A lobby group is being set up for angel investors interested in funding technology and other start-ups.
The move comes as the New Zealand Venture Investment Fund announces almost $50 million of investment over the past two years in such fledgling operations.
The NZVIF was created by the government, in 2002, with a $200 million pot of cash, including a $160 million venture capital fund and a $40 million seed fund. The aim was to be the cornerstone investor in the development of a vibrant early-stage venture capital market for New Zealand.
The fund expects to see private investors match its capital to the tune of $80-$120 million over the next four to five years, irrespective of the nature of future governments.
CEO Franceska Banga says angel investors are typically high net-worth individuals who have usually been successful in corporate life and are looking to help manage or mentor new and exciting companies.
Such investors have always existed, but the NZVIF is increasingly working with them in a formal way and this is leading to the creation of an Angel Association.
This will act as a focal point for existing and new investors; facilitate standard investment practices and “operate as an advocate for the investors, looking at issues like tax,” says Banga.
“We are keen to facilitate this industry-led body. It’s in-train as we speak and activity is expected in the next few months.”
At present, the NZVIF works with various “Angel Groups” across New Zealand, with groups established in Auckland, Hamilton, Palmerston North, Wellington, Christchurch, Nelson and Dunedin.
NZVIF figures show Auckland is home to 60% of such investment, with Dunedin and Wellington on 12% a piece. Manawatu scores a relatively high 5% for such investment thanks to the establishment of a Manawatu Investment Group of local angel investors.
Banga says much of this VC investment tends to be in places with universities or research institutes or in centres which specialise in a particular industry.
Technology represents the biggest sector, with $17 million of the $50 million invested over the past two years going into software and services, and $3 million into technology and equipment. Other categories include pharmaceuticals, diversified financials and capital goods.
Auckland-based technology firms that have benefited from the fund include Go Virtual Medical, Virtual Katy, My Kids Biz, Biomatters, Tomizone, Phitek, eBus, Arena, Calcium, Whats in Play, Databarke Int Systems, Resonance Systems, Digi-Click, BidTogether, Doppelganger, Hector’s World, Sentry Bay, Black Hawk Tracking Systems, Inro Technologies and Unimarket.
Other hi-tech beneficiaries include Wellington’s Ponoko, Plan HQ and Valuecruncher; and RPM Retail and Eurekster in Christchurch. Be Like No1, The Street, Daestra NZ, Vouchermate, Clocktower Games and Innovative Learning are in Dunedin; and Visual Footprints is in Manawatu. All have benefited from angel investment.
Banga says such investments, starting at $250,000, are for the long term and returns from them are still seven to 10 years away. Over time, the fund expects 20% to be very successful, 30% to be moderately successful and the rest to fail, in line with international trends.