NZ angel investors spurn start-ups

First published in the New Zealand Herald on Monday March 5, 2012

Angel investors – rich individuals who back business start-ups – were active in the second half of last year but were keener on supporting existing companies than they were on stumping up cash for new ventures, the NZ Venture Investment Fund (NZVIF) said.

NZVIF, which administers venture capital and seed co-investment programmes for the Government, said “angels” made 97 investments in young, high-growth companies, slightly behind the previous year’s record activity level, but the amount invested was $30.7 million – about half the amount invested in 2010.

The fall in the level of investment was more pronounced in the second half of last year, when angels invested $13.1m, the lowest total since the NZVIF’s Young Company Finance Index began collecting data in 2006.

However, the 44 deals undertaken in the second half was the second highest recorded.

NZVIF chief executive Franceska Banga said the trend of angels investing smaller amounts, in both new and follow-on investment, was indicative of a maturing of a New Zealand angel market and was consistent with similar trends overseas.

“Angels are learning more about how much and when to invest.,” she said.

Angels’ portfolios of new investments grew steadily between 2008 and 2010, in particular.

“A significant number of the most active angel investors are shifting their main focus to supporting their existing companies,” she said in a statement.

This was a rational response to the recognition by angels that companies required follow-on funding, and a lack of material follow-on money from other sources in New Zealand.

“The trends we are seeing in angel investing highlights the need for later stage funds – venture capital funds – to provide the larger investment capital to develop the companies which angel investors have been backing,” Banga said.

Angel investors have cumulatively invested $220m into high-growth companies since 2006, in an average deal size of $540,000. The average deal size in 2011 was $323,549.

Of the $30.7m invested last year, $11.7m was into first round investments and $19.0m comprised follow-on investments in existing companies.

In terms of the stage of investment, $6.6m was seed investment, $23.8m was at the start-up stage, $360,000 at the early expansion level, and nil at the expansion stage, NZVIF said.

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Sparkbox targets entrepreneurs with NZVIF investment partnership

National angel group Sparkbox Ventures plans to back 20 entrepreneurs over the next five years, following the renewal of its investment partnership with the New Zealand Venture Investment Fund.

The co-investment partnership should see Sparkbox Ventures and NZVIF combining to invest around $10 million in start-up companies over the next five years.

Sparkbox chairman Andrew Duff said they are looking for a new type of entrepreneur able to get Kiwi innovation successfully onto the world stage.

“The traits of this new form of ‘extreme entrepreneur’ are people who are capable, knowledgeable, quick to adapt, able to listen, and can learn from the experience of others. They know how to leverage networks, but are creative and can think outside the box and follow a strategic plan to a successful exit.

“We have previously backed entrepreneurs, like Rod Drury of Xero and Grant Ryan of YikeBike, as well as the new breed of successful Kiwi entrepreneurs, like Brian Ward of Mesynthes and Paul Cameron of Booktrack. With the investment partnership with NZVIF, we want to help find the next generation, and our objective is to back around 20 entrepreneurs over the next five years.

“There are some superb ideas and innovation emerging from our universities and research institutes. The key to turning these ideas into commercial success comes down to entrepreneurial abilities. Building successful innovation companies is about identifying the right person and providing them the necessary support and investment.”

NZVIF chief executive Franceska Banga said the initial investment partnership had seen NZVIF and Sparkbox invest around $7 million into over a dozen companies, helping to fund the growth of promising young technology companies like Mesynthes, BigLittleBang and Booktrack.

“Sparkbox is a very active private group which has been investing for over a decade. They are clearly committed to continuing to be an active part of the seed and early stage venture investment market in New Zealand.

“Through our initial investment partnership, NZVIF committed to co-invest $4 million with Sparkbox. That has so far seen us combining to invest nearly $7 million.

“In order to maintain the momentum of investment into start-up companies, NZVIF is committing to invest a further $4 million with Sparkbox. When that is combined with the private angel investment, we can expect that the renewed partnership should see around $10 million of investment into start-ups over the next four to five years.”

Andrew Duff welcomed the partnership renewal, saying Sparkbox’s focus is on early stage investment to back entrepreneurs in sectors including information and communications technology, material science, cleantech, and medical and diagnostic technology.

“We are seeing a lot of promising start-up opportunities needing investment to research, design and develop technology based products and solutions with the aim of taking them to international markets. We are committed to a strategy of specialising on pre-seed and seed investment where we see attractive investment opportunities.”

