The world’s most innovative environments typically have world-class academic institutions at their heart—think Silicon Valley, New York, Boston or London. In these places, researchers, commercialisation arms and investors find ways to turn their findings into businesses and this is the environment Wellington-based investment company Booster aimed to create when it set up partnerships with Te Herenga Waka–Victoria University of Wellington in 2018 and the University of Otago in 2020.
The goal was “getting New Zealand capital to work for New Zealand”, says Melissa Yiannoutsos, the Innovation Fund Manager at Booster.
“How do we support New Zealand companies to grow? How do we build a future New Zealand? And how do we get more diversity in the kind of companies that make up our economy? We’ve got a good base of companies that generate wealth through the primary sector, but we want to help build more companies off the back of deep research and development and innovation.”
There are now 25 companies in Booster’s Innovation Fund portfolio, and 21 of them have originated from research at universities (nine from Victoria, three from Otago, six from Auckland, and one each from Waikato, Massey and Canterbury). She says the goal is to eventually have 40 New Zealand companies in the fund. Currently, it has $10 million invested and it hopes to double this over the next couple of years.
Booster’s Innovation Fund is considered higher risk than its other investments and Yiannoutsos says it should be viewed as a longer-term investment.
“One or two companies might end up being huge successes, some may just offer modest returns and others will be wound-up. It’s all about balancing that risk and the inherent volatility of young companies with a broad portfolio.”
She points to LanzaTech as a good example of the kind of business Booster wants to support: academic research led to a process that allowed it to convert carbon emissions into useful products, such as fuel, and that led to the creation of a valuable company. But that process took around 20 years, and the returns for investors weren’t realised until the company listed on the NASDAQ stock exchange earlier this year.
When these kinds of companies take off, they tend to create high-paying jobs, she says. And if the companies can access the money they need to grow from the local market, they are more likely to stay in New Zealand for longer.
“Massive growth comes from establishing footprints in international markets, but there’s no reason why that intellect can’t stay here. If we can put more New Zealand capital to work on that agenda, it means there’s a positive flow-on effect in terms of the economic impact. These kinds of companies also create local career pathways for our university graduates to use their skills and knowledge, and they also play a role in attracting more experienced Kiwis back home.”
While investing in the fund provides local benefits, these companies are also focused on solving big global problems.
“Close to forty per cent of our portfolio [nine companies] are focused on improving healthcare and saving lives. And there are seven companies that are all about reducing environmental impact and the effects of climate change. But there’s so much more that can be done.”
Typically, there’s a high bar when it comes to investing in start-ups, many of which may be described as ‘pre-revenue’. There may be large minimum investments required or they may be restricted to wholesale investors.
“But the Innovation Fund is about letting everyday Kiwis share in that success. There’s no other product out there that allows retail investors to participate with these kinds of companies in the same way. That’s unique.”
New Zealanders can directly invest through Booster or by buying shares on the NZX, and investors in certain Booster KiwiSaver Scheme funds will also benefit from involvement in the Innovation Fund as part of a balanced portfolio of investments.
Other Booster funds aim to benefit New Zealand in the same way, says Yiannoutsos. Its Tahi fund invests into profitable, locally-owned small to medium-sized businesses that aren’t listed on the stock exchange, while its Private Land and Property fund (PLPF) allows investors to support New Zealand’s primary sector and help create regional growth through investments into vineyards, hops and kiwifruit and avocado orchards.
“With the PLPF, we saw an opportunity for New Zealanders to invest in the productive land that is the backbone of our country. Investors can play a part in ensuring the consistent supply of fresh produce, while also helping to grow the economy through the export markets” she says.
Booster isn’t just after a financial return, either. It believes in being a good steward of the land, so the PLPF has also committed to planting over 80,000 native trees on its land holdings.
Best of both worlds
All of Booster’s funds meet certain minimum responsible investment criteria, including factoring in environmental, social and governance measures. Many Booster funds are evaluated by Mindful Money and some socially responsible focused funds are certified by the Responsible Investment Association Australasia. And as shareholders that act on behalf of its customers, she says it has also been able to influence the decisions of some of the companies it invests in.
“We will continue to be an important shareholder voice and hold companies to account around their environmental impact.”
So can investors have their cake and eat it too? Can you grow your money and help create positive change?
“When we make investment decisions we need to be making commercial returns. But you don’t need to compromise on returns just because you’re investing in companies that are working to solve big problems.”
- Booster Investment Management Limited is the issuer of the Booster Innovation Fund, Private Land and Property Fund and Booster KiwiSaver Scheme. Product Disclosure Statements are available at www.booster.co.nz