Icehouse Ventures: Seed Fund III

Icehouse Ventures is New Zealand’s most active early-stage investment firm since 2015. Snowball Effect has partnered with Icehouse Ventures, giving Kiwi investors a simple way to gain access and exposure to a portfolio of NZ’s early stage startups with global opportunities.

Minimum investment: $50,000 NZD paid over three years

$410,000
Offer live Wholesale
3 days Time left
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$410,000 Offer live Wholesale
3 days Time left
(unless fully subscribed prior)
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Further detailed information is contained in the Icehouse Ventures - Seed Fund III Introduction

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Icehouse Ventures: Seed Fund III

key Details

  • $30m fund
  • Portfolio of up to 40 companies
  • Five year investment period
  • Investing in exceptional early stage New Zealand startups with global opportunities
  • $50k minimum investment drawn in equal tranches over four years
  • 2% management fee pa for first the five years only
  • 20% carried interest over the preferred return hurdle
  • Preferred return hurdle: 5% compounding annually
  • Limited Partnership Structure

Fund Summary

Management Fee

2% p/a for the first five years only

Carried Interest

20% over a 5% annually compounding hurdle

Investment period

5 years

Fund Term

10 years

Investment targets

Up to 40 pre-seed to pre-series A stage NZ companies


World Class Venture is Born in New Zealand

Visionary founders around the world- and at all times- are building solutions, platforms, and products that will define the world we live in for generations to come.

They're creating new markets, solving existential global issues, creating the technology for us to become an interplanetary species, and building innovative solutions which will radically disrupt incumbents. The value being created is immense.

Many of these founders and their companies are in New Zealand.

Over the past five years dozens of New Zealand startups have grown into $100m+ and $1b+ businesses. These include Sharesies, Halter, and First AML who we backed when they first started. A few have sold or IPO'd and a number are still operating privately.

No matter their journey, all of them are contributing to breeding the next generation of founders. Indeed the founders of Halter and Partly worked at Rocket Lab and the founders of Sharesies at Xero. The founders of Avertana and Mint were early employees at deep tech unicorn Lanzatech. Nearly half of the startups we have funded are led by either second time founders or were key members of other startups.

The next generation is poised to be the largest, boldest, and most experienced New Zealand's ever seen. They will also be the most sought-after. As one of New Zealand's oldest, largest, and most-active seed stage investors, Icehouse Ventures will be a key player in investing in and supporting the most promising entrepreneurs from the most promising generation.

IV Seed Fund III is your opportunity to join us as we invest in 30-40 startups over the next three to four years.

Our Advantage: Visibility

We are well positioned to see the majority of NZ's early stage startups.

Our network of 1,500 investors and 280+ portfolio companies provides unprecedented brand exposure, advocacy, connections, and referrals. Many of the most promising startups we have funded including Mint Innovation, First AML, Sharesies, and Halter were referred to us by our community.

Of our last 50 investments, 80% were from referrals.

We have the largest venture investment team in New Zealand, hold the most investor events, coordinate the largest founder community, operate the largest talent platform, and invest the most capital into the largest number of startups.

We also manage a deep tech fund in partnership with Outset Ventures, which operates the only deep tech lab facility of its type in New Zealand. Outset Ventures is the birthplace of Rocket Lab, Lanzatech, Mint Innovation, Avertana, and many others.

Our Advantage: Live Combat Experience

Over nearly 20 years we have completed 287 investments, supported hundreds of follow on rounds, assessed thousands of opportunities, experienced 40 losses, and enjoyed 20 positive exits.

We have led rounds, co-invested with others, successfully and unsuccessfully competed for allocations, co-invested and gone it alone, passed when we should have invested and invested when we should have passed.

We have had our hypotheses validated and invalidated, have had legal and commercial terms support us and undermine us, and have provided transformational support to founders and had others succeed without much assistance from us.

We have backed individuals only armed with pitch decks and funded companies with 500+ employees generating >$50m in revenue.

We have invested in HR software, precious metal bio-refineries, intelligent collars for cows, eco-friendly shampoo, satellite propulsion, anti-money laundering software, regrowing human skin, and so much more.

Our Advantage: Desirability

Reputation

Founders in the market know us as active, engaged, and aligned investors. We benefit from our association as investors with many of New Zealand's most high profile startups.

Resources and insights

Our founders can tap into an unprecedented database of insights, examples, and templates developed from our 280+ investments.

