that you have now.

Robbie Paul:
I mean, international capital is flowing in here at a rate that’s never been seen before. Kiwisavers are participating in this asset class more than ever. Other institutions are participating in the asset class more than ever. The Edmund Hillary Fellowship and the international, sorry, the investment. New Zealand visas are bringing incredible humans to New Zealand who desire the ability to make an impact on entrepreneurs. Kiwis are coming back and, or getting more connected from offshore. And talent is starting to be recycled from within organisations from the bottom to the top that have now been part of startup journeys and are ready to do it again. And all those things I think make for just like a very forceful combination to advance this ecosystem.

Paul Spain:
Yeah. How important is that? I guess sort of, you know, recycling of, of talent and funds from those that have been, you know, successful in the past. And you know, I guess, you know, we so often see, you know, K1W1 has invested in this or that, you know, often quite early on, you know, which is Stephen Tindall’s, you know, I guess that’s his VC fund. And yeah, you kind of see this kind of across the board on many occasions. How important is that?

Robbie Paul:
I mean it has to be ingredient number one if you were to write the, you know, the recipe for success for an ecosystem, it has to be number one, recycling of talent.

Robbie Paul:
Right.

Robbie Paul:
People build confidence, they build wealth, they build capability and a portion of them decide that they want to recycle that back into helping the next generation.

Robbie Paul:
Right.

Robbie Paul:
What you’re seeing now, which is a really positive sign is not just an entrepreneur started a company, sold it, started a new company that was, I mean that’s great. And we’ve backed a lot of those sort of second time entrepreneurs. It’s that when an entrepreneur starts a company, they can hire people, be it, you know, the junior engineer to, you know, like a senior BDR from other high growth tech companies.

Robbie Paul:
Right.

Robbie Paul:
I don’t know who, who it was who said back in the, the day, you know, you raise money and you have to hire your developers from Microsoft, New Zealand or telecom.

Robbie Paul:
Right.

Robbie Paul:
And like obviously fabulously skilled, but a different archetype than the people who’ve worked in a software development firm, you know, in a startup in New Zealand and yeah, sure. And so now, yeah, like I don’t think anybody loves it, but it is a healthy sign to see a lot of people sort of get poached from company to company.

Paul Spain:
Yeah, yeah, yeah. And, and how does that startup life sort of look now from, you know, from your you know, perspective. You know, we quite often chat to, chat to founders who are talking about some pretty crazy kind of lifestyles, working in startup land. And yeah, some pretty intense hours and the like that can, I guess, take a toll in varying ways. Is that still pretty common, part of the sort of earlier stages of startups, or does that vary a lot depending on the, the founders and the leadership?

Robbie Paul:
I mean, certainly the, I mean, there’s definitely a variation in people’s sort of propensity to, to work all hours, but yeah, generally if you’re trying to build something new, you’re thinking about it all the time and you’re working on it all the time. And it reminds me of that quote from the Big Short where he’s like, he’s like, my wife says I’m unhappy. And the guy says, oh, you’re, you’re happy when you’re unhappy. And he’s like, I am happy when I am, I’m unhappy. And it’s sort of like, yeah, I mean, would entrepreneurs, if they were given the choice, literally just shut off on like Friday afternoon and come back Monday? No, you know, that’s not what they want to do. They, they want to build. And so some, some, it’s self imposed. Some, you have no choice.

Robbie Paul:
Some. Yeah, and pretty universally everybody digs themselves in a hole because they, to, to be given a chance to be able to raise money to attract a good person to your team, you got to sell a vision and you sell that vision. Um, and the beautiful thing about that is then you sort of put yourself in a position where you have to deliver that vision and then it turns out to be a hell of a lot harder and there’s, you know, way more complexity. And so there you are, you know, having to compel as many of your team as possible to work as hard as possible. Yeah, as long as possible.

Paul Spain:
Yeah. Okay. Okay.

Robbie Paul:
Yeah.

Paul Spain:
And, and does that tend to stretch out over quite a, quite a long period of time? You know, commonly before this, I guess. You know, is it tied to profitability? Is it tied to sort of particular things where, where they become maybe a little bit more like a traditional firm in terms of the, the, the intensity and so on?

Robbie Paul:
Not if it’s up to the entrepreneur. I don’t, I don’t think so. I mean, I, I think you’re built in one way or the other. And yeah, if you were, if you had worked alongside your team for a decade to build something really consequential, there’s nothing you would want, you know, less than to see People come in and lifestyle it.

Robbie Paul:
Right.

