Autumn 2024 Edition

Kia ora,

Welcome to the Autumn 2024 edition of The Current, where we share our news and insights from the world of deep tech venture capital investment.

In this issue:

• Our thoughts - what deep tech companies, which offer significant human and environmental benefits and thereby returns but are typically characterised by high capital needs, prolonged development phases and inherent risks, should be focussing on to achieve capital efficiency in a capital-constrained environment.
• In Brief – meet our new team members and TVNZ Sunday deep dives into the world of deep tech
• Portfolio spotlight – what we’ve been investing in and why

We’d love to hear your thoughts and ideas on topics you’d like us to cover off as we’re always keen to share our experience and knowledge.

By leveraging advanced science and engineering-based innovations and breakthrough technologies, deep tech companies are addressing some of the world's most pressing challenges.

But in the current environment where risk capital is limited, and the focus for many startups has shifted to achieving operational efficiencies and having a clear path to profitability, deep tech companies face unique challenges. Characterised by high capital needs, prolonged development phases and inherent risks, these companies need to find ways to balance achieving their milestones while conserving funds. Achieving capital efficiency is becoming increasingly more important, so what does this mean for deep tech and what should they be focusing on? In brief:??

• Efficient minimum viable product development and testing of commercial and technical fatal flaws?
• Path to market?
• B2B products that corporates are motivated to acquire by fear or greed??
• Identifying and avoiding fads vs trends (especially B2C)?
• Understanding whether the tech offers a product(s) or just a feature (features are easier to sell early, but have limited upside, and are generally tough to commercialise on their own if no corporate partners are interested).?

?For the full article click here: Navigating the Capital Constrained Environment: Implications for Deep Tech

Meet our new team members:

Over the past few months, we’ve welcomed Dr Sheryl Tan alongside several venture advisors and partners to our Pacific Channel team.

Dr Sheryl Tan joined Pacific Channel in January as an associate in the investment team. Sheryl’s primary role will be to assist in undertaking due diligence of potential investments, specifically R&D and scientific reviews, and work with our portfolio companies as they develop their products. Before joining Pacific Channel, Sheryl was a Research Fellow in neuroscience at the University of Auckland and?became interested in VC after being approached by our portfolio company, Kitea Health to help develop their pressure-sensing device in brain tissue. Sheryl was a nationally ranked weightlifter and is now the Chief Selector for Weightlifting New Zealand.

Venture Partners & Advisors:

Paul Muckleston and Marny Reakes have come on board as venture partners, with Joe Victor and Mohan Nair joining the team as venture advisors. With many of our portfolio companies undergoing transformative change and seeking access to global markets, enabling them to tap into deep levels of expertise and international perspectives will be instrumental to achieving success. Our venture partners and advisors all have a wealth of international experience and long histories of entrepreneurial, technical, operational and investment expertise which will add real value to the deep tech companies in our portfolio.

Disruptive: TVNZ Sunday explores deep tech

TVNZ Sunday recently aired Disruptive – a story that shined a spotlight on deep tech in New Zealand and provided viewers with a captivating glimpse into the world of revolutionary technologies that will solve some of the world’s most pressing challenges. Importantly, stories like Disruptive not only help to demystify the complexities surrounding deep tech but also showcase the human ingenuity and societal impact that is driving deep tech forward.

As a venture capital company committed to investing in the future of our health, food, and environment, seeing our investments showcased was a testament to our wider community's interest in?the power of deep tech to shape a better world.

From our perspective, this programme highlighted two key points:

1. There’s a difference between building a technology and building a business. As an investor, we need to be constantly analysing whether we should pair an innovator with someone who is very commercially astute, understands the industry, and has the skills to shape the technology into a commercial opportunity. ?
2. Understanding the unique value inflexion point or commercial proof point for the type of technology is critical.

To find out more about our thoughts on the TVNZ Sunday story click here:?TVNZ Sunday explores the immense potential of deep tech?

Shaping History Together

Over the past few months, our investment managers have sat down with a couple of our change-makers to chat about the technologies they are developing, the problems they’re aiming to solve, the commercialisation journey, working with Pacific Channel and other VC investors and the excitement that comes from making a real difference to real people (and everything in between).

Check out our latest videos featuring Kitea Health, Tectonus and Vortex Power Systems.

The ERA of Abundance

Earlier in the year, Pacific Channel presented at Emergence 2024, a conference hosted by Wholesale Investor. At the core of this event was the concept that technology is shaping the trajectory and creating an ERA of Abundance.

Most of us would have heard the saying “Something is scarce until you create a technology that enables abundance”. Technology allows us to do more with less which is why the question we ask ourselves when an opportunity comes across our desks is ‘how can this innovation shift the future of our food, our health and our environment – fundamentals in society – from scarcity to abundance?”??

If you are interested, click here to read our article: The Era of Abundance: A Venture Capital Perspective

Here's some insight into a couple of our recent investments.?

Xefco - reducing textile emissions & creating a greener supply chain?

The textile industry’s water-intensive processes haven’t changed in hundreds of years, and with over 100 billion kgs of textiles produced annually, it makes the textile industry one of the world’s biggest polluters.

Understanding the significant environmental impact that comes from textile dyeing and finishing,?Xefco?has developed a revolutionary manufacturing solution that eliminates the need to use any water in the dyeing and finishing process – reducing water, energy, chemical pollution, and the textile industry’s carbon footprint.

Here's why we invested: Xefco: revolutionising the textile industry

Aimer Development - optimising pasture management

While many agtech opportunities we come across focus on animal health technologies – innovations that enhance animal health and productivity, the foundation of a healthy and productive herd lies in the farmer’s biggest investment – their farm. The significance of well-managed pastures cannot be overstated, as they play a pivotal role not only in the quantity but also in the quality of the food source for the livestock.

Understanding this, Aimer has developed a transformative technology solution that addresses the complex and time-intensive challenges farmers face in obtaining quality, timely data to support their feed budgeting decisions and improve productivity levels.?

Read the Aimer investment story here: Aimer: optimising pasture management

Mars Bioimaging - revolutionising medical imaging?

X-rays, CT scans, PET scans, MRI’s – many of us are familiar with the range of medical imaging currently available to help health professionals understand what might be happening inside our bodies. Yet their future potential is restricted by several factors.?

Revolutionising these technology developments,?Mars Bioimaging?has developed the world’s first colour CT imaging system, which is considered to be a game-changer in medical diagnostics because it shows what is happening in our bodies in a way that has never been achieved before.?

Here's why we invested in Mars: Mars: revolutionising medical imaging