Angel expert shares vision about investing in NZ
American Angel Capital Assn Chair Emeritus, John May is having an inspirational impact as he tours New Zealand. In this article he commends Tauranga for the quality of its innovation and startup community.
Tauranga is a tier-one city for angel investing, says American early-stage capital pioneer John May.
“Tier one cities understand it’s something where you’re really helping the local economy, while you’re working on your own financings as an angel. And that you can’t do this without a group of entrepreneurs coming up with great ideas.”
Mr May, former chairman of the US Angel Capital Association, last visited New Zealand briefly five years ago, and this time will spend a month in the country.
During his visit to Tauranga, Mr May took part in a number of networking events with local entrepreneurs, investors and businesspeople. He also ran a workshop for members of host organisation Enterprise Angels, one of the most active early-stage investing groups in New Zealand.
“The three components of a vibrant angel group are investable deals, active angels not just dumb money, and charismatic leadership with people willing to volunteer their time to grow the local angel community,” he told the Bay of Plenty Times yesterday.
All of those elements were present in Tauranga, he said.
“We’re not just trying to make money off the entrepreneur, we’re trying to help them grow,” he said. “This is patient capital – it’s mentor capital.”
Mr May said New Zealand shared a history of entrepreneurial activity with countries such as Canada, Australia and the US.
“There’s an understanding you have to take risks to get rewards, there’s the important element of the rule of law, and a tax structure oriented towards protecting minority interests, which helps create a positive environment for small businesses trying to grow.”
Enterprises Angels executive director Bill Murphy said the experienced US investors the group had invited to Tauranga over the years brought expertise from a market that had been angel investing for two or three times as long as New Zealand.
“We’re still getting new angel investors coming on board all the time so the Angel Investing 101 workshop is incredibly useful for them,” said Mr Murphy.
“But the Enterprise Angels management team are now working on the nuances around effective investing and most especially the post-investment relationship with the start-up company. We need to learn how we can do everything we can to make sure they’re successful.”
Mr Murphy said most US angel groups were made up of cashed-up, wealthy retired businessmen with plenty of time to work with their investee companies.
“In New Zealand, nearly all of our angels are still working fulltime,” he said. “Enterprise Angels has to manage a lot of the process and use our angels in defined areas of their expertise because they don’t have a lot of time. And that creates some challenges in terms of how you resource that. Conversations with experienced angel investors like John are very valuable to us.”
Entrepreneurs focussed on how best they can help
John May also joined a panel – including local angel investors Daryl French, Beppie Holm and John MacDonald – for the Angels at My Table event last night, organised by the Venture Centre.
The event brought the angels before 50 local entrepreneurs, with panelists pitching their ability help get new companies off the ground.
Mr May said he had been impressed with the types of deals available in New Zealand.
“In terms of entrepreneurship and hi-tech, in the horticultural and agri-business and dairy sectors, you’re finding it easy to put knowledge and expertise together with resources, to be state-of-the-art and to find ways to grow even outside your region,” he said.
“The thing to do is to focus on the businesses where you have historic roots and look for ways to deal with the most scalable and innovative aspects of those industries,” he said.
Jo Allum, a co-founder of Venture Centre, said it had been great to have so many entrepreneurs with potentially good ideas getting to know some local angels.
“And some of the best advice from the angels was to tell entrepreneurs they shouldn’t just be looking for money,” she said. “You should also do your due diligence on the angel, find out how he is to work with and whether, as well as investing, he helps you along and is interested in developing your business.”
Darren Bruning of Tauranga-based startup financialme said: “I thought it was a really good idea and nice to get a bit of visibility into how these angel-types think.”
Mr May also visited the Newnham Park Horticultural Innovation Centre in Te Puna, which nine companies, including PlusGroup, Kiwifruitz, Southern Produce, Plus Group, Heilala Vanilla, and industrial design company Locus Research.
Plus Group managing director and Enterprise Angels board member Steve Saunders, who lives in Te Puna, later hosted Mr May to an informal dinner with a group of angel investors. The dinner was catered by MasterChef New Zealand 2014 winners, sisters Kasey and Karena Bird from Maketu, and was designed to give Mr May “a taste of Kiwiana,” said Mr Saunders.
“John’s very interested in cross-border investing and that’s one of the things he’s been looking at here,” he said. That could result in American and New Zealand angel investors interacting more on potential deals, he said.
“There is some potential for cross-border trading,” said Mr Saunders.
“I think being able to get those connections internationally is hugely valuable from a New Zealand perspective. Especially when you’re looking at a technology in New Zealand you think has real relevance to an international market.”