Robbie Paul:
And just hang out. So no, I don’t know if there ever is this sort of point of glory. I’ve never like, I think, you know, reward and happiness all just comes through the journey. And, and so yeah, there’s no, there’s no entrepreneur on our list that has sort of like found this new Zen state and they, you know, they don’t want to build that. Usually they build something and they want to get back into it or they want to give back or they want to hold themselves to a higher standard or prove that they can do it again.

Paul Spain:
So yeah, for founders that have done well and then exit and, and don’t sort of get back into the, into the game. Do you think, do you think that works for them?

Robbie Paul:
Yeah, I mean there are personality types of folks that really do want to sort of chart a new course and that’s totally their call. So I have to admit I don’t come across too many of them.

Robbie Paul:
Right.

Robbie Paul:
But, but the ones that, and that’s probably because, you know, I’m interacting with ones who want to invest. So I don’t, not the ones who don’t want to invest. But you know, it is a personality type where you’re, you’re driven to, if you are sort of a company builder, you’re, you’re driven to want to be doing something. So yeah, I don’t think memberships that, you know, tada youti sell to people who just want to chill right there. They want to, maybe they just want to apply themselves to a different sort of world, but yeah, work equally hard.

Paul Spain:
Yeah. Now what can you share your thoughts on, on Callahan sort of shutting down? Because Callahan’s been a, you know, a pretty big, you know, part of the tech startup world over, you know, reasonable period of time now and you know, helping with, with I guess those government grants and so on that have, you know, often, you know, often help varying companies in this space. How do you, how do you think the future could and should, you know, play out in this, in the regards to, you know, where government should be, you know, hooked into, to the ecosystem?

Robbie Paul:
Yeah, I think it’s unfortunate. I mean, the good news is it sounds like a lot of their services and a lot of their initiatives will sort of fall within other buckets. And so then, and that’s a level of government stuff that I don’t understand that. Well, so if, but if the truth is that a lot of their approaches and services and support will be picked up by other groups, then that’s fine. I would say then that that’s really unfortunate they didn’t keep the name because that Callahan name really spoke to people.

Robbie Paul:
Right.

Robbie Paul:
You know, his, his presentation and, and this ambition and so I really appreciated that, that sort of nod to somebody in the past as opposed to just an objective statement of what it is, you know, Ministry of X or, or. Yeah, I sort of managed to hold two truths in my head at the same time. One is that entrepreneurs will thrive in any environment no matter what, but at the same time that innovators and entrepreneurs have an insatiable appetite for resources and capital and support and that it’s got to be a winning formula. As a country like New Zealand who doesn’t want to just export logs and milk to invest in technology. Invest. And so more is better.

Robbie Paul:
Right.

Robbie Paul:
I mean, I wouldn’t even bother getting into the debate of efficiencies of X or Y or how, how something could be better deployed. It almost doesn’t matter. It’s like, are we as a nation leaning in to one of the most important potential export groups or not? And, and so I think, you know, the government’s been making some pragmatic changes in favor of, of entrepreneurs and startups and tech and in this case I think they were, you know, potentially just trying to simplify and save a few bucks here or there. But at a high level, I would say lean in. It’s a winning formula and it’s an important part of the economy.

Paul Spain:
Yeah, yeah, I mean, yeah, I guess there’s always sort of knobs and adjustments that can be made and I think, you know, sometimes we would see these grants that were given and then the other companies would get sold and they would. Wasn’t necessarily a, a local benefit. So you can, you know, I guess things, things there like, well, maybe there should be some equity or something in some of those sort of cases. But even, even there you get challenges. Right. So none of these things are. You’re never going to find the perfect, perfect answer for, are you?

Robbie Paul:
Yeah, and I mean, I think generally it was very well intentioned, you know, group and, and people. So yeah, hopefully it does sort of rise up through other organisations and, and entrepreneurship stays front and center. Yeah, yeah.

Paul Spain:
Now I guess a lot of our listeners, they’re very, you know, pro the tech world, the startup world. And yeah, I guess if you, if you look, there’s probably quite a variety across our audience, you know, myself included, in terms of what our abilities are to get involved in startups, whether it’s on an investment front or, or what have you maybe you can, you know, walk us through what the options are as, as you see them for you know, Kiwis who do think that actually my money shouldn’t just go into, into real estate or investing in the top us sort of tech companies and so on from your perspective. And, and yeah, I guess, you know, your, your main audience has been wholesale investors. Right. So maybe start by a bit of an overview because there probably will be amongst our listeners there’s probably a reasonable percentage who could be wholesale investors, but they haven’t maybe chosen to go down that track or they’re not even sure what hoops they need to jump through to be a wholesale investor and other ones that are much more likely to be retail level investors.

