On track for another record year

First half year results show angels are investing at rates on a par with previous years. The upward trajectory continues. It’s likely the formal part of the market will hit $100m into high growth start-ups this year.

Reporting on the activity of its members tracked by the NZ Venture Investment Fund, Angel Association Chair John O’Hara said $30.8m dollars was invested in 46 deals in the first six months of the year compared to $20.2m into 29 deals in the same period last year.

More detail and deeper insights can be found at www.pwc.co.nz/startupmagazine in the second edition of Startup Investment New Zealand; a collaboration between Angel Assn and PwC.

Mr O’Hara noted there is always a substantial uplift in activity in the second half of the year, in part inspired by two of the country’s larger angel networks, Ice Angels and AngelHQ, holding their annual venture showcases in September.

“This year Ice Angels’ showcase attracted 1000 guests and that level of enthusiasm has been reflected in capital commitments to the ventures presenting. AngelHQ’s showcase attendance numbers were also up,” said Mr O’Hara.

“We are seeing increasing valuations and amounts raised, and in many cases, start-ups are now appearing to be fully valued. While this is positive it comes with some challenges,” said Mr O’Hara.

“Start-ups that are too well funded can lose their edge and correspondingly high valuations put pressure on founders to deliver the requisite valuation uplift to ensure the next funding round is successful,” he noted.

These sorts of issues were discussed at the Angel Association’s first ever event for founders and investor-directors held the day before the industry’s annual summit in Blenheim on Wednesday 31 October 2018. Called “The Runway”, the day-long event brought together over 35 founders of high growth ventures and the angels who have backed them. As well as building a cohort of like-minded founders who support each other as their ventures scale, the initiative began to build tighter alignment and awareness of what it takes to scale an angel backed company.

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Investors have confidence in startup futures

The October issue of Startup Investment New Zealand Magazine is now available here.

In this edition, we shine a spotlight on Kiwi businesses that have earned a place on the world stage. To be successful, Kiwi startups have always had to think and act global from the outset but there’s now a number of factors helping these startups succeed in offshore markets, and often much earlier in their journey. We’re seeing a developing ecosystem of support including government agencies, networks and people with experience at scaling global businesses, as well as investors who have the confidence to support these innovative companies.

The data is supporting this investor confidence. Five times the number of startup organisations successfully raised over $1 million from local investors in the first half of 2018 verse the same period last year, according to the latest Young Company Finance Index. This year almost half of deals are co invested by two or more Angel clubs and funds. Why is the formula to achieve global success so critical? It means little old New Zealand can produce valuable companies winning on the global stage, which attracts investors and ultimately builds prosperity for us as a country.

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Why you SHOULD be an angel investor… it’s all about portfolio management

Australian early stage angel investors often treat start-up investing like horse racing. They punt with money they’re willing to lose, but this approach has led to a lack of discipline and very poor returns.

They place a few bets based on a good jockey (founder), their form (prior success), the stable (team and advisers), horse (business), equipment (technology), running line (strategy) and weather conditions (market), but start-ups should not be treated as an adrenaline-shot gamble where the majority of investors lose their money and a few “lucky” punters make a killing.

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Fintech Startups Accelerate to Success

A step-change is taking place in New Zealands flourishing fintech sector, with participants in the second iteration of the Kiwibank FinTech Accelerator highlighting a growing maturity, sophistication and global potential.9 May 2018
A step-change is taking place in New Zealand’s flourishing fintech sector, with participants in the second iteration of the Kiwibank FinTech Accelerator highlighting a growing maturity, sophistication and global potential.

Graduates of the Kiwibank FinTech Accelerator 2.0 will showcase their work at a Demo Day in Wellington on May 16. Ventures will first pitch to angel investors and early stage venture funds at an investor-only session, followed by presentations to New Zealand’s business and fintech community later in the evening.

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Record NZ$86 million invested into New Zealand startups in 2017

More investment was poured into New Zealand startups than ever before in 2017, with NZ$86 million ($81.7 million) invested into 111 companies.

The figures were revealed in the latest Young Company Finance Index, published by PwC New Zealand, the Angel Association of New Zealand (AANZ) and the government-backed New Zealand Venture Investment Fund (NZVIF), which found that while the number of deals was just one below 2016, the total amount invested had increased by NZ$18 million.

Anand Reddy, partner at PwC New Zealand, said the investment levels are almost three times what New Zealand was seeing five years ago.

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NZ Startup Community Vibrant and internationally Competitive

The recent Angel Association and PwC release of data reveals a new record of $86 million flowing into early-stage businesses across the country.The recent Angel Association and PwC release of data reveals a new record of $86 million flowing into early-stage businesses across the country.

