"The Icehouse". It's difficult to try envision what a company of this name might entail. Is it an alternative hotel experience? A bougee nightclub for Auckland's elite? Instead, think of a hub of innovation that has facilitated some of New Zealand's most successful businesses.
When looking at the huge number of Kiwi start-ups who are making waves internationally, you don't need to look far behind their sparkly success stories to see the organisation that made all that success possible. I had the opportunity to have a chat with Jack McQuire, manager of ICE Angels, the Icehouse's investor network which consists of more than 150 investors that invest around $10 million every year into Kiwi start-ups.
Natalie: What is The Icehouse and what do you guys do?
Jack: The Icehouse is an enabler of kiwi businesses. For established businesses, we partner with owner-managers and their teams to provide practical support and real-world skills to help them succeed and thrive sustainably. For new startups, we invest in companies, upskill entrepreneurs, foster a high-calibre community of entrepreneurs and investors to learn from one-another, and help wherever we believe we can accelerate their success.
Natalie: Why do you do what you do?
Jack: There are two sides to what gets us out of bed: the big picture and the personal story.
The big picture is that we believe entrepreneurs and business owners will define the future we live in. We believe it’s crucial for us as a nation to foster and grow world-changing businesses that create a positive impact on our world, grow New Zealand’s productivity, and provide sustainable, rewarding and purposeful jobs for our people.
The personal story is what keeps us going day-in, day-out. We work alongside business owners and entrepreneurs who have “skin in the game”. Success is defined by more than just turning an idea into a profitable business. These people are magnetic, energetic, inspiring, challenging at times, and always the fuel that keeps us going.
Natalie: How do you foster innovation?
Jack: Entrepreneurs are the true innovators of our world, we’re simply here to help them on their journey and remove roadblocks. We do that by providing or helping access capital, connecting talent, investors, advisors and directors, helping access decision makers, and providing resources and templates to avoid constant re-invention of the wheel. Owner-managers of existing business can find innovation a bit harder, so it’s our role to show its value, and equip them with the skills to succeed.
Natalie: Do you have a minimum investment amount?
Jack: We’re focused on ensuring investment is right-sized for the stage of the business and often syndicate with other investors. The smallest investments we tend to see might be $50-100k in a pre-seed opportunity, like some of those in our Flux Accelerator, but vary substantially up to our largest investment of $2.5m last year.
Natalie: For businesses you invest in through your funds and ICE Angels, what sort of stake do you take?
Jack: Again, we’re focused on right-sizing investment in relation to the startup, not in relation to our particular stake. We usually expect to see companies raising 5 – 25% equity in each round of investment.
Natalie: What do you look for when deciding which start-ups to invest in?
Jack: We’re “generalist” investors spanning sector and stage, with everything from biotechnology to software-as-a-service and from pre-seed to Series A, so the goal posts shift in every industry and stage but the broad categories are People, Market & Product.
We look for compelling people with unique perspectives grounded in experiences that are difficult to replicate or replace, with passion and commitment for the ventures, and a big vision for what they can become. In their personality we gravitate towards people who demonstrate resilience, who move quickly with a preference for action over “talk”, and are inherently trustworthy. Those people need to be pursuing substantial and sustainable markets, demonstrate validation, traction or genuine customer love for their product, and be developing something that is materially new and/or better at solving a genuine pain than the status quo.
Natalie: What are the typical results you see for businesses who come through the Icehouse? What benefits do they gain from coming through the Icehouse?
Jack: Our alumni group of over 5000 business owners have business growing at 2.5x the rate of the average NZ business. After completing our marquee programme (the Owner Manager Programme) attendees’ businesses have grown export revenue by 134% on average and generated more than 38,000 jobs.
Our work with startups is a smaller and younger sample (we’ve invested in ~130 since 2004, with ~100 of those in the last 5 years), and skewed towards a small handful representing 80-90% of revenue and job growth. Last year in aggregate our startup alumni generated $226m in revenue and grew 3.6x faster than the average NZ business.
On an individual basis, we expect startups to access the capital they need to get to the next stage of capital raising or breakeven, surround themselves with high-calibre people on their board, develop skills and access resources to manage their business, be positioned to attract, retain and lead an exceptional team, and have a clear picture of their milestones for the next 12 – 18 months to create value.
Natalie: Do you have a particular stand out achievement or business success story?
Jack: The achievements we celebrate are those of our portfolio companies, not our own, but one I’m personally close to is Ask Nicely.
Founded as “two guys in a shed” it has been incredible sharing the journey with Aaron & John since they raised their first seed round (our fastest ever at the time) in December 2014, secured enterprise customers like Jetstar, grew revenue >350% in 2017 and attracted a Series A from one of Australia’s best VCs. Over that time, Aaron has transitioned from making every sale to leading a team of 25 across Auckland and Portland while John has attracted exceptional tech talent and built a world-class product that customers love to use, all on a startup budget!
Natalie: What are the biggest challenges in trying to help a business take off or grow to that next level?
Jack: Startups need a perfect storm to really take off and win a market: it isn’t about overcoming a single challenge, but needing a fair amount of skill and luck in timing, strategy, people, product, market… While overcoming a single challenge won’t guarantee success, the ones that most regularly hold our founders back are finding genuine product-market fit, attracting the best talent, then identifying a sustainable and repeatable growth formula.
Natalie: If you had to give 3 tips to an up and coming entrepreneur, what would they be?
Jack: Try. Fail. Try again.
Without Investor networks like Icehouse's ICE Angels, the majority of ideas in New Zealand wouldn't even make it past dinner time discussion. ICE Angels are the literal angels of commerce, they believe in Kiwis, back them and enable them for success, and we think that's pretty great.