Robbie Paul:
Yeah, that’s right. I mean generally the retail investors and the wholesale versus retail is just a definition by the FMA based on assets or wealth.

Robbie Paul:
Right.

Robbie Paul:
And, and so wholesale is generally synonymous with being wealthy, although you can actually be quite wealthy as a retail investor and not quite meet various thresholds. And generally the retail investors have been excluded from being able to participate in that space or in the space. And you know, I think that’s unfortunate because I’ve, you know, I’ve had a lived experience myself as like a 20 year old just because of the position I was in being able to have ownership in aspirational New Zealand companies.

Robbie Paul:
Right.

Robbie Paul:
And I didn’t bet the farm and I didn’t invest money that I, you know, couldn’t lose or that I needed to pay rent or, or anything, but I was able to make that choice myself and invest in some really interesting aspirational New Zealand companies and learn from them and feel that pride of ownership.

Robbie Paul:
Right.

Robbie Paul:
Which you just don’t get investing in a, you know, offshore index fund. Yeah, right.

Paul Spain:
And so why were you able to do that? Is that my job is that that’s a privilege of being part of a venture capital fund that you easily tick the box of being a wholesale investor or is there other correct to jump through?

Robbie Paul:
Yeah, and the regulations have changed since you know, 2012, but that’s roughly just because of the world that I was in.

Robbie Paul:
Right.

Robbie Paul:
And so most people don’t enter the fund world as I did sort of raising half a million and now having just shy of half a billion to invest as sort of like an intern come CEO. Right. Most people build a lot of wealth, sell a company or whatever and, and then start investing in startups and, and so I think that brings a slightly different perspective for me because I, I, I know what the Journey’s like, and I’ve, I’ve had that opportunity to invest and I know the benefits and I know the, the disadvantages and I know how, how it fits in with everything else that I have to take into consideration with saving an investment and all that. But I do think it’s the, the lack of retail participation is unfortunate for New Zealand and, and it’s unfortunate for those individuals.

Robbie Paul:
Right.

Robbie Paul:
And here’s why. Because I don’t think that, I don’t think that most retail investors would ever want to or should, you know, invest. It’s just. But that’s the same with wholesale investors, right? Wholesale. There’s a distribution curve. Some that are really passionate and love technology and are forward thinking and want to support innovation and want to help entrepreneurs and want to feel ownership and have more risk tolerance and you know, are okay with things being illiquid.

Robbie Paul:
Right.

Robbie Paul:
The small number hit like that and others are not and they shouldn’t participate. Like, they don’t, they don’t want to, they don’t need to. And that’s the same with retail investors.

Robbie Paul:
Right.

Robbie Paul:
There is that distribution curve. Some that would be aspirational and forward thinking and others that are not. And our, you know, as a country opportunity is for those ones who are predisposed to want to invest. I think they are also more likely to start and join companies. They’re also more likely to work their way up the ranks of organisations. They’re more likely to lead professional firms. They’re more likely to generate wealth and, you know, generate influence and so on. And by being able to invest in companies and learn from them over a 10 or 20 year period means that they can apply that learning and those experiences to their professional career as opposed to waiting until they’re 65 and investing in a 10 year journey.

Robbie Paul:
And so that’s our, I think our opportunity is to open the door more broadly.

Paul Spain:
Now you’ve got your partnership with Simplicity and I think it’s Kiwisaver Fund. Walk us through how that kind of opens things up to a broader audience.

Robbie Paul:
Yeah, I’m very grateful to Sam and the team for backing us. Right. There’s a mentor of mine who’s ran a significant fund offshore and he talks about how in a presentation, nothing matters throughout the whole presentation and Q and A. It’s just when they’re walking out the door and they’re putting their coats on and they ask, oh, you know, who else is invested?

Robbie Paul:
Right.

Robbie Paul:
And the point is that signaling is very important and trying to find that first. Yes. Is extremely Difficult. And that’s what simplicity was. You know, they were the first Kiwi Saver to participate and you know, I think I’ve been a front runner that many others have now jumped in and followed.

Robbie Paul:
Right.

Robbie Paul:
And, and it also, you know, between Simplicity and then generate who supported our growth fund and PI funds, it means that like 250,000 plus New Zealanders now have exposure to Kiwi innovation.

