Booster has opened up its NZ venture capital limited partnership vehicle to the wider market with the launch of a new portfolio investment entity (PIE) version.
As reported in May, the Booster Innovation Fund (BIF) will allow retail investors direct access to the Kiwi start-up strategy first established by the Wellington-based manager in a joint venture with Victoria University in 2018.
Last year Booster added Otago University to the partnership that has to date allocated to 14 underlying companies including four co-investment deals with Matū Iramoe, the ‘deep tech’ venture capital firm due to list this week as the first client on new local SME exchange, Catalist.
At launch, the BIF PIE will hold assets valued at about $4.4 million after an in-specie transfer from the limited partnership entity.
Allan Yeo, Booster managing director, said the firm wanted to offer a “true retail” route to the NZ start-up market after proving the concept was viable in the limited partnership fund.
“We’ve got a genuine pipeline of opportunities coming through, too,” Yeo said.
He said at inception in 2018, Booster had targeted an allocation of $10 million to the innovation fund over the following five years with over $7 million committed already.
About half of the innovation investments have come via the Booster corporate entity with the remainder sourced from the manager’s diversified funds, including over $1.5 million of its KiwiSaver funds.
Yeo said BIF would only charge fees on “realised” profits received after selling successful underlying portfolio companies. According to the product disclosure statement (PDS), Booster would “receive a performance-based fee if the performance of the fund exceeds 10% per annum”.
Just over half of the current BIF portfolio by value is in biotechnology companies followed by IT and materials technology: aside from the four Matū co-investments, all of the underlying firms have emerged from NZ universities.
In the PDS, Yeo says Booster has “made a long-term commitment to support more young businesses become sustainable, to build more valuable partnerships with research organisations and likeminded investors and most importantly ensure we provide all Kiwis the opportunity to invest in the future of these young companies, which are traditionally only available to wholesale investors”.
Despite the unique risks associated with early-stage venture capital – including a high failure rate among companies – he said investors would likely only allocate a small portion of their total portfolio to the BIF.
He said the strategy could appeal to many New Zealanders looking to support local start-up firms involved in cutting-edge science.
“For instance, one of the companies is developing a drug to help alleviate multiple sclerosis,” Yeo said.
Booster also plans to list the BIF on the NZX during the next 12 months, joining the group’s Private Land and Property fund on the local bourse.
“Traditionally, the lack of liquidity in investing directly in early-stage companies or in specialist investment funds has been a significant barrier for potential investors,” Yeo says in the PDF. “While providing liquidity will continue to be challenging given the nature of the underlying investments, quotation on the NZX provides an important additional avenue for our investors.”
He said the BIF complemented Booster’s other private asset vehicles: the now almost $100 million NZ small-to-medium enterprise-focused Tahi Fund; and, the $75 million property fund.
David Beattie, Booster principal, chairs the BIF investment committee while Melissa Yiannoutsos serves as the Innovations Funds manager.
Booster has about $5 billion under management, split roughly equally between its KiwiSaver scheme and other retail funds.