Launch of the Wairarapa Angel Investment Club
Plans to form Wairarapa’s own Angel Investment Club will see the region’s businesses get the boost they need to set them up for future growth. The programme team working on the Wairarapa Economic Development Strategy [WEDS] are hosting an information evening on 20th June for potential angel investors. The group is optimistic there will be enough interest to establish the club and create opportunities for high-growth potential businesses to receive financial investment.
WEDS programme manager, Marie-Claire Andrews, was part of the founding team for Wellington city’s angel investment network, AngelHQ, ten years ago, and see’s the potential for a similarly successful network here in Wairarapa
“Our region is full of entrepreneurs and innovations that, with the right capital and support, could scale and grow significantly – creating more jobs and inspiring others to do the same” she said.
“We need to use all means necessary to unlock our region’s economic potential and inspiring potential angels to invest their wealth outside the fallback – bricks and mortar - is one of those means.”.
The free information evening is for potential angel investors, advisors and those interested in supporting the concept. It is being held at 3Mile Coworking Community in Carterton at 530pm, on June 20th.
What is an angel investor? An angel investor is an individual who provides capital and, often, expertise to early stage businesses which can’t source traditional sources of business funding. Angels typically invest their own capital, and often provide valuable management advice, mentoring and access to important contacts and markets.
What type of people become angel investors? Typically, angels are ex-entrepreneurs and successful business people looking to add early stage companies to their investment portfolio. By taking an active role in their investments, they provide not only governance by serving on boards, but also assisting companies with relationships, strategy, team building, and future fundraising. The Angel Association believes there are more than 700 angels across NZ.
What are angel groups or networks? Increasingly, angel investors are forming angel networks and groups to share research and pool their investment capital. They can operate as a collective of private investors who band together to increase their ‘deal flow’ (the number of investment opportunities they see). These groups connect high-potential start-up ventures, with willing investors to facilitate the funding and success of emerging companies.
How many angel groups are there? There are around 12 established groups in New Zealand. Those that are members of the Angel Association are listed here. There are, however, other informal networks which operate in a similar way.
What are the returns on angel investments? Angel investors are exposed to high risks and expect that some investments will fail. If an angel invests in ten companies, the rule is that four will fail, three will tread water, two will return 2-5 times the initial investment, and one will result in a return of five to ten times the original investment over a 5-10 year period. Investors typically invest in a portfolio of prospective firms in the hope that 10-20 percent of the investments will be significantly successful, generating an overall healthy return across the portfolio. Each investment will have a defined exit strategy, such as plans for an initial public offering or a trade sale of the business.
Is there a large angel investing market in New Zealand? The angel market in New Zealand has long been predominantly informal. Over the last 10 years it has become increasingly vibrant with the launch of angel networks modelled on similar organisations offshore.
How much money is involved? In 2017, angels invested $69m with an average deal size of $612,000. 66% of those deals were done across angel clubs (‘syndicated’ deals).
What sort of businesses are suitable for angel investing? New Zealand is producing world class intellectual property in a number of areas such as ICT, value added food, life science and niche manufacturing. This intellectual property is behind the creation of a significant number of early stage companies that need angel involvement to succeed. Angel investors are enabling these companies to grow in scale and to become an increasingly strong and positive force for New Zealand’s economic growth. Angel investors usually seek businesses with innovative products or solutions that have international market potential. Management capability is another key factor and founders often need to bring in experienced executives to take the business to the next level.