Robbie Paul:
Right.

Robbie Paul:
And that means they can learn from it and they can benefit from it. And that’s the most important part for me is that, excuse me, is that storytelling that we’re able to do about the companies to the individual Kiwi Savers that are in those funds and how.

Paul Spain:
Does that work from, from an investor perspective? And I’m probably a little bit naive on all the ins and outs of KiwiSaver because I’ve been self employed for such a long time. I’ve never been offered a Kiwi Saver or had the opportunity to participate, although I probably could, I could go and I do receive a salary so I could say, hey, carve some of that off into kiwisaver. But I think most people have come in since kiwisaver’s been around and, and so they’ve been automatically enrolled. How does that work in terms of investing with your funds? And I guess people being able to get in and get out because with a wholesale investor they’re going to drop in X amount of funds into I guess one of your funds that runs for usually quite a long period of time before they can, they can cash out. How does that sort of look different, you know, when it comes to the KiwiSaver side of things?

Robbie Paul:
Yeah, maybe I’ll explain the dynamic with wholesale investors and our funds and then you know how that sort of works with KiwiSaver. If you’re an individual, you know, typically in our funds, which are right now only open to wholesale investors, you can commit a minimum of 50,000. In most cases you pay that over a four year period or sort of four tranches over three and a bit years.

Paul Spain:
Yep.

Robbie Paul:
So 12 and a half. 12 and a half. 12 and A half. That is based on a strategy. So like our second growth fund, which we closed over subscribed last year, said we’re going to use our advantages to invest in 20 later stage new Zealand technology companies. So not startups, but companies that are 5, 6, 7 years old with revenue and product and so on. And so we receive that money over those tranches and then from the first day, for the next sort of five years we can invest that money into a set of companies. And in growth fund, It’ll be probably 20 at any point.

Robbie Paul:
If one of those companies sells, pays a dividend, you know, IPOs fails, liquidates. Since if, if any event causes capital to flow back the opposite direction, that’s paid out proportionately to the investors at that point. Which means in the example from our first growth fund, we were still calling capital down when Tradify was sold last year. So you’re just paying out your final 12 and a half if you’d committed 50,000 and you’re getting money back immediately. And then you’re saying, okay, well there’s one company, I’ve got my money out and now there’s 19 more. And at the end of those 19, that’s my total return.

Robbie Paul:
Right.

Robbie Paul:
And so it’s not like a fund where you commit capital and then you’re, you know, you’re, you liquidate it all at one point.

Robbie Paul:
Right?

Robbie Paul:
It, you invest. We invested across a bunch of companies. When those companies reach their final destination, that’s when we all benefit. Now that creates liquidity challenges because essentially these funds are not liquid.

Robbie Paul:
Right?

Robbie Paul:
You cannot. And because we’re investing in illiquid privately held New Zealand companies now, there is a market for high potential growth stage companies.

Robbie Paul:
Right.

Robbie Paul:
And we are voracious buyers of, of shares in some of these companies that are still unlisted and illiquid. And so that means people are selling.

Robbie Paul:
Right.

Robbie Paul:
And we’ve, we’ve also been sellers, you know, getting anywhere from two to 80 times our money back, selling shares before they have reached a, you know, an exit or an IPO or whatever. Now, so then you would say, well, how does that sort of work on a kiwisaver? Now in a kiwisaver’s case, as an investor, you’re one of many, you know, potentially hundreds of thousands. You’re contributing capital into pools. Usually they have multiple different funds. And then those funds can invest across a broader array of assets.

Robbie Paul:
Right.

Robbie Paul:
And typically when they’re investing in venture, they’re investing a, a minutia, like a tiny fraction, not even like a percentage point. Yes. Into these funds. And the result is that that illiquidity can be balanced because they have thresholds where they could, couldn’t lock up 50% of their capital into something that couldn’t be sold in case kiwisavers wanted their money out. But they can do it into one or two or three or sometimes more percent.

Paul Spain:
Yeah. Okay, so then they can change stream.

Robbie Paul:
Part way and, and yeah, a kiwisaver investor can choose to invest in funds that do have growth assets like Ice House Ventures, or they can choose to invest in other Kiwi Savers that, that don’t even within certain providers. Right. There’s that spectrum. And because they’re able to, you know, they’re regulated and they manage their liquidity in a specific way, they can operate with either a high degree of certainty or complete certainty that anybody who wants to switch or sell can do so when they need.

Paul Spain:
Yeah, right. And are you considering other kind of options from a retail perspective, a listed entity or other things that.

