NZ Entrepreneur – Issue 36

NEW ZEALAND’S E-MAG FOR ENTREPRENEURS AND BUSINESS OWNERS

November 2015

10

QUESTIONS with

Jake Millar

Founder of Oompher & Unfiltered

Inspiring entrepreneurship in Lake Tekapo

What’s my company worth before and after investment?

8 tips to make the phone ring www.nzentrepreneur.co.nz

ABOUT / Short and sharp, New Zealand Entrepreneur is a free e-magazine delivering thought provoking and enlightening articles, industry news and information to

CONTENTS

forward-thinking entrepreneurs.

EDITOR / Jennifer Liew ART DIRECTOR / Jodi Olsson GROUP EDITOR / Colin Kennedy CHIEF FINANCIAL OFFICER /

4

From the Editor

6

Flying High in the Regions

CONTENT ENQUIRIES /

11

Did You Know?

email jennifer@nzentrepreneur.co.nz

12 10 Questions with Jake Millar 20

How to increase Website traffic and conversions

24

Teen Entrepreneurs Ready for National Final

26

8 Tips for Making the Phone Ring

30

Pre-money Value and Post-money Value

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$75,000 Awarded to New Ideas for Nature

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Alastair Noble

Phone Jennifer on 0274 398 100 or

ADVERTISING ENQUIRIES / Phone Kristin Harper on 021 905 830 or email kristinh@espiremedia.com WEBSITE / nzentrepreneur.co.nz

ISSN 2253-5683 NZ Entrepreneur is a GREEN MAG created and distributed without the use of paper so it’s environmentally friendly.

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EDITORIAL

In this issue, we interview 20-year-old Jake Millar, who recently sold his business Oompher to the New Zealand Government and has just launched his next venture.

We also share a great story on successful entrepreneurship from the region of Lake Tekapo. Both stories highlight that there really are very few barriers to being an accomplished entrepreneur

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now, be it age or remote location or otherwise.

If your dream is big enough and you’re prepared to take action, there’s really nothing stopping you. If you want something bad enough, you can make it happen. Here’s to taking action and living the lives we want to.

Jennifer Liew

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www.nzentrepreneur.co.nz • 5

ENTREPRENEURSHIP

Flying High in the Regions Inspiring entrepreneurship and innovation outside our main centres Isaac Wilson of TextFerret interviewed

by Kevin Ptak from Ideas Shop

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Isaac Wilson - Lake Tekapo

AT FIRST GLANCE, Isaac Wilson’s story is like most New Zealand entrepreneurs: since a young age he thought about starting a company of his own. Using his experience acquired working corporate jobs in London, Wellington and Christchurch in marketing science, he was able to build the business nous and portfolio of contacts that enabled him to launch his data analytics company TextFerret two years ago.

But that’s where his story changes: Isaac elected to start and run his technology startup company from rural Lake Tekapo instead of Christchurch or one of the main centres.

New Zealand’s innovation economy is thriving, and there are plenty of examples of companies that have gone on from Auckland, Wellington or Christchurch to achieve global success.

But with recent advances in connectivity and normalised remote worker arrangements, it’s now more possible for entrepreneurs to start and build innovative companies from unconventional places outside our main city centres.

“Running my business from Lake Tekapo has been absolutely the right decision,” says Isaac. “Lifestyle is extremely important to me, and I’ve been able to assemble this jigsaw puzzle of all my different interests to create a great lifestyle here doing what I enjoy.”

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Isaac Wilson - with plane

HOW IT STARTED Isaac moved his family to Lake Tekapo in 2009 from Christchurch in pursuit of a lifestyle that would allow him to fulfill a dream to become a pilot while also keeping one foot planted in his erstwhile professional career in marketing and data analytics.

Building up his flight-time hours and experience would take time, so he also started a consulting business to help make ends meet.

A few years later he was working on a client project to evaluate if there were any customer behaviour insights that could be derived from a large cache of text data. Stepping back after the project, he recognised an opportunity to build

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a standalone text mining product offering.