Media contact:

David Lewis
Cell: 021-976 119

About Sparkbox Venture Group:

Sparkbox Venture Group is New Zealand’s leading early stage investor and has been investing in New Zealand innovation companies since 2001. Our sector preference is Information technology, Mobile, Material science, Cleantech, Communications, Medical and diagnostic technology, Internet and the Cloud. Sparkbox Venture Group provides advisory services to help maximise value from New Zealand innovation. Follow us on www.sparkboxventures.com

About NZVIF’s Seed Co-investment Fund (Seed Fund):

NZVIF invests directly into companies alongside pre-qualified private investment partners known as ‘angel’ investor groups. (Angel investors are typically wealthy individuals who invest their own capital into entrepreneurial firms). Angel investors assess investment proposals and decide whether or not to invest with a company. Following that decision, NZVIF, through the Seed Fund, is able to match the private capital invested on a 1:1 basis, up to $750,000 per company. http://www.nzvif.co.nz/seed-co-investment-overview.html

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Online fun a money-spinner

Game that teaches children about music can be a major money-spinner, believes entrepreneur Chris White, founder of Big Little Bang, an online 3D virtual world for children aged 7 to 14.

MTV Networks paid US$160 million for Neopets in 2005. Two years later Disney bought Club Penguin in a deal valued at US$700 million (US$350 million upfront, with the remainder dependent on the online game achieving revenue targets). In Britain, Moshi Monsters is estimated to be worth US$200 million ($242 million) after a founding director sold his stake in the company last year.

These are the sort of numbers that White believes will fire investor enthusiasm as he seeks expansion capital to further develop Big Little Bang, particularly in the United States. Stephen Tindall’s K1W1 fund and angel investor Sparkbox Ventures provided initial seed capital, and have committed to the expansion capital round. Other angels provided additional funding to develop the prototype into a commercial game, which launched in July.

It now has more than 31,000 players, more than half of them American children, despite the game only becoming available state-side before Christmas. White is now in the US seeking “accelerators and incubators” to help fast-track Big Little Bang’s growth.

“We’re looking to hit the break-even point in the next 18 months and at that point really accelerate our growth to hundreds of thousands of new users each month,” says White.

White’s game is about socialising and creating music in space, using planets, rocket ships and musical wormholes. As a former music teacher, this website strikes me as an astonishing amalgam of creativity and commercial exploitation. It comes as no surprise to learn that Mike Chunn, music legend and advocate for making music the building block of learning, was involved at an early stage.

The Big Little Bang idea is a great example of the creative fostering that is now embedded in New Zealand corporate culture.

White, who has a master’s degree in creative arts and a bachelor of science, has been through the Spark programme, was adopted by the Icehouse business incubator (“I had access to the executive in residence”) and was assisted in forming relationships with the Massachusetts Institute of Technology and the University of Santiago.

Revenue is rising and he’s confident a bright future awaits.

First published in the New Zealand Herald on Monday February 6 2012

Read more on NZHerald

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Angel HQ

 

Angel HQ logoAngel HQ is the Wellington Region’s angel investment network. We are here to help young companies with aspirations for high growth get the investment they need to achieve their goals, while generating a healthy return for investors. We’re known for our predilection for deals with a certain ‘geek’ factor in them, technology is one of our preferred areas of investment.

Angel HQ connects high net worth investors with the most exciting and dynamic of our early stage companies. AngelHQ is SCIF accredited (which means the potential for qualifying transactions to receive matching funds from the Government’s Seed Co-Investment Fund).

Angel HQ is an incorporated society run for and by its members. The members of the board are Bruno Bordignon (Chair), Susan Iorns, Sam Knowles, Suse Reynolds, Jelle Sjoerdsma, and Marcel van den Assum.

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Cure Kids

Cure Kids have invested over $19 million in medical research. This research has helped save hundreds of young lives and has improved the quality of life for thousands of children.

Today, we are more committed than ever to help find answers to the many cruel, life-threatening illnesses that devastate the lives of young children and their families. The research funded by Cure Kids has already led directly to several exciting commercial applications such as A2, Nexus 6, and Living Cell Technologies.

The goal of Cure Kids Ventures Limited is to maximise and leverage promising research into collaborative research, venture investment and ultimately commercialisation, which can then be reinvested back into childhood health.

PO Box 105-384, Auckland 1143

Contact: Maxine Simmons, CEO

M: 021 625 635

E: [email protected]

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Enterprise Angels

Enterprise Angels brings individual business investors together to invest on a joint basis in the establishment and growth of local and NZ wide businesses.

Enterprise Angels acts as a focal point for businesses seeking investment funding:

  • mentoring businesses in their preparation of investment proposals (to better facilitate investment opportunities and their potential match with business investors), and
  • providing an opportunity for businesses to present their investment opportunities to potential investors.

Smart Money from Active & Passive Investors

Over half the investor members are keen to add value to their investment by taking an active role in developing businesses they invest in. The skills of these investors range across senior management, marketing, sales, finance, technology and operations.

Other passive investors in the group are offering a range of governance skills and experience as Board directors to back up their investments.

