Altered Potential

Venture capital might not be a mainstream occupation choice for many just yet, but it is one of the main support arms of innovation, new sectors, and a tech industry that is second only to dairy as an export earner for the country. It’s also an industry that is collaborative and geared towards a diversity of backgrounds. Recent winner of The NZ Private Capital Association Aspiring Women in Private Capital Award, Laura Manson is a testament to the leverage of an impressive previous career, but also a passion for people and ideas to help accelerate ambition and nurture the potential of the New Zealand economy.

An Investment Director at Altered Capital, Manson has a particular focus on nurturing promising scale-up companies. She shares a glimpse into the strategic and active role she plays in both the local and international markets, the potential of standout companies, and the profound commercial and social impact venture capital can have.

Can you describe in a nutshell what you do?

I’m a fund manager at Altered Capital. We are a venture capital firm with a $100 million New Zealand fund and $100 million in international investments. Our role is to find high-growth companies with proven product-market fit to back with our capital and active support.

Is there an average day?

Every day is different, but the one constant is you’re always learning. We work in ambiguity and uncertainty, so you need to get curious and think creatively in order to unearth opportunities. My investing role has three main parts to it: origination, investment evaluation and execution, and portfolio management. Origination involves market scanning and networking to find companies fitting our investment thesis. During the investment evaluation and execution phase, we spend time with founders, learning about their business, product, and future vision. This leads to a formal investment committee process and due diligence work before investing. Portfolio management covers the activities once we’re invested. It means rolling up our sleeves and leaning in to help where we can, possibly taking board roles, and leveraging our local and international connections and expertise for hiring and future funding.

You’ve got an interesting thematic focus. Can you talk a little bit about the thesis there and what you focus on?

It probably helps to take a step back here. Altered Capital was founded by three Kiwis experienced in international venture investing, identifying a unique opportunity in the New Zealand venture market. Venture capital exists on a continuum, starting from pre-seed or seed stages and advancing through Series A, B, and beyond, with each stage corresponding with a different phase in the company’s evolution. The Altered founders observed a lot of early-stage capital and also significant private equity for mature businesses in the New Zealand landscape. However, a gap existed at the Series A and Series B stages, where companies, despite having validated products and growth potential, often lacked the necessary capital to continue scaling.

So, there was an opportunity to create a fund that was targeted at that space. And because we’re coming in slightly later in a company’s journey, it is de-risked relative to the very early stages of start-up company formation, so we can take a more concentrated approach in our portfolio. We will only target investment in up to ten companies from our $100 million fund, which means we can be active and give more attention to each of them, and our interests are fully aligned with the outcomes of all of those companies.

Does that position within the continuum influence the type of companies you will look at? You seem to be big on finance and health, for example.

We’re a generalist investor, so we’ll look across all industries as a starting point. And I think you have to be in New Zealand because it is a small market. The FinTech and HealthTech angles that you’ve picked up on are two areas of domain expertise from our international venture experience. For example, our founding partners led the seed investment in digital challenger bank, Starling Bank in the UK. That’s been an incredible success story, and one of our team still sits on the board there, so we’ve got some excellent lessons and insights from that journey that we can share with companies that might be looking to do a similar thing or go into adjacent domains. A similar story applies with HealthTech, so it does mean we can often get higher conviction around some of the opportunities in these spaces than areas where we’re starting from a lower base of knowledge and experience that we need to build up. So that’s the thematic angle. And then in terms of the stage of companies we invest in – generally that series A, series B space – this is captured in our threshold requirements for investment, which are proven product, proven revenue, and proven unit economics. This does mean that, for example, some of the more deep tech style investments where there are large amounts of capital required and very long pathways to future revenue, won’t suit our investment style as much.

Does that lend itself to a collaborative ecosystem where you might be looking at what early-stage investors are working on and they might be coming to you for follow-on?

Yes, absolutely. It’s a highly collaborative ecosystem, which ultimately helps give Kiwi innovation the best chances of success. We all have a role to play, and as you noted, we do consider ourselves great follow-on partners for early-stage investors. The collaborative approach is definitely an aspect of this industry that’s unique relative to other areas I’ve worked in before.

Do you feel like you’re in a position to be able to leverage smart capital to make some fundamental change here? One of your portfolio companies, SquareOne, for example, could not only bring amazing commercial return, but positive social change in terms of financial literacy and access to banking.

Definitely. We’re super excited to be partnered with them. SquareOne was founded by two Kiwi dads who wanted a better way to teach their kids about money in a digital world. Their solution allows parents to set up accounts for their children in a matter of minutes, with the children then able to earn, save and spend, with their own physical card as well. The product is incredibly customer-centric and does create those delightful moments for people, while at the same time addressing the social issue of financial literacy for youth in New Zealand. They have some pretty big ambitions and are working on additional products, which I think will be exciting for New Zealanders to have access to. Part of the thesis for us was being able to lend our expertise from our experience with Starling Bank and other financial technology investments from offshore. And hopefully, they can better navigate some of the challenges ahead of them with the knowledge of what worked and what didn’t work in other markets.

