Startup star inspired by mission control

CRAIG SIMCOX/Dominion Post

HIGH FLYER: When Neville Jordan went to the New Zealand Stock Exchange in the mid-1990s to talk about floating his company ??? Marine Air Systems Technology ??? the good folk at the exchange told him it couldn't be done.

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Wellingtonian Neville Jordan is the only Kiwi to list a company on the Nasdaq technology exchange. He tells Andrew Janes why he would prefer the next generation of Kiwi companies not to follow in his footsteps.

When Neville Jordan went to the New Zealand Stock Exchange in the mid-1990s to talk about floating his company – Marine Air Systems Technology – the good folk at the exchange told him it couldn't be done.

A company such as MAS, which had grown rapidly in the early 1990s designing and exporting microwave equipment for telecommunications systems, would have limited appeal to the New Zealand investment community, they told him.

"They basically said no one would be interested," he says.

In an episode reminiscent of the record executive who failed to sign a young Elvis, the NZX's loss turned out to be the Nasdaq's gain. Within hours of being rebuffed, Mr Jordan had cold-called the United States-based technology exchange.

"I dialled 0172, got the Nasdaq's number, and the following week I was in their office."

In 1997, in a highly successful float, MAS became the first – and still the only – New Zealand company to list on the Nasdaq. About 18 months later Mr Jordan sold his stake in MAS to Californian firm Digital Microwave Corporation for $60 million – not a bad outcome for a company that he had started in his mother's spare bedroom in Petone 23 years earlier.

Mr Jordan reckons he would get a very different reaction from the NZX if he went to it with a similar proposition today.

"I must emphasise that was the exchange management of 10 years ago. There's a very different atmosphere now. There have been technology success stories like Navman, Rakon and Fisher & Paykel Healthcare.

"People are becoming more attuned to the power of science and technology and how quickly these companies can grow and how valuable they can become."

NURTURED

It was a next-door neighbour in Petone who introduced 11-year-old Neville Jordan to the wonders of electronics.

That interest was nurtured by a high school teacher, and after graduating from Canterbury University in electrical engineering he worked first for the Civil Aviation Authority and then IBM. At age 25 he headed to the United States on a six-week Rotary scholarship.

"That Rotary scholarship essentially changed my life," Mr Jordan says. "I went to Nasa mission control in Houston and saw that there were other young people having a lot of fun in technology. That really set me on the path of wanting my own company."

Two years later he set up MAS around a communications receiver that he had designed to enable ocean yachts to get accurate time signals for navigation.

"I'd done a lot of ocean yacht racing as a navigator and receiving accurate time signals – this is prior to GPS – was always a problem. It was serendipity. When I saw that companies could be started on technology I just felt that this looks good."

After devoting himself to MAS for 23 years and then selling his stake, Mr Jordan retired for about three weeks before re-emerging as a venture capitalist.

He set up Endeavour Capital which, in partnership with I-cap Partners, was one of several companies selected by the Government to manage one of its venture investment funds.

Endeavour typically takes an equity stake of 20 per cent to 40 per cent in companies. It has at present 17 companies on its roster and has invested about $100 million. Recipients range from biotech companies Protemix and Proacta to IT companies such as payment solutions firm GFG Group to engineering firm Flexidrill, a company that has developed improved technology for drilling rock.

Through relationships with the commercial arms of Waikato and Canterbury universities, Endeavour has another half-dozen smaller, early-stage investments in what Mr Jordan calls feedstock companies for the investment pipeline.

PORTFOLIO

He is loath to play favourites when discussing Endeavour's portfolio.

"All our children are beautiful," he says with a laugh. "But some are more beautiful than others. We've got maybe half a dozen that could be very substantial international companies and remain here [in New Zealand]."

Making sure that New Zealand derives the maximum benefit from its emerging technology companies is one of Mr Jordan's priorities.

Despite the NZX's change in attitude in the past decade, there are still gaps in New Zealand's financial infrastructure that need to be plugged if the country is to stem the flow of technology companies seeking a listing overseas, he says.

"We've got outstanding scientists and technologists and there's now good money going into the development of science and technology. There's some good intellectual property being developed.

"But as companies get bigger they run into trouble. Because New Zealand investors want dividends, they're not accustomed to capital growth companies as American, British or even Australian investors are.

"Our financial institutions are very reluctant to invest in science and technology so there are not a lot of analysts with a good understanding of these companies. We're at a risk of losing our productive base."

To provide emerging companies with a local growth path, Mr Jordan is setting up another fund, which he says will be a lot bigger than Endeavour's existing ones.

LIQUIDITY

The new fund will aim to expand science and technology companies to the point at which they are ready for a trade sale or a listing – preferably locally.

"The point of difference with this fund will be its size and the level of international investors."

He wants the fund to be up and running in about three months and to have its first close – when about half the cash is in and the first investment is made – before the end of the year. Once up and running the fund would be looking at two to three investments a year.

The adventurous streak that led Mr Jordan to set up his own technology company is evident in his interests outside of work. He has dived under the ice in the Arctic, motorcycled though the Andes and done more than 50,000 kilometres of ocean yachting.

Last year he spent five weeks driving his vintage Rolls-Royce from Beijing to Paris in a competitive rally. Not wanting it to be just another rich man's indulgence, he set up a website asking students questions about science-related topics along the route.

"We asked questions like, what's happening in the Gobi Desert with horses and why are many people riding farm bikes now? It was about getting kids curious about the world around them and it was hugely successful and generated more than 250,000 unique visits."

After almost a decade spent identifying and investing in technology companies, Mr Jordan says he has come back to looking at the people involved as the No 1 investment criterion.

"If there's one thing I've learned about this business it's people. Can we trust these people with our money? There can be amazing science and technology, great products, but if you can't get on with or there's no trust with the people then it's best not to do the deal."

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