Seed Funding to Established Businesses – Equity Growth & Acquisitions

Enterprise Angels will consider business equity growth investments in all business sectors in:

  • Businesses needing seeding funds to develop new products and ideas through early development, prototype and intellectual property protection stages
  • Start-up businesses that are ready to commence manufacturing, production, and distribution
  • Businesses that after start-up are already achieving initial sales
  • Established businesses with proven records of sales revenues

Enterprise Angels also considers the full purchase of businesses, including options for the strategic graduated exit of owners and for the relocation of businesses to the Western Bay of Plenty.

To date, the group has considered business investment opportunities seeking funds from $40,000 to $5 million.

To contact the Enterprise Angels re your potential business investment opportunity visit www.enterpriseangels.co.nz

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Ice Angels

The ICE Angels is an Auckland-based angel investment network that was founded by the ICEHOUSE business incubator in 2003. Its objective is to connect high-potential start-up ventures with willing investors in order to support the success of emerging New Zealand companies.

The ICE Angels is composed of 105 members who have collectively invested more than $30 million in 20 companies over 54 rounds. The ICE Angels’ investors are interested in early stage ventures with international growth potential within sectors including software, media, internet, communications, life sciences, and medical devices.

P: +64 (9) 308 6213

F: +64 (9) 309 9713

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K1W1

K1W1 Ltd is an investment company owned by Sir Stephen Tindall.

K1W1 Ltd is an investment company owned by Sir Stephen Tindall. It has invested over a total of $100M Seed and Venture capital into a large number of start-up and early stage businesses from Biotech, environmental technology, high tech, software and other high export potential businesses. The aim is, either directly or as a “fund of funds” to assist young entrepreneurs to grow New Zealand as a leader in the “knowledge economy” and to help create a culture of making New Zealand “cash flow positive” in international goods and services trade.

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MIG Angels

Manawatu Investment Group (MIG) is an angel investment group managed by The Bio Commerce Centre, a technology commercialisation centre in Palmerston North.

MIG connects up and coming technology businesses with equity investment from experienced business operators. These operators are high net-worth Manawatu individuals with an interest in investing in early-stage, technology-based companies in any sector. MIG offers aspiring companies investment capital and the opportunity to involve experienced and successful business people in shaping and growing their business.

+64 (6) 353 3100

+64 (6) 354 3709

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Otago Angels

Otago Angels is a network of 90+ Angel investors, primarily based in Otago and Southland, who seek high-growth investment opportunities, typically with global growth aspirations. Preference is given to projects from our own geographic area. Normally, the companies will be in the seed or start-up phase, and technology-based.

Otago Angels is managed from the Upstart Business Incubator in Dunedin, and prefers deals in the $100,000 – 1,000,000 range. Members of the network assist with due diligence on companies, provide funds, and frequently take an active role either on Boards or by making their personal networks available. As well as administering the network, the entrepreneurs from Upstart Incubator provide a gate-keeping role to ensure that only high quality opportunities are offered, and prepare applicant companies for the due diligence process.

A: L1, 333 Princes Street, PO Box 1310, Dunedin

T: +64 3 471 9974

F: +64 3 471 9975

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Powerhouse Venture

powerHouse invests in early stage ventures. We invest utilising managed funds and co-investment. Our approach is to combine the professional management of a venture capital firm with business incubation, supported by the networks and expertise of our investor group. We source ventures from the leading generators of innovation – universities and research institutes – as well as the private sector.

As an active, hands-on investor, powerHouse concentrates primarily on Canterbury-based companies, providing capital and expertise to drive those early-stage businesses to become competitive internationally.

powerHouse works closely with entrepreneurs, researchers and investors to identify high growth opportunities and to fund, build and realise value. For investors, this means opportunities come screened, shaped and validated and there is the reassurance that powerHouse carefully guides and mentors the companies as they progress, both before and after investment. The management team and board have considerable experience in these areas and a track record of working with young, fast-moving companies.

powerHouse raises an investment fund every year. Each fund targets six investments, typically in the range of $100,000 to $1,000,000. powerHouse also manages The Christchurch Fund, a regional development portfolio.

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Sparkbox Venture Group

Sparkbox Venture Group is New Zealand’s leading early stage investor and has been investing in New Zealand innovation companies since 2001.

Our sector preference is Information technology, Mobile, Material science, Cleantech, Communications, Medical and diagnostic technology, Internet and the Cloud. Sparkbox Venture Group provides advisory services to help maximise value from New Zealand innovation. Sparkbox usually invest up to $150,000 per funding round and can invest up to $500,000 over the life of a company. Our investment approach and flexibility means we can consider early stage opportunities that others cannot. Sparkbox contributes both cash and skills services ranging from access to our experienced business partners to transaction assistance. To date Sparkbox has invested in more than 30 companies. Follow us on www.sparkboxventures.com.

Address: Level 1, The Generator, 22-28 Customs Street East, Auckland Central

Phone: +64 9 950 5300

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