Leading the world – NZ angels
Bill Payne encourages the New Zealand angel community to keep doing what we’re doing.
Hey Kiwi colleagues!
Just recently I was on the phone to one of the wonderful team at New Zealand Trade and Enterprise. After the conversation it occurred to me that I overlooked one point I wanted to make: the greatness of the angel activities of New Zealand. I’d like to share my thoughts on this with you as the festive season looms and hope it might inspire you to keep doing what you’re doing so well.
I have visited New Zealand and shared my experiences in entrepreneurial finance on half a dozen occasions in the last nearly ten years – in 2006, 2008, 2010, 2011, 2012 and 2013. My five month visit back in 2010 provided me with lots of wonderful experiences with, and a deep understanding of, your entrepreneurial ecosystem and I wrote a report on it which if you’re interested you can see here.
In the past decade, I have visited several other countries around the world, especially those with the most active and organized angel communities, including Canada, Australia, Ireland, England, Northern Ireland, Scotland, Poland, Russia, Estonia, Finland and Hong Kong. And, by attending multi-national angel association meetings in Asia and Europe, I have met angel leaders from many other countries, including Italy, Portugal, France, Germany, Belgium, China, India and others.
Three countries lead the world in organized angel activity, the US, Scotland and New Zealand. The next most engaged countries are Canada, Australia and, to a lesser extent, England. Successful angel groups (funds and networks) engage members in operating the club, managing deal flow, conducting due diligence, writing checks and, most importantly, mentoring and generally engaging with portfolio companies after investment. Member engagement is perhaps the most important aspect of successful “angeling.” Many groups throughout the world, especially in Europe, engage paid managers to do all the heavy lifting. Not so in the top three countries. Paid administrators and managers may be involved, but the members generally set policy, engage in processing deals and stay engaged with portfolio companies after investment.
These subtle differences in member engagement are not necessarily obvious to most knowledgeable observers. I first recognized and then wrote about this observation in a blog for Gust only 18 months ago under the heading US Angel Groups vs. European Business Angel Networks (BANS).
New Zealand “punches far above her weight” in the angel investment community. This is readily measured by comparing NZVIF Young Company Finance reports to data available for angel investing in other countries. And, why has this happened? I think there are four factors:
- Your isolation: New Zealander’s “paranoia” about their isolation drives them to actively search for best practices all over the world and to bring the “best and the brightest” from elsewhere to New Zealand regularly. The search for best practices (and networking) has led AANZ leaders to attend national and international angel conferences all over the world. Adopting these best practices has led Kiwi angel leaders towards not just doing the right thing, but adopting best practices to do the right thing.
- Adjusting the model: Most NZ angel groups have adjusted their operating models over the past decade. ICE Angels was rather subtle in altering their operations to engage more members. Enterprise Angels in Tauranga threw out the old and adopted an entirely new model and have become one of the most active angel groups in the country. The MiG angels in Palmerstson North bravely took on adopting an angel sidecar fund to work alongside their angel network, using the best of models available in the US. And these are just three examples…
- Government support: Early on, the New Zealand government recognized the importance of angel investing to a thriving entrepreneurial ecosystem. The engagement of NZVIF, NZTE and other agencies, primarily through AANZ and the country’s business incubators has made a big difference. There is a significantly better understanding of and engagement with the angel community by the Kiwi government than in almost all other countries in the developed world. Much much better than, for example, in the US.
- International outreach: Finally, AANZ has made a big difference by forcing angel leaders to get their heads above the trees and look to what is best for New Zealand, not just their local community. To Kiwis, AANZ has mostly an internal focus. To me, AANZ is central to the international outreach which has been a key to international success. In my opinion, the AANZ Summit is one of the best and most important annual meetings of angels in the world, second only to ACA in the US. And, I have attended such meetings in Europe, Asia, Australia, Canada and England.
I know I have rattled on and on, but I wanted you to understand that New Zealand and AANZ are doing well and there will be a significant payoff in job and wealth formation in the coming decade. Let’s not forget it takes a LONG time. My only advice to you all is don’t pull back on the throttle. Stay engaged for the long haul. It takes a decade to begin to see success and two decades to really begin to see a difference in economic impact. It probably takes three decades to get it right and see significant and measurable changes in the Kiwi economy.