INSIDE THE INVESTOR ROADSHOW: One Australian startup's experience raising millions from investors for global expansion

SuppliedDenys Hornabrook and Andrew De Zolt.

  • Raising capital for growth is one of the most important milestones for an ambitious company, yet founders often know little about the process before they are in the thick of it.
  • Business Insider spoke in detail to the founders of VINEX, an Adelaide-based company that built a global marketplace for wine, about how they found investors and secured capital.
  • There are also perspectives from others involved in the process, including one of their backers — James Spenceley, the former Vocus telecoms boss who is now a private investor.

The startup is fundamentally a good idea in search of cash.

The idea is usually disruptive and has the potential to grow into a large and successful business. One of the critical challenges is pulling together the resources to get it off the ground.

Denys Hornabrook and Andrew De Zolt, operating from Adelaide, created a global marketplace to buy and sell wine. Not a place for wine lovers, but a wholesale digital platform for businesses, something which could one day turn over billions in gross sales.

They called it VINEX. First they asked for — and received — support from family and friends. That built the foundation of the company but soon that source of funding quickly exhausted. Then they had to go to professional investors.

“Nobody was partnering with us wine guys so the whole task of raising capital was something we had to learn,” Hornabrook told Business Insider.

The early raising had brought in about $450,000 which had allowed him to validate the business model, to launch, get customers, and start commercialisation.

But getting significant funding for expansion was elusive. Hornabrook spent two years looking.

“We are drawing on our decades of experience in the international wine industry based in Adelaide but it became quite obvious to us early on that for our marketplace platform, we had to approach a specific profile of investor,” he says.

“We needed to engage with investors that have what I would call “patient capital”. They’re not looking to multiply that capital in a short time frame. They have either experience or they can appreciate and understand what is required when a new company is endeavoring to reshape and remodel a sector, move it into a technology based environment.”

In South Australia, with its intensive wine regions, potential investors had a general but superficial understanding of the sector. There was also a risk that by talking to traditional wine investors, their idea could end up in the lap of a rival.

“For our business model, which is trading wine around the world business-to-business, and very large-scale bottling around the world initially, they just didn’t get the concept,” Hornabrook says.

“And we chose not to target wine industry investors because we wanted our business to remain confidential so we could benefit from first mover advantage until we commercialised.

“We knew that there would be some level of scrutiny in our organisation as to who was behind it and what’s important is to have independence. We didn’t want to contaminate that with a lot of wine industry investment behind us.”

Hornabrook started to look outside Adelaide.

First was Melbourne where he found potential investors.

“We did spend a bit of time working with a couple of people in Melbourne, we certainly invested some time in a couple of trips to Melbourne,” he says.

But they turned out to be conservative. As Hornabrook describes it: assertive in engagement, but not overly adventurous.

Next stop Sydney

“From the first day we went to Sydney, we knew it was a completely different mindset,” he says.

“The targeted investors were very engaging, they were active, they were far more hands on. They were more global in their outlook. It didn’t matter that we were a marketplace for cereal, water, coffee, or for wine. They had a far better grasp and interest in what the customers were.”

The big break started at an investment seminar in Sydney where Hornabrook was pitching.

In the audience was Bill Kemmery, highly experienced in corporate investor relations who runs bespoke investor roadshows around the world and connects investors to emerging opportunities via his platform Fundexa.

Kemmery thought Hornabrook presented well, that the business proposition was strong and VINEX would have no problem getting funding.

What happened next, though, shows that even when the investment case seems obvious to experienced eyes, the dollars don’t necessarily appear.

“I remember checking online after the presentation,” says Kemmery. “It was really clear to see that a lot of thought and effort had gone into establishing the business, and there was plenty of potential in what they were looking to do.

“But I had not actually followed up after the event because I had assumed that this would basically sell itself. It was such a strong proposition.”

Some months later, Kemmery received an email from VINEX about a capital raise. He was surprised that VINEX needed to promote a raise.

“The founders came from the sector and they use third party technology so there was nothing difficult or convoluted in the actual tech,” Kemmery says.

“It was really around the business opportunity, which I thought looked to be compelling. So I was very surprised to see that it was still looking for funds several months later.

“The quality of the information, the detail they provided for a prospective investor was excellent, so certainly they made it very easy for anyone to understand the business. So I would have assumed that they’d be able to get funding a lot earlier.”

Those who arrange funding, or investor introductions, will either charge an up-front fee or between 5% to 10% of the amount raised.

Startups such as VINEX had an advantage in that the concept has global application. The investment pool outside Australia is more substantial than the local market.

The deck

The first thing Kemmery did with VINEX was to distil the pitch deck to around eight pages, down from 20.

Hornabrook has been honing his style.

“Investors can smell bullshit at fifty paces,” he says.

The VINEX business model was built in 2015 drawing on 25 years of international wine training.

“I have intimate knowledge of my subject,” he says.

“You live and breathe what you’re creating.”

He tries to create dialogue in his presentations, take the potential investor on a journey.

“I don’t see myself as selling a company or selling an idea,” he says. “I try to be more mutual in describing what the opportunity is, provide case studies, company achievements, without embellishment.