“That was our ‘eureka’ moment,” he says. “We didn’t come up with the idea for TextFerret independently. The way it happened was that it just hit us after working on this project. We saw it as a good source of annuity revenue that would be complementary to our other services, and importantly, we could continue to run it from Tekapo.”

Fast-forward to today and TextFerret is doing business across New Zealand and Australia, mainly working for insurance companies and government departments. In addition, Isaac also runs two other online businesses, both dealing with analysing online consumer data.

GIVING IT A GO “Once you start the journey, the path sort of forms in front of you,” he says.

The important thing, according to Isaac, is to know yourself and your working style; and be committed to making the remote arrangement work for you.

“You need to know your strengths, to be able to say ‘this is what I do well’ and be able to sell that credibility and expertise,” Isaac says. “These are the same skills you’d need to be successful as an entrepreneur in any city too.”

“You need to be able to come up with creative solutions to put people at ease that you can deliver on their requirements, even if you are

working from somewhere that might seem a bit different.”

That’s not to say that working from a rural area on a high-tech startup isn’t without its challenges.

Arranging work meetings and trips can take a bit more planning, and Isaac also has to deal with occasional power cuts or road closures during the winter.

But by the same token, such disruptions can happen in the centres too. A cancelled flight due to fog at Auckland or Wellington airport would have the same impact.

“In the end, there’s not a substantive difference to being based in Lake Tekapo versus Christchurch or another city,” he says.

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It’s all about bringing the right skills together and doing what it takes to get the job done for our clients—regardless of where any one of us is located DOES LOCATION MATTER?

In today’s economy, location is actually less important than it’s made out to be.

Technology makes it easy for Isaac to connect virtually with clients through Skype, phone or email, or with his technical team based in Wellington and China.

“It’s all about bringing the right skills together and doing what it takes to get the job done for our clients— regardless of where any one of us is located,” Isaac says.

For other entrepreneurs living in the regions that may be considering the feasibility of launching their enterprise

from outside one of the main centres, Isaac is quick to endorse the sentiment of giving it a go.

“Working in a rural region has been great from a lifestyle perspective, and I’d encourage anyone with a business idea simmering away to give it a go,” he says. “You should have realistic expectations for what you’re trying to achieve.

Taking over the world from Lake Tekapo might not be realistic, but that’s not the primary objective here. I’m aiming to build a life rather than a dominion, and that’s absolutely achievable.” ■

Isaac Wilson is an entrepreneur living the dream with his family in Lake Tekapo. More about TextFerret

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Did You Know?

12 Facts About Entrepreneurs That Will Likely Surprise You What’s your picture of what the average entrepreneur is like?

on a survey done by the

Here’s 12 facts from a report titled ‘The Anatomy of an Entrepreneur’. It’s based

Entrepreneurship, of 549

Kauffman Foundation for company founders across a variety of industries.

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1. The average and median age of company founders when they started their current companies was 40.

of respondents themselves had earned bachelor’s degrees, and 47% 22. 95.1% had more advanced degrees. than one percent came from extremely rich or 33. Less extremely poor backgrounds.

44. 15.2% of founders had a sibling that previously started a business.

5. 69.9% of respondents indicated they were married when they launched their first business. An additional 5.2 per cent were divorced, separated, or widowed.

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of respondents indicated they had at least one child when they 66. 59.7% launched their first business, and 43.5 per cent had two or more children. majority of the entrepreneurs in the sample were serial entrepreneurs.

77. The The average number of businesses launched by respondents was approximately 2.3.

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8. 74.8% indicated desire to build wealth as an important motivation in becoming an entrepreneur.

4.5% said the inability to find traditional employment was an important 99. Only factor in starting a business.

101. Entrepreneurs are usually better educated than their parents.

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2. Entrepreneurship doesn’t always run in the family. More than half (51.9%) of respondents were the first in their families to launch a business.

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3. The majority of respondents (75.4%) had worked as employees at other companies for more than six years before launching their own companies.

Which of the above surprises you the most and alters your mental model of what entrepreneurs are like? ■

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INTERVIEW

QUESTIONS

Jake Millar in Unfiltered Spaces, the professional filming studio owned and operated by Unfiltered

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with Jake Millar

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Work out what is going to make you happy in life, and strive towards that with all of your oomph and passion.

