Angel investment rises 26% to reach record level

Startups in New Zealand received an unprecedented level of funding last year, with $86 million flowing into early-stage businesses across the country. That’s according to Startup Investment NZ, published by PwC New Zealand, the Angel Association of New Zealand (AANZ) and the New Zealand Venture Investment Fund (NZVIF).

“It’s exciting to see such a large number of deals coming through to support early-stage companies. We’re seeing investment levels that are almost three times what we saw just five years ago” said Anand Reddy, Partner at PwC New Zealand.

John O’Hara, AANZ Chair, endorsed this sentiment noting that membership of angel networks continues to grow with a new network established in Marlborough last year and a budding network getting started in the Hawkes Bay.

Established networks like Ice Angels in Auckland, AngelHQ in Wellington and Enterprise Angels in Tauranga are also experiencing growing memberships.

Driving the growth in investment dollars is an increasing number of larger deals in 2017, compared to the year before. The number of deals in 2017 held steady at 111 – one lower than the 12 months previous – the total amount invested has risen by $18 million, a 26% increase.

Offering some insight on the larger number of dollars being invested in a similar number of deals, John O’Hara suggested it reflected a maturing ecosystem.

“A number of the ventures angels have backed are now looking for larger capital injections to fuel their growth. With a thin VC industry, it’s not surprising we are seeing larger deal sizes.

John also offered a word of caution to investors and founders.

“The market’s a little frothy right now. We’re seeing some strong valuations. Entrepreneurs have to be sure they’re not setting the bar too high with their forecast results. If they fail to meet these, it’ll make it make it harder for them to get the next round of funding.

“And investors will be similarly impacted. Flat and down rounds do not impact well on portfolio return prospects.”

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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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.

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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.

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2017 Angel Summit focuses on next 10 years

The tenth Annual New Zealand Angel Summit will be held at Cable Bay Winery – Waiheke Island from 1 – 3 November 2017. It’s theme; “Doubling down on success… the next ten years!”

New Zealand is now decade in to formal angel investing in New Zealand and has amassed some impressive statistics for a nation of our size. Over $500m into nearly 1000 deals in the more formal part of our market. Ten years ago there were 4 clubs and 100 or so angels. Today there are 10 clubs and over 650 angels. All this activity has delivered hundreds of jobs and tens of millions of revenue. It’s this value creation we want to continue to accelerate.

Ten years ago there were 4 clubs and 100 or so angels. Today there are 10 clubs and over 650 angels. All this activity has delivered hundreds of jobs and tens of millions of revenue. It’s this value creation we want to continue to accelerate.

The 10th Annual NZ Angel Summit is being held back where it all started at Cable Bay Winery on Waiheke Island. The choice of the small intimate venue continues the deliberate approach by the Angel Association to ensure it creates the right atmosphere for relaxed and informal conversations between active angel investors. The last two summits have sold out and it unapologetically prioritises attendance for those who are ‘doing deals’.

On the first morning the Summit will celebrate our community of investors and founders and their achievements in the past decade. There is so much to be proud of. The rest of the event will be spent digging into what we need to do to double down on our successes based on stories and insights from New Zealand’s heroes. International speakers, carefully vetted for their ability to both understand New Zealand’s unique circumstances and our aspiration for outcomes and success are flying in to present.

Showcasing Angel Investor Backed Ventures

The Showcase event which kicks off the event will include up to 10 venture in three tiers; seed, first formal round, last raise with a clear exit path. Each group of ventures will be introduced by an experienced angel investor who will talk about the investment opportunity, the return profile, valuations and potential acquirers.

New Zealand Investor Keynotes

Key Note sessions will include deep insight into what we can be proud of and what’s next. Stalwart investors will share memories of getting started – what was their vision and what inspired them, their challenges and what we need to do in the next decade to ensure value is delivered. These sessions will explore why our environment looked as it did 10 years ago, how far we’ve come and how we build on what we’ve created and set the vision for the next 10 years.

International Angel Investors

International special guests include Justin Milano (Good Startups, San Francisco, USA) who will explore the role of fear in the early-stage space. A veteran of Silicon Valley, Mr Milano has worked with angels and entrepreneurs to use cutting edge psychology and neuroscience, including emotional intelligence skills to help entrepreneurs and angels create break-throughs and unlock potential. Ron Wiessman (Band of Angels, San Francisco, US) will deliver a dose of reality exploring the critical the role of capital strategy and how tough it can be to source and entice an acquirers.

