Technology benefiting from angel investments
Angel investors pumped a record $53.2 million into 116 high-growth businesses last year as confidence returned to the technology sector.
New Zealand Venture Investment Fund chief executive Franceska Banga believed 2014 had started in a similar vein, saying the environment for young technology firms seeking funding was probably the best it had been in 15 years.
A form of hybrid investment that combined equity crowdfunding and angel investment might soon make it possible for non-professional investors to invest in startups alongside experienced "angels" and on the same terms, she said.
The investment by angel investors was up 80 per cent on a lacklustre 2012 and the highest since NZVIF began polling angel groups in 2006. The market had been boosted by the strong performance of companies such as Xero, SLI Systems, Orion Health and Vend, Banga said.
Angel Association chairman Marcel van den Assum cautioned that angel investment was likely to continue to fluctuate as it was still a young sector of the financial market.
Auckland clean technology company Hydroxsys has just attracted what NZVIF believes to be the largest amount of angel capital invested in a single funding round.
The company has developed a new material for separating water from fluids, with applications in the dairying and mining industries, and attracted $2.1m from backers including seed capital firm Sparkbox Ventures.
From this month, businesses seeking up to $2m in capital in theory had the option of raising equity direct from the general public through licensed crowdfunding platforms.
However, equity crowdfunding is still temporarily in limbo as it will be some weeks before any licences are granted to platform providers by the Financial Markets Authority.
Banga did not believe crowdfunding would compete with angel investment, saying they either offered different things or could potentially go hand in hand.
"Crowdfunding will let businesses get ‘earlier money' from the likes of friends and family when they might only need $50,000 or $100,000 for a prototype," she said.
Angel Association executive director Suse Reynolds estimated there were about 500 individuals in New Zealand who could be classed as angels. Networks included a new one especially for female investors, Arc Angels, which has 17 members and has just made its first invest- ment.
Angel investment grew 80 per cent to a record $53.2m last year.
There are believed to be about 500 angel investors in New Zealand. Software and IT services firm attracted almost half of the money invested.
About 80 per cent of angel investment last year was "follow-on" investment and 20 per cent were completely new investments.
The average deal size was just under $500,000.