“It’s been pointed out to me that I probably haven’t been aggressive enough, that I’ve been a bit reserved, or a bit quiet. Maybe that’s my personality coming through, but I’m very conscious of not over promising.

“Really what they’re understanding is a couple of pretty simple things: one is the idea itself, the second one is the logical argument that I’m putting to them, thirdly is the market size possible, and fourthly, am I credible and what is their assessment of me?

“Ultimately, the investor knows four things, but make no mistake if they have doubts about one or two of those things, one of those things won’t be me. I’ve got to tick that box.”

The investor

James Spenceley

An early investor in VINEX was James Spenceley, the founder of ASX-listed telco Vocus and now a professional investor. He was an early investor in, and the chairman of, outsourcing marketplace Airtasker.

Spenceley knows a bit about investing and building businesses. He has completed merger-and-acquisition deals totaling $2.3 billion and directly raised more than $750 million in equity.

“I’d never met Bill before and that’s probably how I source a lot of my opportunities,” he told Business Insider.

“People email me deals, or in the case of Airtasker where I actually use the product, then I know where to go to try find them.

“We sat down and went over the business and I really liked it.

“I actually think it’s amazing that this (wine trading) was all done manually and hasn’t been disrupted. They have brokers who make phone calls and trade wine. There’s no price or market or statistics.

“The brokers seem to be the key holders to getting stuff done which is never good for buyers or sellers.

“With VINEX I like the fact there’s two parts to the business. One was the fact that they control the market which is going to be valuable at some point and secondly they can take a clip on everything that trades on the platform.”

VINEX is the holder of data so a buyer or seller can go back and check the price of a particular wine and make a judgement on what price it should be now.

And he liked the companies using the platform, including Jacob’s Creek and Woolworths, among a range of well-known names as outlined in this slide from the VINEX pitch deck.


“I came in toward the end of the raise,” says Spenceley. “I think I was the last investor in and they had already raised the amount they wanted. I’m pretty sure they extended it just to have me included which was great.”

He put in $150,000 on a $1 million raise.

VINEX became cash flow positive in July 2017, ahead of planned further expansionary investment.

“I think they’ve been very open, very transparent, and that’s the thing I like to see as an investor,” says Spenceley.

“Not a lot of people come with a bad side or a downside or a negative. They (VINEX) have continued to deliver and I think they’re doubling their revenue pretty consistently and their volumes are going up massively.

“I probably see them once every four or five months. I give them a bit of guidance on how to report to the investors. Young companies are very focused on running the business but providing then just simple metrics to the investors is really good.”

Spenceley gets a lot of pitch decks. If it’s 25 pages long, it goes to the bottom of the pile.

If its ten pages, and seems to make sense, he wants to know more.

“You want to take someone on that journey. VINEX certainly did that well.”

From the 2017 VINEX pitch deck:


Hornabrook says VINEX’s capital raising success been a combination of getting the pitch deck right and working with Kemmery.

“A capital raising agent like Bill has good connections, and a real understanding of the investor profile that our story was going to resonate with,” he says.

“Surprisingly, we actually didn’t have a lot of meetings, and we really didn’t need to because we were successful in what was really actually about four or five meetings. I put a lot of that down to the competency and experience Bill brings to the occasion.

“The roadshows really are the result of a lot of planning and a lot of drawing on the experience of the party that you’re with and the agency that you’re with.”

In retrospect

Hornabrook last year read Chinese entrepreneur Jack Ma’s book, The House that Jack Built.

One of Ma’s last quotes in the book is: “Never raise capital when you need it most.”

“I wish I [had] read that at the beginning of the book. I would’ve gotten on with my life a bit quicker,” Hornabrook says.

“I thought that was fantastic advice. We raise capital and immediately relax and get back into the business and head down.

“Before you know it you’re looking at cash flows. Then you start scrambling again.”

From the 2017 VINEX pitch deck:


If he had his time again, Hornabrook says he would be less tolerant with those who say they can raise capital.

“I think what I would’ve done differently is I would’ve tried to identify some mentors that had been here before and have the experience and drawn on that advice,” he says.

“I floundered a bit in terms of understanding the questions, understanding what they (capital raisers) could potentially do for us, understanding what their costs were, and trying to really cut through that to see whether they’re actually able to deliver.

“Once we aligned with what worked out to be a good partner, it was really interesting and I immediately got a sense that there was traction. I’m a believer that you’ve got to use your gut feeling and it seemed right. It seems trite to say but Bill (Kemmery) didn’t embellish things.”

VINEX closed its current round of funding at $2.1 million, 22% over-subscribed.

Several million dollars a month is traded through the exchange each quarter, with wines from 12 countries. The online platform is now connecting buyers from 47 countries and 6000 producers.

Management is planning the company’s next stage, and a possible corporate relocation to a post-Brexit London in April 2019.

Kemmery said: “We’re now working with them now to build awareness among the European venture capital and private equity investor groups. When they go the market next year or the year after, the company is well known and we’ve probably already identified groups that are going to be investing into the next round.”

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