“It’s like a marriage, with hopefully a very happy divorce”: Rob Vickery

Lukas Niklaus, one of the four co-founders of visual effects studio Floating Rock, says they weren’t really looking for investment when they met Hillfarrance Venture Capital founder and managing partner Rob Vickery in April 2022. 

The company was founded in 2020 by Niklaus, Garrick Rawlingson, Stephanie Parker and Laurent Herveic – all ex-Weta Digital artists.

Its work ranges from the likes of Air New Zealand’s Tiaki and the Guardians safety video to the trailer for Flintlock: The Siege of Dawn, an action role-playing video game developed by A44 Games.

Niklaus says the Wellington-based startup hadn’t considered venture capital investment before meeting Vickery, who is now chair. 

“We assumed that we were not the kind of business that would be interesting for investors. We are not a traditional services business and it wasn't a high growth model. But then, as we started talking to Rob, we actually figured out that there can be quite a bit of potential in what we do and the things that we wanted to do.”

Niklaus was introduced to Vickery by Zsombor Pirok, the founder of gaming studio Space Rock Games, which has also had investment from Hillfarrance. Pirok told him he thought they would be a good match. 

The founder and funder hit it off instantly. What was meant to be a two-hour initial meeting went on to the point that Vickery nearly missed his flight home to Auckland after staying for dinner.

Vickery says what Niklaus didn’t know was that Hillfarrance has a Scout programme based on similar schemes in Silicon Valley, where he used to work, which allows their startup founders to identify and scope out a potential investment on the venture firm’s behalf. 

“Zsombor is a commercially minded guy and he was like ‘yep, I want to help the first investment into Floating Rock and I’m going to take a little piece of that’, which is what our Scout programme does. 

“So I flew down and fell in love.”

Hillfarrance invested $1.5 million into Floating Rock in October 2022 and did a further $2.5 million injection in March 2023 – the biggest ever investment into one startup in Vickery’s career. 

Floating Rock has grown to 52 staff from just 12 when Hillfarrance invested while revenue will have grown from a seven-figure number to 12 times that by the end of the year, Vickery says. 

Caffeine talked to the founder and funder about what it takes to make their relationship last the distance. 

‍

What was the initial attraction?

RV: Before I came to New Zealand, I knew there was a large community of successful, technically minded creative people, particularly in the Wellington region. There are a number of obviously large VFX companies and studios there and I felt that there was something special in that market. I just hadn't quite worked out what it was and I was taking my time to work it out. Personally, I'm a giant VFX nerd. I had this inkling there was something special that had not been tapped into, which is really what gets VCs excited – the unknown. No one had invested into visual effects technology and I thought well, let's go and have a look.

LN: He gave us the confidence that we were lacking a little bit. We have a very unique skill, a world-class kind of skill, but we didn't know how good we were. And Rob made us aware of what we could do if we were unleashed. That, along with his hands off approach with everything that's our speciality, but then hands-on in terms of anything business that he saw we could profit from – all his insights, his experience. He was just the missing puzzle piece for us. And then, the big thing is the human part. We just connected and that's what matters more than anything else to us.

‍

Does that human connection matter to funders?

RV: It's everything. If you don't have it, then it’s not going to be an enjoyable ride. This is a 10-year relationship minimum and if we don't like each other, then it isn't going to be enjoyable for anyone. We're looking for a return, of course, that's our venture fund model, but greater returns come from when you have a really symbiotic relationship with the people that you invest in. And we have that. The greatest way that can manifest itself is having a deep-rooted passion for what they're doing, and knowledge as well. I wasn't investing into them just because I saw giant dollar signs; I also saw the chance to do something really special, strategic and big for this country and to lead a new movement. Floating Rock is the epicentre – the Acropolis of that movement.

‍

How do you nurture your relationship?

RV: I'm not hands on in the pipeline, or in the creative. That's not my bag. I go down to Floating Rock on average now once a week and sit down with the team, at team meetings, and get to hang out with everyone, and talk about everything from planning events overseas to technical challenges, HR stuff – those kinds of things. I’m extremely hands on, but not so hands on that I'm ever a nuisance. I do it for everyone [portfolio companies]. I don't go to everyone every week, but I talk to all of our founders every week, if not two or three times a week, depending on what they need. 

LN: I don't have to keep Rob informed because of how involved he is. What helps me and our other founders a lot is that whenever we text Rob or send an email, within half a minute, we get a response. It just happened today; I had a question about how I could handle something, and I can just quickly tap into Rob, who is way more experienced than me, to give me the insights that I need. Last night, we were texting at 11pm. 

‍

What do you see as Floating Rock’s potential?

RV: When you think about companies like Pixar or Weta, they are businesses that create massive enterprise value through two ways. One is building exciting new technology and the other is by adding creative IP. I saw the potential for a next-generation visual effects powerhouse to emerge that would look similar to that model. Also when you think about gaming and media today, it's converging at a pace that we can't keep up with. The biggest movie offers are now are based on video game IP. Floating Rock worked with Space Rock to create the characters that we used in its trailer and they have been translated immediately over into the game, saving time and money with amazing fidelity and great animation. With Apple Vision Pro coming out, I see the need for even more high fidelity multi-dimensional worlds being created. That's not being built by the BBC; it's being built by entrepreneurs with deep vision and the ability to take big risks. 

LN: He’s talking my language. This is exactly what we are wanting to do. We’ve been part of those big machines all our careers. What we always wanted was for executives to step aside and let the creatives do the creating because you can tell when the creators have had a free hand, when they've had fun working on something. That's what we see in the games industry too. It's such a collaborative, creative environment. The movie and the games industries are converging and I think with world-class VFX right in the middle of it, we are perfectly positioned for that.

‍

What are the three most important elements of a founder/funder relationship?

LN:  1. Trust is the biggest one. 

        2. Communication is a big one.

        3. Trust again.

‍

RV:  1. Passion: It's about only taking money from someone who really understands what you're doing. This is about having an insane belief and love for what they're doing and we'll get rich along the way. But we'll get rich along the way because we're doing the right things and we're doing it with the right people at the right time. 

         2.Trust: I think transparency kind of goes with trust – being open and honest with your entrepreneurs about what you can and can't do and your limitations as an investor. Not everyone can invest in your business for the rest of your business lifecycle; some funds are not big enough for that. 

         3. Connection: There's a connection that you must have so you can have those difficult conversations with founders, because you've got that trust. It’s got to be more than just meeting someone once a quarter at a board meeting. Venture capital is like a marriage, hopefully with a very happy divorce. We're going to have to get divorced, because the lifecycle of funds is 10 years. At some point someone's going to have to buy our stock because we've got to get that money back, and hopefully many times more, to our LPs.