Lance Wiggs’ Post

How predictive of success is winning a Hi-Tech Company of the Year Award? I have looked through previous Hi-Tech Awards Company of the Year winners across the Start-up, Emerging and Company of the year categories. The Punakaiki Fund Start-up of the year category is not very predictive, but there are some real gems in there. Some companies did extraordinarily well after they won. Others did not. The category is for companies with last 12 months revenue of $0-2m (it's varied over time, but generally very early). The companies need to do a lot of work (funding, time and luck helps) to make it. Companies at this stage are not inevitable, but smart founders and investors will see success. PFL invested in 3 winners in this category - Whip Around, which went on to win the next category up and is doing very well in the USA, Raygun, serving a global market from Wellington and with revenue squarely in the next category, and Moxion, which exited to Autodesk in 2021 shortly after our investment that year. Investing at this stage is early stage venture capital - returns can be very high, but so are failure rates. The ASX Emerging Company of the year category is for companies with revenues between $2 and $15 million (varies by year), and is far more predictive of success. However it's not entirely predictive, and some companies will need a more time and capital to succeed, and others might drift. PFL invested in 3 winners - Vend by Lightspeed, Timely and Whip Around, each of which continued very successfully, with Vend and Timely exiting for a combined total of over $650 million (measured by the return for our shares). Investing at this stage is growth venture capital - we expect lower returns but much lower failure rates from those companies. The PwC New Zealand Hi-Tech Company of the Year category is very solid - at least in the last 20 years, as it essentially marks when companies have already succeeded, and for many they kept doing very well. While there is no guarantee that investors in those companies will keep getting returns, it's insightful to look at the listed company winners, which include Serko Ltd., Xero, Vista, Volpara Health, and Fisher & Paykel Healthcare. These were all quite a few years ago, they have performed exceptionally well for sharemarket investors and later stage funds.