Maybe it’s slightly earlier stage, but in the VC world, people will focus on the “power law” with the idea that a fund needs at least 50 or even 100 investments to seize potential but you can’t have a deep level of relationship and involvement across that amount. Do you think there’s a lot to be said for pulling back a little bit and as you have done, just going smaller portfolio but deep?

Yes, the more concentrated portfolio approach allows us to spend more time and energy with each company than if we had 100. Part of the reason we’ve structured it like that, and can do that, is because of the stage that we’re investing at. The reason a lot of earlier-stage VC funds have up to a hundred companies is because of the odds of success at that stage in a company’s life. Generally, only one in ten startups will be successful and nine out of ten will fail or stagnate. So a highly diversified approach is necessitated when you’re investing at that early stage because it’s really hard to know what will succeed without having any solid proof points in the business yet. The fact that we invest once we can validate some proof points allows us to have this more concentrated approach and be more active and aligned with the companies that we are investing in.

And at that stage where you do have those validated proof points, how much of it still comes down to this conviction that you sense from the founders? If we’re using SquareOne as an example, you sense this very deeply personal drive. Does that still come into it at this stage for you?

It does. We are data-driven in our approach to making decisions, but there are aspects which you can’t quantify. Founder quality, including their personal journey and track record, all factor into it and help you build conviction around the opportunity. It’s grounded in data and proof points, but there is that layer, which you can’t really quantify that does help add conviction to the decisions that you’re making.

Can you talk a little bit about that? What are some of those things that you can’t quantify?

There are just some things that you get a sense about – a founder, an opportunity, as you say, that are unquantifiable. There are always objective things you can point to, whether it’s specific domain expertise or what they’ve done historically, but I think the less quantifiable things come down to what you can observe in terms of their passion for what they’re doing. And that comes through in their energy and enthusiasm and ability to engage you in their mission. They’re also heavily oriented towards action and solutions. In the case of SquareOne for example, the velocity of execution of that team is just incredible. They are really on a mission.

It seems like a lot of entrepreneurs have a sense of being able to solve some really big problems via an entrepreneurial commercial route. Do you think that helps in terms of that fuel for that velocity of execution?

I think absolutely it does. I think at the heart of most, if not all, entrepreneurs, there’s a mission and a purpose that’s driving them. And I don’t think that commercial outcomes and socially positive outcomes are mutually exclusive. There are many examples of entrepreneurs who are driven by that higher purpose in addition to the commercial element of the entrepreneurial vehicle.

What drives you?

I am a people person and I love connecting with others around solving challenging problems and having a positive impact on the world around us. That’s essentially what drives me.

What was the catalyst to get into venture capital?

Venture capital wasn’t really on my radar when I was growing up and studying. I think at the time, it was probably still in its infancy in New Zealand. But when I reflect on what I love doing, it’s clear why I’ve steered in this direction. I’ve always had an interest in business. I love learning about new technologies and industries, and just generally have a curiosity about the world. I also love working with people on really interesting problems. I think all of those things are what make up the fabric of venture capital. But my early career was built primarily in finance and investment banking. In that environment, I had significant experience working across high-profile M&A transactions, IPOs, and capital raisings, and that gave me a real depth of insight into how decisions were made in large public and private entities, what drove value, and how different investors thought about the world. That experience really did create an awesome platform and foundation for what I now do.

Your history was also one of the things that was mentioned in respect of your recent NZ Private Capital Aspiring Women Award. Do you think that’s part of it, just this heritage that you have and being able to bring it into this side of things – has that helped?

I think it’s helped. People have many different paths into venture capital, including from the sciences, as ex-founders, or from finance and investment backgrounds similar to my own. My prior career spans investment banking, corporate strategy and private equity, and I do think my journey has given me a unique lens and toolkit when it comes to investment decision-making. My experience in corporate strategy, where I helped to build a new ventures division within a larger organisation, has also given me relevant insights into developing something from the ground up. Overall, my background has provided a unique set of experiences that are hugely valuable in applying to my role in VC.

What does the award mean for you?

Receiving the award was an honour, and it’s awesome that such an award exists to recognise and encourage women in this industry. Like many industries, there has been a lack of female representation in the past, but we’re making progress and there are some outstanding women in this industry who are making a real impact. I just hope that sharing stories of women who are doing great work in this ecosystem can help to inspire others.

Any advice for someone interested in getting into the industry?

There’s a lot of content out there that you can absorb and educate yourself with about the ecosystem, the various funds and investors, and the startups that are doing exciting things at the moment. Also just reach out and connect with people who are in the industry or working in startups and try to learn as much as you can from them. It’s a very friendly community and there are many ways to get involved.

Any final thoughts about the world of VC?

This is one of the best jobs I think you can have. It’s incredibly varied. It’s working on really interesting technology that is genuinely making a difference in the world and people’s lives. And it’s a privilege to be a capital allocator in this industry and to be working with such ambitious and mission-driven people.