Robbie Paul:
I think we want to stick to our knitting, which is venture capital. But I do think there’s approaches that are possible to make it more accessible to retail investors. Investors. And I mean, just to give you a sense of how much more accessible we’ve made it since we started, like in 2008, the average investment per investor per company, per round, meaning, you know, a company will come back 1, 2, 3, 4, 5 times, was $60,000.

Robbie Paul:
Right.

Robbie Paul:
That’s a lot.

Robbie Paul:
Right.

Robbie Paul:
Once is a lot. And then you have an American fly in and say, well, you need a portfolio of 10 and you know, be prepared to follow half your half the time into second and third rounds. That’s a million dollars. I mean that, that is both just absolutely a lot, lot of money, but also just emotionally a ton because you have opportunity costs.

Robbie Paul:
Right?

Paul Spain:
Yeah.

Robbie Paul:
Fast forward to 2017. We raised a fund that investors could commit 20 grand to. It was paid over three years. So 8,000, 8,000, 4,000 and invested across 100 companies.

Paul Spain:
Yeah.

Robbie Paul:
Halter Henry shares, these Don Aerospace, Mint Innovation.

Robbie Paul:
Right.

Robbie Paul:
And dozens more of like Tradify and really interesting companies. And, and so one, the absolute amount that you’re putting to work in, you know, an asset class that’s illiquid and long term and high risk is a third. But, but, but it’s also diversified across 100 companies across multiple years. And it’s just a complete change. Right. That doesn’t make it accessible to everybody, and I accept that, but it makes it accessible to a heck of a lot more people than 60 grand per company per round. And so our opportunity is to just take a step a little bit further and say, well, who would be able to participate if it was five grand a year, you know, or just five grand once?

Robbie Paul:
Right.

Robbie Paul:
And I think there would be a lot of aspirational people who are crescendoing into their careers who, you know, who like innovation, who maybe even work for startups or work for high growth Companies or who want to start a company that would say, no, that is something I would invest in, you know, and so that’s the aspiration. We haven’t launched anything, but I think it’s a direction of travel that is important either for us or somebody else.

Paul Spain:
That’s great. Really interesting to chat, Robbie. We’ve covered a fair few bases. Anything else you wanted to add before we wrap up?

Robbie Paul:
No, I think I would just conclude by saying there’s lots of reasons to be really optimistic about the position we’re in in the world and with our entrepreneurs and with all these proof points that we’re starting to see. And so, you know, entrepreneurs should lean in and make the most of it.

Paul Spain:
That’s good. And something we chatted about before we started was all the tariffs kind of coming in. There’s obviously sort of pros and cons of this. Any comments you could make in terms of, when you’re looking at your portfolio companies, are there some that are, you know, upbeat because of the, the introduction of, of tariffs? There must be some who are, you know, obviously going to be impacted because the amount of business they do in.

Robbie Paul:
The U.S. yeah, there’s probably more that are, you know, negative as a result of uncertainty than there are positives.

Robbie Paul:
Right.

Robbie Paul:
I mean, but gosh, in every instance, pandemics and macroeconomic shifts, there are some companies that are better poised to benefit from those, those changes. And this is possibly the same thing here. It’s amazing how many companies have gone from being sort of branded as, as impact, waste reduction, recycling to critical minerals and meaning, right. Like instead of framing it as I can recycle X and that’s good. And, and we can do well and do good. You say, well, I can set up a facility in America and help America access critical minerals for defense or data or whatever. And so I think it’s representative of the sort of malleable approach that entrepreneurs take and find opportunities in everything.

Paul Spain:
Interesting. Well, we look forward to seeing what’s next and following the journey of Icehouse Ventures and, and your variant companies. And, you know, I’m sure there’ll be listeners who will be looking up the, the kiwisaver options and, and maybe curious around some of your investor events. For folks who are wanting to maybe get on an email list and get updated about your investor events. Is that just sort of duck across to Icehouse Ventures website?

Robbie Paul:
Yeah, the website’s there. We host a variety of events each year, including our big annual showcase on the floor, Spark arena, that’s coming up in August and we’re very accessible, so it’s not hard to get introduced or get my email from you.

Paul Spain:
Yeah, that’s good. Thanks so much, Robbie. Really appreciate it.

Robbie Paul:
Thanks, Paul.

Paul Spain:
And of course, a big thank you to our show partners, Gorilla Technology, HP, 2degrees Spark and One NZ. Thanks everyone for listening in and we will catch you again on the next episode next week.