US venture capitalist eyes local landscape

US venture capital company Hambrecht & Quist, the underwriter for Kiwi company MAS Technology's bid to list on the NASDAQ stock exchange, is exploring the possibility of bankrolling other New Zealand companies.

US venture capital company Hambrecht & Quist, the underwriter for Kiwi company MAS Technology’s bid to list on the NASDAQ stock exchange, is exploring the possibility of bankrolling other New Zealand companies.

H&Q consultant Donald Campbell says the success of Lower Hutt-based MAS Technology, the first New Zealand IT company to try for listing on NASDAQ, the Chicago-based stock exchange oriented toward technology stocks, is raising the profile of Kiwi IT companies abroad. MAS Technology, which specialises in wireless communications, may also itself increase interest in the country, with its executives now on a global road show, whipping up investor interest in Europe, North American and Japan.

San Francisco-based Hambrecht & Quist specialises in raising finance for young technology companies, from venture capital and private placements to public offerings and mergers and acquisitions. Some of the bigger names on its client list include Apple, Adobe, Informix, Intuit, Netscape, US Robotics and Synoptics (now Bay Networks). Last year the company raised $8.7 billion for clients and is increasingly turning its eyes to foreign companies, says Campbell.

Companies with globally appealing products, capable of fast growth are most likely to appeal, he says.

“It’s important that they’re capable of rapid growth. In the US ‘rapid’ can mean over six months.”

The company formed an Asia-Pacific branch ten years ago and has offices in Shanghai, Hong Kong, Singapore and Bangkok. Campbell says in the past two years the company has been making a major effort in Europe and have taken 10 European and Israeli companies public.

Campbell has been working in Latin America and says Chile (which has a population of around 13 million) has interesting parallels to New Zealand.

“It’s a small country but very advanced [it has one of the top economies in South America] and we’ve found significant opportunities there, mainly in software and electronics. There is no venture capital industry there expressly for technology companies and we’re attempting to form a venture capital fund. The opportunities we’ve found will require longer-term investment than is usual for US companies [three to five years], because the companies are generally smaller, but the people are very good and so are the companies.”

Campbell says he would not be surprised to find a similar situation in New Zealand.

“I don’t think New Zealand is too small to attract foreign venture capital. We’re certainly looking at New Zealand, albeit tentatively at this stage. We will look at local companies and talk to them about their needs.”

Wellington technology investment bank Morel & Co organised two seminars for Campbell to meet with local developers.

“We began in Chile much the same way; we just went down and started talking to companies,” says Campbell.

He says, however, that unlike Israel, which has a reputation as a high-tech country, New Zealand is not thought of as rich in IT development.

“We see that in Chile too. A lot of times the Chilean companies we deal with are going to want sponsorship or a partnership with a North American company to establish and improve their image but I don’t think it will take long to change that. I think MAS Technology is raising the profile of New Zealand in that area.

“Israel on the other hand has a very strong technology community. A lot of it was originally sponsored by Israel’s defence industry but the country turns out very strong commercial products also.”

As for New Zealand’s distance from major markets, it’s not a great problem, says Campbell.

“Two generations ago I would have said yes but now it is easier to communicate. India is one of the major countries for software development at the moment and it’s as far from North America as New Zealand. One of the companies we’re working with in Argentina is using Russia for development. Companies are looking at places with good people at lower cost.”

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