When start-up companies talk product to investors, instead of talking business, they’re asking them to buy into a dream, NZ Stock Exchange CEO Mark Weldon told an IT audience in Wellington last month.
Start-up and early-phase ICT companies searching for capital give potential investors little real information about their business, Weldon says.
“It is extraordinary how little [New Zealand] CEOs know about their business,” he told a meeting of the NZICT Group late last month. “That is why capital markets don’t fund them. They want information about the company. What they continue to get out of the ICT sector is information about the product.”
Product information, even if investors can understand it, is almost irrelevant to them when it comes to sinking money into the company, with a prospect of a return and in due course a profitable exit.
“If that continues, there will be no capital,” he says “You’re just asking them to buy a dream.”
Xero stands out as a company that has it right, Weldon says. It set up good links into the financial networks, through Cameron & Partners and First NZ Capital, two companies that neatly complemented each other’s skill-sets. Such networking is more important in New Zealand and Australia than it is in many overseas countries, where the banks are more active in that respect.
Read more at Computerworld.