An accomplished entrepreneur at just 20 years of age, what’s your secret?

The secret is simple: work out what is going to make you happy in life, and strive towards that with all of your oomph and passion.

I worked out that in life I want love, family, friends, freedom, finances, fortune (health and luck), fitness, fun and influence… Every decision I make has to take me closer to building success in one of those areas. The other key thing is that in order to be truly successful, you need only two things: extreme skill, and networks.

I therefore dedicate myself to becoming skilled at business (through action and education), and building networks (friendships). If you are incredibly skilled, and have a strong network, you will be unstoppable.

What or who has been your greatest source of inspiration?

‘What’ inspires me is to achieve my 30-year-plan this is a gem of advice that Sir Michael Hill gave me.

Work out where you want to be in 30 years, and work your way backwards. This drives me everyday.

‘Who’ involves a lot of amazing people, but first and foremost my father. Dad died in 2010 in a skydiving plane crash, and he was someone who did what he loved, everyday, always seeking higher things. His passion for skydiving and business reminds me to find joy in my life. Additionally, Sir Richard Branson, Mike Pero, Elon Musk, Eric Watson, Elizabeth Holmes, Jamie Beaton and Graeme Hart have been significant inspirations for me in business and life.

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For me, it is about freedom - being in charge of my own destiny. As entrepreneurs, we get this privilege more than most. I love creating, I love building value, I love building wealth, and in business, I get to do this everyday. It is magical.

I decided to explore the opportunity of becoming an entrepreneur after reading Sir Richard Branson’s ‘Losing My Virginity’ (the book that changed my life).

Sir Richard showed me what life could be like.

As for the ‘specific moment’, I was incredibly fortunate to be offered a $40,000 law scholarship to the University of Otago, and I had a phone call with the Dean of Law, Mark Henaghan, to discuss the scholarship. I told him of my entrepreneurial itch, and he encouraged me to scratch it - I will be forever grateful for that. I remember feeling on top of the world when I made the decision.

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For me, it is about freedom - being in charge of my own destiny. As entrepreneurs, we get this privilege more than most. I love creating, I love building value, I love building wealth, and in business, I get to do this everyday.

It is magical.

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Out of all the things you could have chosen to be when you grew up, why did you choose entrepreneurship and was there a specific moment that lead to that decision?

How old were you when you started your first business and what did you sell?

I was 7-years-old, and I sold fridge magnets! My business was called ‘Jakeo-Magnets’ and operated from Greymouth. My Mum is incredibly creative, and she gave me the idea. I would sell magnets outside of the supermarket in Greymouth and usually make about $45.00 per day - a killing! In those days, Mum paid for my raw materials (!), so it was 100% profit… talk about a good business model!

Jake Millar on the Paul Henry Show discussing the launch of Unfiltered in November 2015

Tell us a bit about OOMPHER, the business you just recently sold to the government?

OOMPHER is a digital media company with a vision that ‘less people die wondering what they could have achieved’. I set out to inspire students to do extraordinary things through Wise Words from leaders in their fields.

The problem I was trying to solve was that students leaving school were flocking to University simply because it ‘seems like

the right thing to do’.

We therefore interviewed 130 thought leaders such as Rhys Darby, Mahé Drysdale, Suzy AmisCameron and Nadia Lim to talk about how students could get into their field.

OOMPHER was sold to New Zealand Government Crown Entity Careers NZ in May 2014 - and they’re continuing to distribute our content into Kiwi schools.

I’m really proud of what we have achieved.

www.nzentrepreneur.co.nz • 15

Jake Millar and Julie Christie - Mentor and inspiration

Your new venture Unfiltered, tell us a bit about that and who it’s designed for?

Unfiltered, also in the media/ journalism industry, is a paid-subscription business education platform dedicated to helping Kiwi businesses grow both here in New Zealand, and globally. In conjunction with PwC, AMP, NZTE, Craigs Investment Partners and the University of Auckland Business School, we interview the most successful Entrepreneurs, Investors and Executives in the World for

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the benefit of New Zealand business. Our interviewees include people such as Sir Richard Branson, Julian Robertson, Eric Watson, Diane Foreman, Sir Ralph Norris, Rob Fyfe, Claudia Batten and Victoria Ransom. Additionally, we create business-specific video content with our commercial partners across four digital channels - Startup Series, Scale School, Global Know-How and Risk Ready TV. Check out www.unfiltered.co.nz and learn how you can achieve your business dreams.