NZVCA Executive Director Colin McKinnon says: ‘The reported growth in investment dollars was due to an increasing number of larger deals in 2017, compared to the year before. The increased deal size indicates a maturing of the early-stage market. We are seeing angel investment building larger companies that are capable of attracting international investment.

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The network effect: NZ angel networks drive funding

Of the $86 million invested into young companies in 2017, over half ($49 million) came from angel investment networks, rather than individual funds or institutional investment.

“The strength of our angel investment networks in New Zealand is growing every day, which helps to explain why they’re responsible for a growing share of overall funding” says AANZ Chair John O’Hara.

“They’re responsible for over double the funding that’s coming through the next most-popular channel of angel funds.”

Raising funds from angel networks can take a little longer than other sources of early stage funding (such as mico-VCs and high networth individuals) given that sometimes over a dozen individual investors are collaborating to complete DD and gather the investment. Angel networks also tend to be run with a large component of voluntary input so founders and lead investors need to be committed project managers.

John notes that not only do networks tend to bring a larger pool of connections and expertise than single source funding options, they bring deeper reserves of connections for follow on funding.

“Angels are inveterate travellers and networkers and have connections in markets across the world which can be tapped for sales channels, in-market insights as well as follow on funding recommendations,” said John.

“Nothing beats getting on a plane with a line-up of carefully targeted meetings. New Zealand founders and investor directors need to spend more time in-market and be preparing for the founder to be based there,” John added.

He concluded by noting that lining up an in-market Board member was also an important component of scaling into offshore markets.

Click here to find out more about how the startup sector is evolving, and where it’s heading next.

Click here to dive into the data about this asset class.

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Software the top sector for NZ angel investors

More than half the investment made in early stage companies in New Zealand last year was in the software and services space (53.8%), followed by 17% in technology hardware and equipment.

“Technology is increasingly the engine of growth for all companies, regardless of size” explains PWC’s Anand Reddy.

“It’s no surprise that it’s these areas where the most activity is happening and where angel and early-stage investors are putting their energy. This reflects global trends too. Data generated by Crunchbase notes that the software and services remains the dominant sector for investment.”

Speaking personally, John O’Hara said that his own portfolio leant towards software generated ventures.

“I am particularly proud of Ask Nicely, which produces software for NPS (net promoter score) collection and analysis. This company has already generated tangible returns for a number of the early angel investors. The company is now scaling into the US, with the founder moving to Portland, Oregon in the last couple of months.

“New Zealanders have a knack for practical problem solution and we are increasingly seeing them turn this knack into compelling business opportunities,” said O’Hara.

Click here to find out more about how the startup sector is evolving, and where it’s heading next.

Click here to dive into the data about this asset class.

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Angels Tell the Truth: What Makes a New Company Fundable

There’s more than $100 billion dollars currently being invested annually by venture capitalists, private equity firms and angel investors. Why do some businesses get a piece of the action and others don’t? It comes down to the fundability of the company.

Entrepreneurs may think they have a great business idea, but investors may not see it that way. To learn why, entrepreneurs need to look at their business from the investor’s point of view. Just like the founder, investors are looking for a match made in heaven – when both company founder and investor make money in the end and all live happily ever after.

As an experienced angel investor, managing partner and CEO of Sofia Fund, here’s my advice – consider this the ultimate primer on demystifying the angel world.

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New Zealand’s Utility Electric Vehicle, UBCO, now on-road and offshore

After successfully raising NZ$4.20M earlier this year, including NZ$1.40M from US investors, Spring Capital and successful technology entrepreneurs Bob and Ethan Ralston, UBCO is now growing their global market both on- and off-road. The off-road market in North America alone is estimated at US$12.7bn (including both 2 and 4-wheel drive vehicles) and the on-road market is about US$6.21bn USD.

Over the last year funds have been spent on R&D, market development, marketing and operating costs. The results are looking good both in product and market outputs.

In May 2017 UBCO Bikes USA, LLC was established in Eugene, Oregon as a dedicated distributor of all Ubco products in the USA. Subsequently, a dealer network has been established across a number of US states, from Oregon to Mississippi, including BMW and John Deere dealership groups. With 120 units dispatched to the US to date, and a further 90 units on-order, the size and frequency of orders is increasing.

In Australia, UBCO appointed a national distributor that is focussed on rural agricultural equipment and there is already a 20′ container of 2018 2x2s being distributed across Australia.

The latest UBCO 2×2 is a road registerable Utility Electric Vehicle that is classified as a moped/scooter/motor-driven cycle globally and can be driven on-road with as little as a learner car driving license. The new model has been significantly upgraded with proprietary design, parts, and improved electrical integration it has improved strength, durability, ride comfort as well as higher performing motors and improved sealing.

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Lead Partners

NZTE NZVIF PWC

Expert Partner

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AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”