Actionable Insights

The extensive programme includes gritty content which covers; building strategic value, actively managing your portfolio for returns, Government’s role – identifying the right policy levers, the role of NZ corporate venture, and deep dives into term sheets – how have they have evolved and what role do they play in venture success lead by AANZ Expert Partner, Avid Legal’s Bruno Bordignon. Insight into which industries and technologies are going to irrevocably disrupt markets in the coming decades and make the best investment opportunities round out the valuable programme.

Finally, the event will also include the presentation of Arch Angel Award and two inaugural awards “Contribution to the industry” and “Lead angel and best venture award” – celebrating a great angel/founder collaboration.

To book your seat (preference is given to active angel investors) click here.

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Follow-on investments

During the Asian Business Angels Forum and AANZ Summit 2015 we talked to Nelson Gray, educator, angel investor, mentor, fund manager, and non-executive director of the Scottish Angel Capital Association.

In this interview Nelson Gray talks about what angel investors should know about follow-on investments.

 

You can meet a quality network of investors and experts in early-stage company growth, acquisition and exits in person by registering your place at the 9th Annual NZ Angel Summit 2016.

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Building an International Portfolio #ABAF15NZ

#ABAF15NZ: Building an Internation Portfolio

Getting real on the likely hood of cross-border deal syndication – the risks, the restrictions and the potential. Is it possible to build an international portfolio? What are the pros and cons?

Moderator – # Nelson Gray (Scottish Angel Capital Association, SCT)

# Ashley Krongold (Our Crowd, AUS)

# Raiyo Nariman (Malaysian Business Angel Network)

# Bob Kelly (Microsoft, US)

Click here to view video on youtube

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The Role and Relevance of Listing #ABAF15NZ

#ABA15NZ: The Role and Relevance of Listing

Where does listing fit in the lifecycle of an early-stage company? Is it different internationally? What are the options?

Introduction presentation from Tim Bennett, CEO, NZX who explains New Zealand’s regulatory environment, markets and opportunities for high growth companies and angel and venture capital investment markets.

Moderator – # Chris Twiss (NZVIF, NZ)

# Chris Twiss, New Zealand Venture Investment Fund

# Garth Sutherland, and Bronwyn McGrayth from Adherium, NZ who recently listed on the the New Zealand stock exchange

# Chris Twiss, NZVIF explains the NZ fund investing and compares to international markets with comment from Ron Weissman, US and David Chen, China.

How much time should founding team of early-stage companies be giving to thinking about IPO.

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Role and Importance of IP in building Angel Venture Value #ABAF15NZ

#ABAF15NZ: Role and Importance of IP in building Angel Venture Value

A practical look at how IP can be leveraged to build value in ABC’s (Angel Backed Companies). Building revenue streams and IP portfolios.

What IP are Asian acquirers looking for? Do angels need to own the IP? What role does the exclusive licence play? What are sector specific consideration in IT vs. life science deals.

Moderator – # Anton Blijlevens (AJPark, NZ)

# Allan May (Life Science Angels, USA)

# Introduction to international panel and their ‘war stories’ about intellectual property in China, Australia, and New Zealand

# David Chen (AngelVest, China)

# David Hugues (NZ Plant and Food – Crown Research Institute, NZ)

# Jim Kalokerinos (Brisbane Angels, Australia)

Click here to watch video on youtube

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Equity Crowd Funding #ABAF15NZ

#ABAF15NZ: Equity Crowd Funding

Presenters from three platforms spanning UK, Australia and New Zealand look at current developments and dynamics of both accredited and unaccredited equity crowd funding. They also discuss its impact on angel investment and advances made by early-stage companies to change the world.

Moderator – # Ashley Krongold (Our Crowd, AUS)

# An intro to crowd funding in Australia

Slides available here

# Josh Daniell (Snowball, NZ)

# David Wallace (Armillary Private Capital and Crowdcube, NZ)

Click here to wtch video on youtube

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What’s Your Portfolio Strategy? #ABAF15NZ

#ABAF15NZ: What’s Your Portfolio Strategy?

Over three decades Bill Payne has successfully founded and invested in over 50 start-up companies. He talks briefly to the delegates of the Asian Business Angel Forum 2015 about building an early-stage investment portfolio.

Find out more about # Bill Payne here.

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Lead Partners

NZTE NZVIF PWC

Expert Partner

NZX AVID AJ Park “FNZC.jpg”

AANZ Summit Sponsors

Callaghan Innovation “UniServices” Kiwinet “Spark”