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Spark to go it alone with VC investments

NZ Newswire logoNZ Newswire 2/06/2017

Spark Ventures will effectively be an internal VC, aiming to invest $10m to $12m a year in expansion stage companies. © Mark Coote/Bloomberg Spark Ventures will effectively be an internal VC, aiming to invest $10m to $12m a year in expansion stage companies. Spark chief executive Simon Moutter's drive to create a $100 million venture capital (VC) fund backed by large New Zealand corporates has been put in the too-hard basket.

But the company is committing investment of between $10m and $12m a year of its own in innovative technology companies.

The decision follows a year of efforts by Mr Moutter to attract a group of major New Zealand companies to back the concept of the so-called 'Reactor Fund'.

This came from a private sector-backed mission to Israel last June to study that country's innovation policies and culture.

In an email to the participants on that mission on Friday, Mr Moutter said the idea was being "shelved for now", but that Spark would make its own commitment.

"Spark has decided to divert the investment we would have made to this large VC fund towards increased direct investments of its own in expansion stage companies and areas closer to our sector via our Spark Ventures unit.

''Spark Ventures will effectively be an internal VC, aiming to invest $10m to $12m a year in expansion stage companies."

Several factors had led him to conclude the Reactor Fund was too difficult to achieve at present.

These included evidence that the funding gap the fund sought to fill "has already begun to close", said Mr Moutter.

In the last year, there had been several large-scale venture capital and private equity fund-raising efforts, he said, citing specific funds of up to $1.1 billion raised through a variety of sources including Direct Capital, Movac, and a deal between The University of Auckland and the IP Group.

Concerns had also been raised about the potential for an "overly large" new fund to "'swamp the system'' or overmatch the investable opportunities or available entrepreneurial talent here.

"In addition, New Zealand companies have been lifting their spending on research and development and there is noticeably more international growth capital looking for investable opportunities in NZ."

Spark, Air New Zealand and Vector had backed the Reactor Fund concept.

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