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Record angel investment creates new challenge

Record angel investment creates new challenge

Angel Association chair Phil McCaw said the record investment activity by angel investors shows that the sector is becoming a key source of capital for young New Zealand companies.

The latest Young Company Finance Index reports record levels of angel investment activity with more than $31 million invested by angel investors into young companies in the first half of 2010. In the year to 30 June 2010, $52.2m was invested, eclipsing last year’s previous record high for a June year of 42.7m.

Phil McCaw said New Zealand is now seeing consistently high levels of investment from angels, which is great news for New Zealand entrepreneurs looking for capital to commercialise their innovations and ideas.

“The growth in angel investing is helping to build the pipeline of young companies, but it is also creating a new key challenge for our capital markets – which is to ensure investment capital is available as young companies grow beyond the capacity of angel investors.

“Angels invest in young start-up. Typically, we’ll invest up to around $1 million in a young company. After that, growing companies need other courses of capital. New Zealand is struggling to provide that. We need new venture capital funds who can invest between $2 million and $5 million into companies to help them break into international markets.

“Meanwhile, we expect the angel investment community to continue to grow and the Angel Association will continue to support the development of industry standards that make it easier for entrepreneurs to connect to the right Angels and for Angels to work together on new opportunities. We are following the trend in the United States, which has seen this type of investing become a crucial source of capital for start-ups companies.”


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