What's Angel Investment?
What’s Angel Investment? Angel Investment is a relatively new term for New Zealand. It’s a term, borrowed from the Americans, used to refer to those people or groups of people prepared to invest in very early stage business ideas. Typically, Angel Investors are those people prepared to:
- take a punt, and
- work along side people with great ideas
With the over-riding goal of helping to build a successful, profitable and valuable business. In my view, the best angels are those prepared to contribute time and experience along side their cash – “people make businesses successful”.
Angel Investors sit along-side friends and family as one of the first ports of calls for entrepreneurs. They typically invest in: people they like + ideas that interest them + the potential to earn a good return.
How much do they invest? In New Zealand Angel Investors range from those prepared to invest between $25,000 (at the low end) and up to $1m (at the high end). At the high end they tend to operate more professionally and rigorously in their approach. A lot of the organised Angel Groups (listed below) are backed by the New Zealand Venture Investment Fund – a fund set up by the government to support the Angel and Venture Capital communities – which invests along-side these groups.
Where do you find them? Fortunately this is getting a little easier through the formation of organised angel groups throughout the country. The down-side (for people looking for money) is that with organisation comes greater discipline so you need to make sure you’re prepared. I’d characterise the angel community in New Zealand into three groups today:
- Organised, closed groups – the closed groups have a limited number of investors and generally have been operating for some time. Their approach tends to be rigourous and they may have a particular industry focus. The ones i’d include in this category are SparkBox, Movac, CureKids, Chrysalis, K1W1 (Stephen Tindel) , Jasmine (Sam Morgan).
- Organised, open groups – the open groups have a wide range of members who will “club together” on a deal by deal basis. They will agree between themselves the roles they want to take and how much they are prepared to invest. The ones, i know of, that are actively doing deals today include: Auckland – IceAngels; Wellington – AngelHQ; Manawatu – Manawatu Investment Group (BioCommerce Centre); Nelson – Venture Accelerator; Canterbury – PowerHouse Ventures; Dunedin – UpStart Angels .
- Independents – there are still plenty of high net-worth people out there that aren’t actively involved in the networks listed above. These people are tougher to find, talk to your accountant and lawyer, start networking through things like your local chamber of commerce and by attending industry events where you think they might be.
Remember Angel’s are “people” and by and large they are interested in being approached with good ideas from motivated, interesting people, it’s your job to find them and don’t be afraid to “pitch”.
Other resources: The other places you should look for information include:
- The New Zealand Venture Capital Association – list VC, Private Equity and Angel groups / investors.
- NZAngels.com – full of lots of good information on what’s going on in the Angel Investment sector. Also a good place to post your opportunity.
- Start-up.co.nz – the web-site of start-up magazine. Full of lots of good tips on raising capital from around the world.
- Escalator – the Escalator programme is funded by New Zealand Trade and Enterprise and run by the Economic Development Association of New Zealand. The Escalator programme is designed to help early stage businesses get funded so it’s well worth looking at.