I follow the following market validation formula, taught to me by entrepreneur Sam Ovens. Firstly, find a painful problem, in a specific industry. Secondly, cold approach 50 to 100 potential clients to get feedback, asking whether they would pay for your product. If they say “yes,” make these early adopters commit by signing a pre-launch contract. Once you have 10 to 20 pre-sales, build the product. If you follow all of these steps, be careful to retain as much equity as possible, as by this stage you know for sure your idea is excellent. This is the best way to avoid unnecessary risk and protect the downside.

What has been your biggest challenge as an entrepreneur?

As an entrepreneur my expectations of myself, and what I want to achieve, are constantly evolving. Although this is exciting, it is also challenging, as you never reach a level of true satisfaction. In business I think it is important to look over your success, and be proud. It is okay if you are not totally satisfied, but definitely be proud of your success! This is fundamental, as you never know when your time on Earth is up!

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In business I think it is important to look over your success, and be proud. It is okay if you are not totally satisfied, but definitely be proud of your success!

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Can you tell us how you know you’re onto a good idea or perhaps share the key things that help to define a good business idea?

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Tim Alpe (Co-founder, JUCY), Briar Douglas (National Manager - Youth, BNZ), Keith Marshall (CEO, Careers NZ), Jake Millar, Jane Ratcliffe (General Manager Channels and Digital Resources, Careers NZ) and Mai Chen (Managing Partner, Chen Palmer) announcing the sale of OOMPHER to Government Crown Entity Careers NZ.

Jake Millar and Keith Marshall, CEO of Careers NZ, shaking on the sale of OOMPHER

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So don’t waste your time stressing, don’t waste your time working on something you hate, don’t waste your time with people you don’t like. Make radical change in your own life so that you’re happy with your current situation that’s the best you can do.

What is the greatest lesson you have learnt about life?

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Is there a specific book you’d like to recommend other budding entrepreneurs read?

Wow! I can think of so many.

Zero to One by Peter Thiel is the best book I have read on Tech Startups. Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee Vance for inspiration.

Essentialism by Greg McKeown for focusing on the essential. Outliers by Malcolm Gladwell for understanding, and, a Kiwi example, In The Arena by Diane Foreman for the details on life as an entrepreneur! Read, read, read - that’s my advice for any entrepreneur!

We’re all mortal, don’t fear it, embrace it. This has been so hard for me to accept, and it is scary. A friend of mine, Jake Bailey, the Christchurch Boys’ High School Head Boy of 2015, was recently diagnosed with cancer.

Jake’s story has allowed me to accept that luck plays such a big part in our lives. There is so much that it totally out of our control. You or I may get cancer tomorrow, and we can’t do anything about it.

But what we can do is control the now.

So don’t waste your time stressing, don’t waste your time working on something you hate, don’t waste your time with people you don’t like. Make radical change in your own life so that you’re happy with your current situation, that’s the best you can do. The rest is decided by a crazy game called life. Also be nice to people, everyone is fighting their own personal battle. ■

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MARKETING

HOW TO INCREASE WEBSITE TRAFFIC AND CONVERSIONS

You may already know that 93 percent of New Zealanders will research their buying decisions online before making a purchasing decision (that counts for business to business too).

BY Colin Kennedy

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YOU MAY ALSO know that some companies are making a bundle of sales off their internet traffic, while others are getting nothing – not a sausage. Zip. Which one are you, or are you in the middle? And, why are some companies so successful and others so dismal?

It is probably because most New Zealand companies are fixated with search engine optimisation, not conversion. If you’re getting even a smidgen of traffic and hardly any inquiries, there’s something about your website people don’t like.

People come to look at your website because they are firstly looking for information that will help them make an informed decision, and because they want to ‘feel’ something when they do – trust, confidence, excitement…

You will already have heard the meme: ‘Content is King’.

