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Thursday 30 June 2022

Q&A: Dean Tilyard on Finistere’s new $40m Aotearoa Fund

10th May 2021 By Bridget O'Connell | bridget@foodticker.co.nz | @foodtickernz

The Ticker sits down with Finistere Aotearoa Fund’s Palmerston North-based investment manager Dean Tilyard to learn more about the US food and agritech investor’s $40m fund, what it will be targeting and how soon it will deploy.

Q. Why has a global player like Finistere decided to launch a NZ specific fund?

Dean Tilyard

A. Finistere is a long-established investor in food and agriculture, and New Zealand has been on their radar for around a decade – the company has now made seven investments here and so it has long recognised the country as a global centre of excellence in terms of its ability to generate compelling IP. And of course, New Zealand’s rich history of large amounts of publicly funded research being applied to the agri industries.

Finistere’s NZ activity has been in early stage commercialisation – putting together programmes and funding for companies. I personally got to know them 5-6 years ago when they invested in a Palmerston North company Biolumic that I was involved with and the relationship grew from there.

Over that same period global agri investing has exploded, so that’s contextual – what we were really wanting to do [with this fund] was put a really clear strategic pathway for companies and funding in NZ.

But our focus is on more than just capital, it is about connected capital – it is about taking New Zealand companies connecting them into the markets, putting the right investors around them, the right partners and trying to do that at speed to transition great IP into companies that can scale and make an impact.

Q. Tell us more about the type of company the fund will be looking to invest in?

A. Our primary focus is series A & B funding rounds. So these are companies that are starting to emerge from their real startup phase – they may have customers and revenue and product, or they may still be in development for deeper technologies.

New Zealand has got a number of those companies already, and we know that because Finistere has invested in some of them already, and there are more of those companies around. We know the pipeline is pretty good.

Our challenge – a New Zealand challenge – is to move more companies from the very early stage of development, from commercialising IP into companies that have a better understanding of their global market and pathway.

Q. Are there many competitors in that space?

A. There are options – we know global agritech investment has doubled from 2019 to 2020 – Finistere is not the only investor there, but what we really look to bring is our connections to offer syndicated investment with the other investors. Our connections to companies and markets globally our global connects and you know we have a good understanding of New Zealand companies so we understand the local law and culture and we can understand those companies.

Q. What would a typical investment from Finistere look like?

A. It varies, but series A & B rounds – these sized rounds are getting much larger than they were even 12 – 24 months ago – we are talking about companies raising $10m-$20m plus, and Finistere being one of the participants in that.

Finistere typically plays a lead investor – that’s what we would look to do with most of our investments in New Zealand – but we also work alongside both local investors and our international network through our offices in San Diego, Silicon Valley, Dublin, Tel Aviv and now Palmerston North.

A typical investment from Finstere might be around $5m plus or minus, with a number of other investors syndicated alongside us.

Q. Is there any support for New Zealand companies prior to this stage?

A. For companies earlier than those stages out platform is through Sprout Agritech in Palmerston where Finistere does invest in the seed level – around the $1m seed level – and we do that beside our co-investors there which are Fonterra and Our Crowd – an Israeli based venture capital firm.

Q. You also have a partner on the new venture – can you tell us about that?

A. Yes, this time we are working with New Zealand Growth Capital Partners via its $300m Elevate NZ Venture Fund. It’s a funder of funds model so it’s looking to encourage the formation of VC funds in NZ.

We have been really heartened and fortunate to develop our relationship with them and it means that they put some capital down and Finistere is matching that, so the first mutual commitment is around $40m.

Q. What is the investment horizon for the vehicle?

It is not short term – our typically investment horizon is around five years, it can definitely be longer. Our funds have a ten year horizon so we expect out funds to have made a return within 10 years.

Q. And what kind of returns are you looking for?

A. Typically, venture capital returns are 3-5 times investment back is the sort of metric we look for. We invest across a portfolio so it is high risk – we know that not all will make it – we start off very optimistically about each investment but some of them go better than others.

Q. Have you noticed a change in global interest in New Zealand in recent years?

A. Definitely, and there are multiple levels to think about here. There is more interest in food and ag investing now and that is driven by the requirement for the world to produce more food. But also the big sustainability drivers are in there driving investor interest. Within that context, New Zeaaland is a known global centre of food production and the science related around that.

Q. Are there any challenges for Finistere deploying the Aotearoa fund?

A.  Over the last five years we have run three programmes where we have bought international investors down to New Zealand and they’ve spent time here. Investments are about familiarity and New Zealand is some way away from markets  – it can be much easier investing in Europe and the US so we have put a lot of time into getting our co-investors familiarity with Finistere in this setting and what else New Zealand can do.

New Zealand has huge platforms of IP and we can be really efficient at developing technology here as well. To show our co-investors first hand has increased NZ’s recognition among them – and making announcements like we did with F Aotearoa Fund – we had a lot of international interest off the back of that –  it all makes a difference – but it is work a whole lot of people have to do collectively everyday which is about positioning New Zealand internationally.

Q. Have you got any deals in the pipeline? How soon can we expect to hear about your first investment?

A. Yes, of course we have – we have companies we are evaluating. We are really confident about what we are doing in New Zealand we are confident about the companies coming through, so we expect to be making announcements in the near future about our first investments – in the next couple of quarters.

 

 


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