Angel investment bounces back

26 September 2013

Angel investment bounces back

Angel investment bounced back in the first six months of the year with investment up 50 percent compared to the first half of 2012, New Zealand Venture Investment Fund chief executive Franceska Banga said today.

Releasing the latest Young Company Finance Index, Franceska Banga said angels invested $22.5 million across 43 deals involving young New Zealand companies in the first half of 2013. In the first six months of 2012, $15 million was invested across 45 deals.

In the 12 months to 30 June 2013, $36.5 million was invested into young companies, up 18 percent on the year to 30 June 2012 when $30.9 million was invested. Cumulatively, $273.9 million has now been invested into young companies by angels since the Young Company Finance Index began measuring activity in 2006.

“Angel investment has bounced back well from low levels which is positive and will hopefully continue. This is good news for the growth company pipeline,” Franceska Banga said.

“What we are also seeing is the sector maturing and becoming more professional in the way in which angel investors are operating.

YOUNG COMPANY FINANCE INDEX

“Investors are showing strong support for existing companies which can demonstrate good progress. Of the $22.5 million invested in the last six months, 85 percent – or $19.2m - was follow-on investment. While new investments are relatively low, we expect this will pick up as more active angel investors are recruited by networks – something we are working with the Angel Association NZ to support.”

Angel Association of New Zealand chair Ray Thomson said there is a real sense of building momentum and interest in the high growth opportunities available to angels.

“Growing levels of membership in angel networks should see improvements in both the quantum of funding and also the numbers of angel deals receiving funding next year. The increasing interest in the innovation sector is reflected by much greater media coverage this year and increased government interest, reflected by the formation of Callaghan Innovation. These are all helping to build a positive investment climate.

“The higher proportion of funding going into follow-on rounds should be seen in a positive light. Astute investors are only pouring more money in when ventures are meeting sales and revenue targets. It is also pleasing to see the levels of syndication growing.”

The first half of 2013 saw 79 percent of deals syndicated between different angel groups – the highest level recorded - with 21 percent of deals not syndicated. Ray Thomson said the collaboration reflected in 4 of every 5 deals receiving money from other networks and funds shows that investors are working together, and bodes well for success as these ventures are exposed to wider networks of skills and connections to markets.

In terms of the stage of investment, $3.1 million was seed investment, $12.7 million was at the start-up stage, and $6.7 million at the early expansion stage. In terms of the type of investments angels are making in 2013, 30 percent of investments were convertible loans, 49 percent were ordinary shares, and 21 percent were preference shares.

Since 2006, by region, 54 percent of investment was in Auckland, 11 percent in Christchurch, 10 percent in Wellington, 8 percent in Dunedin, 6 percent in Palmerston North, and 5 percent in Hamilton. Software&services received 29 percent of the amount invested, followed by pharmaceuticals/life sciences technology (19%), technology hardware and equipment (13%), and food and beverage (9%).

Click here for further information.

ENDS

© Scoop Media