Well, it is true.

By creating professional, informative and educational content you achieve a number of objectives: 1. Better search engine optimisation because Google values sites that are active.

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2. You get more referral traffic. When you have good content, you can spread it around to referral sites, which rank better than you. These sites then act as a springboard to your own website (do this properly and you won’t even need Google).

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3. You build trust. By offering solid, useful advice (with no obligations) you begin to position yourself as an authority on the subject.

People will begin to trust ‘that you seem to know what you’re talking about’.

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4. You build ‘liking’.

If you offer helpful, conversational advice free of charge, people will automatically begin to think of you as ‘nice’.

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Here’ a simple content marketing plan:

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1. Establish a blog on your website, or a stand alone blog

up a Twitter account, a business Facebook 22. Set page and your LinkedIn page 3. Set up an interest group on LinkedIn and invite others to join

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4. Identify a couple of referral sites i.e. www.eZine.com 5. Identify media sites, journalists, complementary blogs, PR distribution sites

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your blog and then distribute it via 366. Write Facebook, Twitter and LinkedIn

77. Post it to your referral sites 8

8. Rewrite the blog as a press release and distribute it to media outlets

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9. Format the article as a pdf for download off your website I recently visited the site of a company that sells trailers. They had tons of articles on all kinds of things, including ‘buying tips’, ‘on road regulations’ and ‘towing tips’.

They had masses of traffic and a lot of people discussing purchases with them.

Good content builds trust and engages your customers in a conversation. It’s what your customers are looking for. ■

Colin Kennedy, Head of Content from Espire Media is a thought leader in content marketing strategy and communications in New Zealand. www.espiremedia.com

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GOT A PRODUCT, SERVICE OR BUSINESS WORTH TALKING ABOUT? Want to grow brand awareness in a more effective and useful way?

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Check out our blog for content marketing advice, tips and ideas, plus a free copy of our content marketing guide The Content Creation Cookbook!

Tomorrow’s Entrepreneurs

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Teen Entrepreneurs Ready for National Final Young Enterprise CEO Terry Shubkin profiles some of the contenders for the National Final of The Lion Foundation Young Enterprise Scheme.

THE YEAR IS SWIFTLY coming to a close for students taking part in The Lion Foundation Young Enterprise Scheme (YES). Here at Young Enterprise HQ, we’re gearing up for the YES National Final in December! Nineteen YES Companies from all corners of New Zealand will descend on Wellington to compete in our National Final.

have gone from strength to strength in their quest to bring personalised culinary experiences to their customers.

Each team will give a fiveminute presentation to five judges. For these teams, it will be a culmination of all their hard work throughout 2015. The winner will be announced as the supreme winner, The Lion Foundation Young Enterprise Company of the Year.

Customers got to cook a meal and enjoy wine pairings with the chef, with proceeds from each event going to a different charity. The students have managed to create and foster relationships with a number of suppliers and sponsors to make their events successful, including their partnership with Bidvest Food Services, who supplied the ingredients for their events.

Our Regional Champions for 2015 have created a wide range of products and services. The Bidvest Chef’s Project from Nelson College are the Nelson/Marlborough regional champions. They

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This social enterprise team of six have put together a series of events in Nelson and Wellington, offering customers a chance to cook with amazing chefs such as Benjamin Bayly, Laurent Loudeac and Matt Bouterey.

Another YES Company competing for the national title is Husky, from Kingsway

College, who are the Auckland North regional champions. Husky designed “warm and stylish slippers for the sock lover” – a hybrid slipper/sock which is handcrafted from merino wool and suede leather.

These comfy and durable products have proved very popular with many customers, including some at Young Enterprise HQ! We’ve heard through reliable sources that they make great travel socks.

Husky were invited to speak at the Kea Inspire World Class event and sold their products at the Indie Markets in September.

Their amazing product and hands-on approach mean that they’ll be an interesting one to watch in the future!

Revive ’15, from Villa Maria College, are the Canterbury regional champions for 2015.

They have overcome many challenges throughout their YES experience. Earlier this year, after settling on St John Ambulance as a charity they wanted to support, they looked to what products they

could create and sell.

