May 2004
Dear NZVCA colleague,It was another busy month for the Association. Last week's Budget held nothing specific for the venture capital and private equity industry but we continue to work closely with government officials on some key industry initiatives that kicked-off last year - more on that below. More deal activity during May as well with iGlobe Treasury Management announcing an investment into business intelligence software developer Xegen and Endeavour i-Cap and TMT Ventures investing $1.5 million in Albany mapping company GeoSmart to fund development of its new SmartMaps mobile devices, car navigation and fleet management systems.
NZVCA events in July
As part of the first national Innovation Festival planned for early July, the NZVCA is running a series of events in Christchurch, Wellington and Auckland featuring venture capital and private equity success stories.
Attendance at these events will be free for NZVCA members and their staff and clients/customers.
Event details are as follows:
Christchurch, Monday 5 July, 10.30 a.m. – 12.00 p.m at the Canterbury Innovation Incubator.
Wellington, Tuesday 6 July, 10.30 a.m. – 12.00 p.m at Ernst & Young.
Auckland, Wednesday 7 July, 10.30 a.m. – 12.00 p.m. at Simpson Grierson.
At each session, managers from companies that have been backed by venture capital and private equity funds will discuss their experiences and be available to answer questions from the audience. It’s an opportunity to get some great insights into how venture capital and private investment works in the real world.
Full information on the events, including speaker details for each venue will be available on the NZVCA website after 10 June 2004. To register, please use the online registration function in the “Events” section of the NZVCA website. It will only take a couple of minutes.
If you want to find out more about the Innovation Festival itself, please click on the link set out below.
NZ Innovation Festival Website
NZVCA submission on the Taxation (Annual Rates, Venture Capital and Miscellaneous Provisions) Bill 2004
The NZVCA submission was sent to Government on 26 May and a copy will be available in the Public Policy section of the NZVCA website by 2 June 2004. The key NZVCA recommendations are as follows:
• The tax exemptions proposed in the Bill are too narrowly focused and will not, of themselves, result in a material increase in offshore investment funds into the New Zealand industry.
• The key priority remains the introduction of an internationally recognised limited partnership regime;
• The NZVCA supports the introduction of a generally applicable gains tax exemption for venture capital and private equity investment by non-residents regardless of their domestic tax status. Offshore investors do not want to invest in New Zealand and run a risk of gains here being treated as on revenue account and therefore taxed at a rate that is often higher than they would face at home;
• Clarification is needed regarding the tax treatment of a New Zealand venture capital or private equity fund manager’s “carried interest”. As a result of the recent venture capital limited partnership (“VCLP”) reforms in Australia, carried interests in Australian funds can now be treated as a capital return to the manager and be subject to a reduced rate of CGT. Under current legislation, a New Zealand fund manager’s carried interest will, in most cases, continue to be derived on revenue account and be subject to full income tax.
We have asked to appear before the FEC Select Committee to discuss the NZVCA submissions and we will keep you posted on progress.
NZ Venture Capital Monitor Industry Survey
Our next online survey covering the first two quarters of 2004 will be going out to venture capital and private equity fund members in the first week of June. The survey will close on 16 July. Thanks in advance for your ongoing support for this critical industry initiative.
New members
We welcome the following new members;
Minter Ellison Rudd Watts – Associate
Tony Dowd (New Horizon Capital) – Individual
Don't forget, full details on all NZVCA members are set out in the "Members" section of the NZVCA website.
Speaking of which, we are starting to get some great increases in traffic to the NZVCA site - currently running at about 400 visitors a week. Just another indication perhaps of the steadily growing interest in the New Zealand venture capital and private equity industry!
NZVCA website
 Chris Twiss
ex NZVCA
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