Angel investor group Sparkbox and K1W1, an investment company owned by Stephen Tindall, have launched Start-Up Fund, aimed at companies from Auckland’s business incubator the Icehouse.
The New Zealand Venture Investment Fund’s Seed Co-Investment Fund (SCIF) will match investments made by Sparkbox and K1W1, so enabling Kiwi entrepreneurs to get funding of up to $150,000 per project.
The $150,000 injection will give start-ups the proof-of-concept funding they need and, hopefully, set them up for the angel investment stage, says Icehouse chief executive Andrew Hamilton. The funding — “pre-angel and post friends and family” — will help people with good ideas quickly determine whether they have a viable concept, and whether it can be turned into a business, he says.
Since the Icehouse started, seven years ago, Hamilton has seen many companies fail simply because they didn’t spend enough time validating the market and testing to see whether their idea was really viable, he says.
Seven out of ten companies entering the business growth centre each year fail after six months, often because of lack of funding, lack of quality ideas or lack of business opportunity, says Hamilton. “With a bit of funding, we can get these companies on the right road,” he says.
Applicants for the Start-Up Fund must be Icehouse residents. The 85 start-ups that applied for this first round of funding were first cut down to 20, says Hamilton. Of this 20, six are now being put through a process that will cut the candidates down to two. The winner will be announced in the next couple of weeks.
The aim is to fund at least five projects a year, says Hamilton.