Originally, Revive’15 had planned to make a Canterbury themed ice cream. Unfortunately, part way through the year, their supplier dropped out!

Heading back to the drawing board, they connected with The Fudge Cottage to create two flavours of gluten-free fudge (caramel and apple crumble).

Revive ‘15 set up distribution relationships with restaurants who sold their fudge.

Then, in September, more disaster struck! Three hundred units were in transit to their retail outlets when the delivery vehicle was broken into. Revive’15 have shown wonderful commitment throughout the year, despite their obstacles.

We look forward to seeing all of our Regional Champions pitch in the National Final!

If you’re interested in seeing the teams compete, or celebrating with us at the National Awards, you can contact us at events@ youngenterprise.org.nz. ■

Young Enterprise works with an estimated 90,000 students across New Zealand, including nearly 3,000 taking part in The Lion Foundation Young Enterprise Scheme. You can find out more about Young Enterprise, make a donation or volunteer on their website, www.youngenterprise.org.nz.

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SALES

8 Tips for Making the Phone Ring

Our phone is not ringing as much as before; companies are taking longer to reach a buying decision and referrals are slowing. Combine this with poor time management and what do you have? Disaster. So what can you do to maintain sales and income?

BY Debbie Mayo-Smith

ONE OPTION IS TO understand the value of your time and organise your day to earn more.

Here are eight concepts to help you do just that:

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MONEY HOURS Organise your day around the ‘money’ hours. These are the hours that you can and should be talking with your prospects and customers.

Going out on appointments.

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Calling on the telephone.

Finding new customers and seeking opportunities with existing ones.

The money hours are too valuable to waste on nonrevenue generating activities.

Confine these activities to before or after your money hours. This requires discipline, doesn’t it? How much easier is it to do a bit of paperwork rather than picking up the phone?

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BEST TIME TO CALL

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FOLLOW-UP

Do what you say you’ll do.

Ensure you document your follow-up When calling, persistence immediately. If you set it aside for later, pays. Sometimes up to six you’ll either forget to do it, or you won’t calls are required. The best time remember all the details. to call to get real people willing Documentation can be your paper diary to do business is between or, even better, your computer. Your 3:30pm and 4:45pm. The best proprietary or email software has the time to get a ‘live’ conversation ability to be your memory and prompt is between 3:30pm and 5:30 you automatically. In Outlook, you can pm. Friday is the best. Monday use the Tasks or Calendar function, or To is the worst. The best results are Do in Lotus Notes. When creating one, obtained within 24 hours when you can write notes, add attachments – returning incoming phone calls. but more importantly, you set a date and time for it to pop up and remind you to And leave a good message. do the follow-up.

Use this prompting function to help you PROSPECTING HOURS to maintain your follow-ups when faced with a continuum of ‘not yets’. Persistence Dedicate a certain pays heaps, yet very few people persevere percentage of your money when they don’t get an immediate ‘yes’. hours to prospecting for new The prompt is also superb for those business. Vary the time of day longer-term ‘call me back in six months’ when you contact individuals follow-ups.To make it easy, standardise to increase the probability of your most frequently used follow-up pieces for easy production and distribution. reaching them. As this is an activity most people hate, put it in your schedule. Then do it. Pick up the phone and – as all telemarketers are told – call with a smile on your face.

A little extra advice: with so much email clutter and spam filtering, if possible post the marketing or proposal material in addition to emailing. Emailing allows recipients to share and forward it. However, many large corporations and government departments strip attachments or limit mailbox sizes, so the recipient may never see your email or attachments. Posting a print version ensures they do.

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KEEP IMPROVING Make sure you schedule non-money hours for professional development such as sales skills, people skills or improving industry and/or product knowledge.

KNOW YOUR STATISTICS Sales don’t appear magically out of thin air. The ‘yes’ you got today from a customer was generated by an activity that occurred in the past. One of the biggest problems for small business owners and the selfemployed is being too busy and allowing marketing and business development to slip off the radar. In other words, not following point one – using the money hours correctly.

If your sales funnel is four months, and you were busy in February, neglecting to create activity, June will be unusually quiet.

