NZ angel investors bet on fewer new investments in first half as total funding falls
By Paul McBeth
Oct. 12 (BusinessDesk) - New Zealand angel investors scaled back their support for new investments in the first half of the year, instead preferring to top up funds to firms already in their portfolios, as the amount of money invested fell 20 percent from a year earlier.
Angel funds invested $20.6 million in the six months ended June 30 across 53 deals, compared to $25.9 million across 61 deals a year earlier, according to the Young Company Finance index compiled by the New Zealand Venture Investment Fund and Angel Association. Of that, about 77 percent, or $15.8 million, was follow-up investment, and the remaining 23 percent, or $4.8 million was new investment. That compares with a 53/44 split a year earlier.
"Angels are coming off a previous year which saw a lot of new investment," Angels Association chair Marcel van den Assum said in a statement. "When economic conditions tighten, it is natural that investors will look to continue to support those companies in their portfolio which are doing well."
Earlier this year, visiting Silicon Valley venture capitalist Bill Reichert of Garage Technology Ventures said New Zealand's angel investment community appeared to be vibrant, but could benefit from greater pooling of its resources, whereas the local VC community was still recovering from the global financial crisis in 2008.
An increased proportion of deals in the period were syndicated between different angel groups at 88 percent, compared to 77 percent a year earlier.
The index showed $8.8 million of funds invested by angels in the half was in software and service companies, followed by $3.4 million in pharmaceuticals and biotechnology, $2.7 million in healthcare, $2 million in food and beverage, and $1.1 million in technology.
In terms of the stage of investment, $9 million was in seed investment, down from $13.4 million a year earlier, $11.1 million was in the start-up stage compared to $10.4 million in 2014, and $500,000 was at early expansion or expansion stage, down from $2.1 million.
NZVIF investment director Chris Twiss said the second half of 2015 will provide a greater steer on how wider economic events are weighing on early stage investing by angels, and the annual investment was likely to be below the $55.9 million in 2014.
"That said, there continues to be strong interest in good New Zealand technology, especially where there is a global market opportunity, and the role of risk capital stimulating and supporting start-up companies is even more important in this climate," he said.