Founder Network

We have New Zealand's largest founder network. This community are willing and able to share their knowledge and experience with fellow founders.

Follow On Capital

We have a $110m late stage venture fund to fuel the growth of our top performing portfolio companies. We also have extensive relationships with tier 1 growth investors overseas.

Platform

We have a dedicated and expanding platform to help our founders solves the most pressing issued to their scaling, notably talent and hiring.

Our Investment Philosophy

We seek to invest in:

  • Exceptional teams with unique perspectives, intellectual firepower, and massive ambitions.
  • Markets that are large, growing, accessible, and have numerous (not few) and valuable potential customers.
  • Products and technologies that have the potential to be significantly greater than the status quo or apex incumbent’s.
  • Highly dedicated leaders who know when to discard the consensus and have incredible perseverance.
  • Innovative solutions to difficult problems and innovative business models.
  • Companies developing strong obstacles to imitation, whether that be by moving very fast and capturing market share, building proprietary intellectual property, or both.
  • Products and technologies that not only address particularly painful and urgent customer problems of today, but burgeoning problems that will likely be significant tomorrow.
  • Exceptional timing: where specific founder domain expertise, technological advancement, and the evolution of a customer need eclipse.

Case Studies

Market Overview

The New Zealand early stage ecosystem is growing rapidly. In 2020, annual early stage investment volumes from angel groups and venture firms grew by 48% and reached $160m. Icehouse Ventures represented 25% of that total capital invested. We expect to see this growth continue over the coming decade.

There are a number of macro conditions that underpin the thesis for early stage venture investment in New Zealand:

  • New Zealand tech companies are global from day one by design and necessity. Given the natural constraints of a small domestic market, there is often little focus on building a product that doesn't have the potential for global application and scale.
  • New Zealand's entrepreneurial DNA and first principles problem solving approach means solutions are often novel and simple, and frequently lack over-engineered complexity.
  • A high trust business environment that is globally recognised. New Zealand is one of the least corrupt nations and one of the easiest countries to operate a business in.
  • In recent years there have been a number of high profile exits. This is now resulting in a recycling of talent and capital into new innovation. This is an important step in the maturation of the New Zealand venture ecosystem. In the past 12 months we have seen exits from Vend ($450m), Seequent ($1b), EzyVet ($216m), Timely ($100m+) TradeGecko (USD80m), and Cin7 ($133m).
  • Historically, the New Zealand venture environment has been capital constrained. New Zealand has low operational costs relative to most other Western countries. New Zealand companies are conditioned for capital efficiency.

Team


Investment via Snowball Effect

Investing in Seed Fund III provides a simple way for wholesale investors to get exposure to early stage NZ VC opportunities. All investments will be held within Snowball Nominees, and will be available to view on Orchestra. Because the fund is a Limited Partnership, only wholesale investors are able to invest.

Supporting documents

Summary of Limited Partnership Terms

Name:  LP. (the "Fund")

Target Portfolio Size: Up to 40 companies pre-seed and pre-series A NZ companies.

Minimum Capital Commitment: NZD 50K, to be drawn down at 25% per annum over 4 payments (via Snowball Nominees).

Percentage of Investment Commitment Due Date
25%
Upon 10 Business Days’ notice from acceptance of an Application to Invest
25%
Upon 10 Business Days’ notice expiring no earlier than Friday 3rd of February 2023
25%
Upon 10 Business Days’ notice expiring no earlier than Friday 2rd of February 2024
25%
Upon 10 Business Days’ notice expiring no earlier than Friday 7th of February 2025

Fund Term: 10 years.

Fees and Expenses: 2% annual management fee on committed capital for first 5 years only.

Reports: Via Snowball Nominees (a limited partner), each investor will receive annual audited financial statements and quarterly unaudited summary financial information of the Fund, subject to the confidentiality provisions set forth in the limited partnership agreement.

Investing through Snowball Effect

All investors (Beneficial Holders) who invest in Seed Fund III will have their interests held by Snowball Nominees (Nominee). The Nominee will subscribe for interests in the Limited Partnership on behalf of the beneficial holders. This simplifies the compliance and investment process for investors. Snowball Nominees will use the Orchestra registry service, providing shareholders with an online record of their investment in the Fund, along with access to Fund communications and documentation. 

