Gravy Train Wreck?

In NZ since 2000, angel investor since 2010, this is my take on the NZGCP issues.

NZVIF was set up in 2001 to stimulate a venture capital industry (VCA) and later the development of an Angel investor community (SCIF). Both are crucial to the growth of tech startups that can take the NZ economy into the 21st Century.

NZVIF's early remit to nurture funds in that . However, this was much less successful overall and invited controversy with the Peter Thiel debacle. Unfortunate circumstances but big incentives to attract overseas investors were very common at that time, look no further than Singapore. However, the early-stage investment volume has grown steadily and the NZVIF portion has declined from 50% to 10% of organised Angel group investments. Success!

Personally, I expected NZVIF to gradually phase out its SCIF programme when Dellabarca took over from Banga in 2016. However, it is clear that since then management has lobbied the government to make NZVIF ever bigger and shift from co-investing to direct investing. Dellabarca attended the AANZ Summit in 2016 and promptly alienated everyone in the industry. Unperturbed the Board eventually approved a costly rebranding to NZGCP.

A big fund for direct investment means big bonuses (carry) but needs a great team with a track record. So, no surprise that the mass exodus of the experienced team in 2019 was a set-back. Dellabarca has attempted to reassemble a team ever since. However, staff didn't stay. Even top hires don't yield an experienced team with a good track record for years.

So the ambitions of NZGCP management got deflected into the $300m Elevate programme, now a fund of funds model. Picking up on the earlier VCA model, only this time targeting series A investments - a sensible move to plug a widely recognised gap. Reputable offshore funds are setting up shop in NZ. However, only $21m to Blackbird Ventures would suggest that $300m will be hard to place. The risk is that it will attract lower-tier funds that are after the fees rather than see the upside potential of NZ startups.

I wrote my open letter to Minister Twyford because I feel that too many people in the industry are paralysed. Kiwis don't like to face uncomfortable truths, worry about what harm a real or perceived old boy, old girl network could do to them, and nobody wants to derail the NZGCP gravy train.

The three (plus one) NBR articles (R????? + H???s S????? R??? + B??????? + K????Ex) and numerous comments since then are highlighting that there is an untold truth behind the sudden departure of Dellabarca and that nobody in the industry has confidence in the competence or integrity of the NZGCP Board.

Against this background, it is questionable whether the NZGCP millions are being applied to produce the best outcomes for NZ Inc. We are a small economy and cannot afford this kind of distraction. Overseas investors don't care for this, they don't need NZ, NZ needs the funds and connections that international investors can bring.

???????????????? ?????????????? ???? ?????????????? ?????????????? ???? ?????????? ?????? ???????????? ???? ???? ???????????????? ?????? ?????????????? ?????? ?????????? ???? ?????? ???? ???????????????? ???????? ????????????????????. ???? ???????? ?????????????????? ???????????? ???????? ???????????????? ????????????????. ???????? ?????????? ?????? ???? ???? ?????????????????

My recent LinkedIn posts on this topic #Della1bacle #Grib2chair have clocked up a total of over 43,000 views in addition to the NBR articles and lively behind the scenes email sharing, as I'm told. This is specialised field and it looks like there is a lot of interest from those in the industry.

A: "The only logical conclusion to be drawn here over multiple articles about different topics is the NZGCP and Dellabarca can’t keep track of the stories they spin. Maybe the ministers (Twyford, Robertson, Little) are hoping by ignoring this stream of allegations they can avoid the inconvenient truth about the board and former CEO."

B: "What signal does this send to international investors looking to invest in NZ, if local investors (including Crown entities) take the money and then seek to recut legal terms? Albeit in this instance it seems they all shot themselves in the foot and took a bath, if the sale was a real prospect."

C: "Like it or not NZGCP indirectly is accountable to the taxpayer. I agree this sounds like a breach of fiduciary duty to their shareholder. I suspect part of the problem is that this NZGCP capital comes too easily to its management team. They lose $500K plus on one transaction and nothing happens!" D: "Per NZVIFs 2019 report, assuming that the CEO (Dellabarca) is the highest paid employee his remuneration and other benefits exceeded $520,000 to take care of taxpayer funds. Not sure what he is getting paid for exactly."

E: "If it's true that NZGCP could have made $700,000 for the taxpayer and chose not to, that seems like quite the breach of the fiduciary obligation...especially given their poor return profile over the years."

F: "Interesting to note Tywford addresses Rudi’s concerns about the CEO as being the responsibility of the board, but there is no comment from the minister as to the Rudi’s concerns about the board itself - something the minister has full control over. Maria - was there further comment from Tywford on that matter? Him saying they are doing a good job implementing ways to deploy taxpayer money is not the same as him stating for the record that they are doing a good job as an ethical and responsible fiduciary for taxpayer money." Maria, NBR: "No, that was all Twyford had to say on the matter. NBR feels strongly that he needs to be held more accountable for what goes on at an agency holding the purse strings on over $300m of taxpayers' money."

G: "In addition to the mysterious previous investigation that Gribben refuses to discuss anything about, didn't Rob Towner also conduct the investigation at High Performance Sport New Zealand that found allegations there were “wholly without substance”. And I hope Rob is not a go to for taxpayer funded entity boards looking for absolution."

H: "Maria - did you ask former board members Richard Hughes and David Flacks if they were aware of any allegations or complaints against or behavior by Dellabarca during their tenure? It seems they both resigned before their terms were up."

I: "Good grief this looks absolutely appalling. An entity critical to one of our biggest economic drivers turned into a toxic work environment. A CEO that departs mysteriously with praise from the board echoing in his ears as he leaves, "exceeding expectations". Despite the fact nothing has been achieved in the past 2 years other than a rebrand and a tiny investment in an Aussie fund. Sounds like enabling behaviour and does it indicate that any inquiry outcome is predetermined? And let's not forget this is after the entity looks to have been caught out misleading ministers to get more funding. Rudi is right, the government needs to step in urgently, suspend the board and have an independent inquiry. The fish rots from the head."

AH: Rudi Bublitz, I may disagree with you on a few things and I don't often like the way you go about things - but one thing I support you on is your willingness to call it out when you think it needs to be called out - good on you for doing that. I also want us to focus on driving forward our economy, being positive and enabling - there are many things to be proud and empowered about - I just hope that this crap can be tidied up, put behind us and we can move forward. [...] Rant over. Use your wings Rudi!

SR: Hey Rudi … we can always rely on you to call it how you see it!! The key thing in current the context is to ensure we leverage our venture ecosystem to grow the businesses New Zealand so desperately needs. We absolutely need people who know how to do this well and there is a unique opportunity in the pending appointing a new NZGCP CEO and refreshing its governance to ensure these are people who the industry will 100% get behind. I think we all agree that they need to be people who have a deep appreciation of how challenging (and rewarding) it is to scale a high growth tech company and therefore how important it is that we are collectively and constructively supportive. Onwards...

SY: I am pleased someone, Rudi, is willing to speak out and expresses in plain English, what bemuses many of us...

BC: Good letter Rudi. Why it had to come to this is incomprehensible.

More like this ? #Della1bacle #Grib2chair