Situation vacant - Angels wanted. Location: Auckla

Media Release

10 November 2008

Situation vacant - Angels wanted. Location: Auckland.

Want to invest in the next Google, Navman, or TradeMe? A ‘De-Mystifying Angel Investment’ seminar is being held in Auckland tomorrow to explain the mechanics of angel investment to people interested in investing in early stage businesses.

Angel investors is the term given to experienced business people who invest not just money but also some time and effort to help new businesses to grow.

New Zealand Venture Investment Fund chief executive Franceska Banga said attracting more people to angel investing could help to increase the amount of capital available to young companies with high growth potential.

“New Zealand produces quality research and innovation which we struggle to commercialise because of the difficulty in finding capital.

“The current investment climate is making capital even harder to find in the short and medium term for young companies. So increasing the pool of high net worth individuals who want to engage in angel investing is, arguably, more important than ever.

“More angel investment will be good for New Zealand’s economy. We need more seasoned angel investors willing to invest in young companies with innovative products and high growth potential.

“The Auckland seminar will introduce potential angels – generally people who have done well from a successful business and are looking for new investment opportunities - to the mechanics of angel investing. It will also introduce them to some Auckland-based angel groups such as Sparkbox, and ICE Angels.

“Currently, there are around 250 experienced angel investors active in New Zealand, although many more will be doing it on an ad hoc basis. A pool of around 1000 active angel investors would greatly expand the capital available to young companies.”

The Auckland event is one of a series which are being held in centres throughout New Zealand by NZVIF, in conjunction with the Angel Association NZ and local angel groups. The presenters include representatives from NZVIF and ICE Angels.

NOTE TO MEDIA: Media are welcome to attend the event on 11 November, 5.30pm at Otago University, 385 Queen St. Please contact NZVIF to register for attendance.

Background

What is an angel investor?

Angels are, typically, ex-entrepreneurs and successful business people looking to add early stage companies to their investment portfolio. They enjoy the challenges of growing new businesses and being part of an exciting venture, as well as the financial rewards from investing. They provide not only governance by serving on boards, but also assisting companies with relationships, strategy, team building, and future fundraising.

Is angel investing risky?

Angel investors are exposed to high rewards and high risks, and expect that some investments will fail. If an angel invests in ten companies, the general rule is that four will fail, three will tread water, two will return two-to-five times the initial investment, and one will result in a return of five to ten times the original investment over a 5-10 year period, generating an overall healthy return across the portfolio. As wealthy individuals, angel investors are more comfortable with investments with a higher risk level.

What are angel groups or networks?

Increasingly, angel investors are forming angel networks and groups to share research and pool their investment capital. They can operate as a collective of private investors who band together to increase their 'deal flow' (the number of investment opportunities they see). These groups connect high-potential start-up ventures, with willing investors to facilitate the funding and success of emerging companies.

How many angel groups are there?

There are around 15 established groups in New Zealand. They include ICE Angels, Pacific Channel, Chrysalis, CureKids Ventures, K1W1 and Sparkbox in Auckland, Angel HQ & MOVAC in Wellington, the Manawatu Investment Group, Powerhouse Ventures in Christchurch, Venture Accelerator in Nelson and Upstart Angels in Dunedin. There are, however, other informal networks which operate in a similar way.

Is there a large angel investing market in New Zealand?

The angel market in New Zealand has long been predominantly informal. Over the last 2-3 years it has become increasingly vibrant with the launch of several angel networks modeled on similar organisations offshore. The New Zealand Venture Investment Fund’s Seed Co-investment Fund has been a catalyst for the formation of formal angel networks and evolving practice standards – the Angel Investing Guide is an example. An Angel Association New Zealand has just been established.

What sort of businesses are suitable for angel investing?

New Zealand is producing world class intellectual property in a number of areas such as ICT, life science and niche manufacturing. This intellectual property is behind the creation of a significant number of early stage companies that need angel involvement to succeed. Angel investors are enabling these companies to grow in scale and to become an increasingly strong and positive force for New Zealand's economic growth. Angel investors usually seek businesses with innovative products or solutions that have international market potential. Management capability is another key factor and founders often need to bring in experienced executives to take the business to the next level.

Are angels common elsewhere?

Yes, angel numbers are growing fast in places like Europe and the United States. The US has the most developed and advanced angel investment market and the number of accredited investors who are entering the angel world is increasing each year by over ten percent. There, angel groups fund over thirty times as many entrepreneurial companies as the formal venture capital industry, and are the largest source of seed and start-up capital. In 2007, US angels invested around $25 billion into early stage companies.

ENDS

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