Nominee Interest Holding

In broad terms, the Nominee must:

  • Act in accordance with the relevant beneficial holders’s instructions (e.g., in exercising the voting rights attached to the relevant Investor interests)
  • Account to the relevant beneficial holder for all proceeds from the relevant Investor interests (e.g., dividends & distributions received)
  • Deliver notices, letters, reports, demands, offers, agreements and other documents and communications received by the Nominee to the relevant beneficial holder.
  • Under the Nominee Deed Poll, each beneficial holder indemnifies the Nominee against any losses, damages, costs, actions, proceedings, claims and demands that may be made against or incurred by the Nominee as a result of it holding the Investor Shares under the Nominee Deed Poll (unless the Nominee has been fraudulent or grossly negligent).

A Summary of General Nominee Terms

  • The investor (Beneficial Holder) acknowledges that the Nominee has not made any, and the Nominee confirms that it makes no warranty, representation, undertaking, promise or assurance in respect of the performance of the Fund.
  • The Beneficial Holder will be required to acknowledge and agree that:
    • They have had the opportunity to review or seek advice regarding the governing documents
    • Is not relying upon the Nominee or the Nominee's advisers in relation to any matter arising out of or in connection with their interest in the Limited Partnership
    • Restrictions apply to the transfer of beneficial interests, with the cost of any transfer payable immediately to the Nominee
    • The Nominee may require the beneficial holder to supply ongoing AML/KYC information
    • The Beneficial Holder indemnifies the Nominee from and against any and all losses, damages, costs, actions, proceedings, claims and demands which may be claimed, made against or incurred by the Nominee as a result of: (a) Partnership Interest; (b) breach; (c) failure to make payment. 

We encourage all investors to familiarise themselves with the full set of terms and conditions of this offer, along with their obligations as per the Nominee Deed poll.

Disclaimer: This is a private investment opportunity, where participation will be limited to investors who are “wholesale investors" as defined by the Financial Markets Conduct Act, 2013. Participation in the fund is at the sole discretion of the management of Icehouse Ventures. This offer page has been prepared for distribution in New Zealand to selected prospective investors who are not members of the "public", as that term is defined in the Financial Markets Conduct Act, 2013. In order to invest in this offer you acknowledge and represent that you are a “wholesale investor” as defined by the 2013 Financial Markets Conduct Act.

This offer page has been compiled solely for information purposes to assist prospective investors to make their own evaluation of Seed Fund III, and any subsequent decision to invest in the Fund. The information contained in this offer page is not comprehensive and is selective. This offer page does not contain all of the information that a prospective investor may require to evaluate a decision to invest in Seed Fund III and the risks associated with that investment. In making a decision to invest, prospective investors must rely on their own examination of the information contained in this document as well as such other information as they may consider relevant.

Nothing in this offer page constitutes legal, tax or financial advice. Prospective investors should seek their own professional advice on the consequences of investing in the Fund. No representation is made that any further information will be given, other than as required by law. This document may contain projections, forecasts or other statements or estimates regarding the future prospects or performance of the Fund. Any forward-looking statements are provided for informational purposes and reflect certain assumptions. Actual results may vary. No assurance or representation is made by any person that any projection, forecast or target will be achieved. Accordingly any reliance placed by any prospective investor upon them is a matter for its own commercial judgment.

International investors

The distribution of this offer outside of New Zealand may be restricted by law. This is not intended to, and does not, constitute an offer of securities in any place which, or to any person to whom, the making of such offer would not be lawful under the laws of any jurisdiction outside New Zealand. This includes, but is not in any way limited to, Australia and the United States. It is the responsibility of any Snowball Investor to ensure compliance with all laws of any country outside New Zealand relevant to their subscription, and any such Snowball Investor should consult their professional advisers as to whether any governmental or other consents are required, or other formalities need to be observed to enable them to apply for securities pursuant to each offer. The failure to comply with any applicable restrictions may constitute a violation of securities law in those jurisdictions. The securities in each offer have not been and will not be registered under the US Securities Act or the securities laws of any state of the United States.

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Warning statement

It's crucial for you to understand the characteristics and risks of this investment opportunity. New Zealand law normally requires people who offer financial products to provide in-depth information to investors before they invest. The usual rules do not apply to offers by companies through Snowball Effect. As a result, you may not be given all the information you need to make an informed decision. Investing is risky. Some of the key risks include loss of capital, illiquidity, lack of returns, dilution, loss of key people and customers, and lack of control. You should only invest money that you can afford to lose.