What can we do better? Collaboration and Completeness
Suse Reynolds, Executive Director, Angel Association of New Zealand talks about what we can do better.
Investing in high-growth, start up companies is highly risky.
Founders and their supporters, particularly investors, but also professional service providers and the government deserve recognition for their involvement. It’s a high stakes game and not for everyone.
I care enormously about the impact and inspiration the seriously amazing founders of high growth companies are having and will have on New Zealanders.
I also care so much about the people who are up for investing in these companies in a way only a tiny proportion of New Zealanders are willing or able to do.
At the Angel Association Summit recently there were over 120 of these terrific people. They all have different backgrounds, levels of wealth, experience and confidence. The time, energy, emotion and money spent by each of them is huge and the rewards are generally more “heart than head” or as John Huston described it at the Summit, “more physic than financial”.
Organised angel investing is still young, especially in New Zealand. Angel networks and funds as well as Individual angels, are building teams, capacity and capabilities to invest. One of the aims of the Angel Association – a collaborative body of networks, funds and some individual angel members – is to provide a way to share this capacity and capability across the country.
Networks and funds provide an effective way of bringing new investors into the space. They provide a mechanism to up-skill investors and gradually increase the size and number of their investments creating a broader base of support for the Xero’s, LanzaTech’s and Pacific Edge’s of tomorrow.
Angel Association members are seeing good deal flow as their own data and the latest Young Company Finance (YCF) Index demonstrates. Cumulatively, over $300 million has been invested in early-stage companies by angel investors since data was first recorded in 2006. And in the last couple of years the number of investors interested in engaging with angel networks has nearly doubled.
Most New Zealand angel deals are syndicated. The members of the Angel Association make good use of country wide collaboration and are constantly working towards improving the efficiency and effectiveness of the interaction. Kiwis are good at working together. As a small and diasporic nation we innately understand we need to work as a team to take on the big boys.
At the moment the data curated quarterly in YCF’s Startup publication does not seek to pick up all early stage company investment activity or hold itself out as doing so. Its focus is on deals being done by publicly visible, active angel networks and funds. Informal early stage investment, venture capital investment and IPO related investment and the very many private deals which are not reported are not included.
The YCF segment of the market is small but it’s important and it’s great that we can get such good measurements and insights into it.
By international standards YCF index is a rare and valuable data set because any form of angel investment activity is notoriously difficult to capture, being an intrinsically private pursuit.
At the end of the day virtually all of our technology companies – from the 1 month old start up to Fisher & Pykel Healthcare – can trace their roots back to at least some original “start-up” capital from angel-like investors in their earl-stage capital raises. Ultimately, the best environment for entrepreneurs is one where capital and expertise is available from a range of different sources. Sources to suit the startups, each bringing their own benefits and strengths to the table, which are not mutually exclusive.
The Angel Association is exploring ways we might curate or extrapolate what is happening to provide a clearer more complete picture of the New Zealand wide early stage investment activity for the benefit of founders – giving some insight into the range of investment options, and for New Zealand as a whole – to demonstrate how much team work takes place in our little country to encourage and support startups.
None of us has all the answers, however, we all have an interest in promoting success and profiling a complete picture of how incredibly rewarding it is to be involved at ground level with the super stars of New Zealand’s economic future.