Here are other statistics you should know: How many phone calls or emails to make contact with an individual? How many contacts to a qualified lead? Qualified leads to proposals? Proposals or contracts to customers?

Calls per hour? Follow-up attempts before dropping?

PRODUCTIVE TIME Always, always have something to read for flight delays, waiting rooms, standing in lines.

Use your time driving to listen to educational, business podcasts or CDs. With headphones, you can also use the time to make call backs.

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JUST ONE MORE If you can discipline yourself to make just one extra contact a day with someone new, you’ll have about 250 extra contacts in a year. ■

Debbie Mayo-Smith (BSc Hons Econ) is an International Motivational Business Speaker and Managing Director of SuccessIS! www.successis.co.nz

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PERSONAL TRAINER

Entrepreneurial Intelligence

with SandyGeyer

I would like to go out on my own but feel overwhelmed by what I ‘don’t know’. How will I know when I know enough to succeed?

YOU WON’T, AND you never will. The entrepreneurs who fail quickly are the ones who become wrapped up in what they don’t know and stress themselves silly whilst apologising to everyone they meet for breathing their share of oxygen. There are many things that you can do to ensure that you have devised a plan that has merit and identified all possible obstacles in advance. But the reality is that there are no guarantees

for any businesses out there and the ones who succeed are most likely to be the ones who focus on what they do know.

Once you are clear on ‘what you got’ you are automatically clear on ‘what you don’t got’ and you can then work hard to fill the obvious gaps with the right people or resources. Remember that what you know now will pale in comparison to what you will learn on this journey and that’s a good enough reason to set off. ■

In each issue, Sandy will be answering commonly asked questions from new entrepreneurs. If you have a question for Sandy to do with entrepreneurship, building successful businesses or the challenges and difficulties faced by entrepreneurs, email the editor at jennifer@nzentrepreneur.co.nz Sandy Geyer is an entrepreneur and mentor and teaches the principles of entrepreneurial intelligence (EnQ), to entrepreneurs in New Zealand, Australia and South Africa. You can visit Sandy’s website at www.enqpractice.com

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Investment Corner

Pre-money Value and Post-money Value

BY Nathan Rose

“IMAGINE A NEW investor wants to invest $200,000 into your business, and in exchange wants 20 percent of the company’s equity. What is the valuation of your venture that is implied by this proposal, before the money was put in?”

If you’re scratching your head and can’t say with full certainty, then you are like the majority of human beings on planet Earth - susceptible to confusing the difference between pre-money value and post-money value.

Put simply, adding more cash to a company makes it worth more. Think of it this way: all else being equal, the value of a house would increase if you put a briefcase filled

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with cash into the living room, and the amount of the increase would be equal to the amount in that briefcase.

• Pre-money value is the value of a company before it receives new investment.

• Post-money value is the value of a company after it receives new investment.

This may seem very simple, but don’t be fooled! The difference can make your head spin if you haven’t taken the time to understand it. Rest assured that sophisticated investors sitting across the table from you in any negotiation will understand the difference very well.You should get your head around two important equations:

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Per cent owned by the new investor = new money invested/post-money value It requires a bit of algebra to solve the initial question that this article posed, but if you think back to high school mathematics, you will hopefully be able to see that:

To solidify your understanding, try changing things around and working out this one for yourself:

20% = $200,000/ postmoney value post-money value = $200,000 / 20% post-money value = $1,000,000 We still need to go further, as the question asked for the pre-money value, thus: “What is the valuation of your venture that is implied by this proposal, before the money was put in? “ For this, we need another equation which relates pre-money value and postmoney value to each other.

The importance of understanding what the new investor is asking for during negotiations cannot be understated – getting premoney value and post-money value mixed up is not only embarrassing (as it betrays that you don’t really ‘get’ financial language), but it could also mean you and the investor are talking at cross purposes and you agree to give away more equity in your company than you meant to, or refuse a deal which is acceptable to you.

Post-money value = Premoney value + new money invested. $1,000,000 = pre-money value + $200,000 pre-money value = $1,000,000 - $200,000 pre-money value = $800,000

You’ve spent a long time building your business to the point of being ready for investment. Take a couple of hours to make sure the difference between premoney value and post-money value is something you’re 100 per cent sure of. ■

“Imagine a new investor wants to invest $500,000 into your company at a pre-money value of $1,500,000. What percentage of the company is the investor asking for?”

Nathan Rose is an experienced investment banker, and offers services in financial modelling, building great pitch decks, and capital raising analysis for entrepreneurs and small business. Find out more here.

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Ecosystem WWF’S annual Conservation Innovation Awards are now in their second year and are a celebration of Kiwi innovators whose ideas look set to make a real difference in the fight to protect our special places and wildlife.

WWF, WITH THE SUPPORT of The Tindall Foundation, is the leading organisation backing innovation in the grass-roots community conservation sector.

$75,000 Awardedto NewIdeas forNature

BY Rosa Argent from WWF

Ayla with a raukawa gecko at Baring Head ©Eloise Taylforth.

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We are proud to support the people on the frontline of conservation protecting our unique places and wildlife, and this year we have welcomed 90 Seconds as our awards video production partner – enabling us to better share their inspiring stories.

The kiwi innovators behind a wasp-killing bait, an Iwiled restoration project and a new-generation native lizard monitoring system will each be awarded a $25,000 grant to recognise their contribution to innovation in conservation.

The three winners, from Nelson, Tolaga Bay and Wellington were congratulated by TV3 Presenter, Samantha Hayes, and ‘the Bugman’ Ruud Kleinpaste, at an event held in Wellington on Thursday, 5 November – marking Conservation Week.

The Conservation Innovation Awards are a WWF initiative which seeks to unearth new ideas to boost conservation action in New Zealand.

Otago Science wananga ©Uawanui Project

The winning ideas are:

Lure, Trap & Retreat! Out-of-date 1960s ‘bucket’ traps are the current standard for monitoring more than 100 species of endemic New Zealand lizards. The idea of a new-style trap, submitted

by Wellington-based EcoGecko Consultants, who describe lizards as the ‘forgotten fauna’, will replace these unreliable tools and help keep track of these ecologically important reptiles.

The Uawanui Project this Iwi-led community project from the East Cape is based on the principle that a healthy environment means healthy people. With a long-term commitment to ensuring conservation becomes part of everyday life, the project seeks to integrate environmental efforts with economic, social and cultural development and education in the Uawa Tolaga Bay area.

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Vespex inventor Richard Tait ©Entecol

Vespex Wasp Bait invasive wasps

the natural environment. Using a

cause around $60 million worth of damage to the New Zealand environment every year, and are responsible for stealing food from native species and killing newly hatched birds. Not to mention the hazards faced by conservation workers and anyone enjoying the outdoors. The Vespex wasp bait is a new protein-based bait that wasps carry back to their own nests – and which, importantly, is unattractive to bees. It has been successfully trialled in conjunction with the Department of Conservation and has environmental safety and good stewardship at the heart of its development.

crowdsourcing website, entrants

WWF’s Michele Frank, who oversees community conservation projects for WWF nationwide, says the entries submitted to this year’s awards were truly inspirational.

a Silicon Valley entrepreneur

“These awards are an exciting collaboration between people who share a passion for improving

Landcare Research, and Shane

posted their ideas publicly, joined discussions with site visitors and then adapted their ideas in response to comments,” says Michele.

“We are proud to be celebrating our winners for being at the forefront of conservation thinking and committed to developing ideas that look set to change the game. By harnessing creativity like this, we can bring better tools to the community volunteer army and better protect our wildlife, sooner.”

The finalists in the awards were judged by an independent panel comprised of Matthew Monahan, and co-founder of Kiwi Connect, Devon McLean director of Project Janszoon, Justine Daw, general manager of partnerships at Inder, programme leader of Industrial Design at AUT. ■

All entries to the 2015 Conservation Innovation Awards can be viewed here. If you would like more information regarding the awards please contact Rosa Argent, WWF-New Zealand Communications Manager at rargent@wwf.org.nz.

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PARTING SHOT

You don’t learn to walk by following rules.

You learn by doing and falling over.

-Richard Branson

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