AngelHQ, the Wellington angel club, is set to become an Incorporated Society.

Since its inception two years ago, the group has been operating under the aegis of Grow Wellington, the Greater Wellington Regional Council’s Regional Economic Development Agency.  AngelHQ will continue to receive support from Grow Wellington and existing sponsors BNZ Partners, Deloitte, Gibson Sheat, and PriceWaterhouseCoopers, and will maintain its existing relationships with AngelLink and other angel clubs in the Angel Association network.

If you’re interested in being a foundation member of AngelHQ Inc, you’re invited to attend the foundation meeting on Wednesday 18 August at BNZ Private Clients Lounge, Level 4, BNZ Building, 1 Willis St.  Note that existing AngelHQ members automatically become foundation members of the newly incorporated society.

You can download the prospective AngelHQ Constitution and Rules.

Angel HQ is delighted to be able to offer you a unique opportunity – a day long seminar covering all the essentials of angel investment on Monday 14 June 2010 with renowned, angel investor, Bill Payne.

Bill has over 25 years experience and has invested in over 50 companies, mentored hundreds more and founded four angel networks. He will be supported on the day by experienced Wellington-based, angel investors and industry experts such as Dave Moskovitz from WebFund, Phil McCaw from Movac, Owen Gibson from PriceWaterhouseCoopers, Glenn Milnes from No8 Ventures and Susan Iorns and Jelle Sjoerdsma from Angel HQ.

Topics covered:

• Deal selection
• Due diligence
• Deal structure
• Valuation
• Post-investment relationships

For more info and registration details, download the flyer.

MusicHype is a platform for bands and their fans to interact directly with each other and build valuable relationships. It takes a novel approach that integrates existing music and social networks into a cohesive, interactive, and fun online experience for music fans.

Disclosure: I’m a significant investor in MusicHype, and Chairman of its board – [Dave]

The Pitch:
The music industry is changing rapidly: Bands find it hard to engage with fans and make money online, fans find it hard to access the music they love in a sea of visual and aural noise, and labels find it hard to maintain relevance.

MusicHy.pe is an efficient and entertaining promotional distribution platform that enables major bands to connect directly with their fans and make money online. MusicHype is creating the new music industry bringing bands and fans together online and offline.

For fans, we aggregate relevant music and news in a curated experience that spans existing social networks and music services. Fans can take part in competitions, listen to and watch live and recorded gigs, buy gig tickets, merchandise and digital music, collaborate with bands to help create album artwork, videos and songs, and increase social status and music cred with through our loyalty points system.

MusicHype delivers direct sales revenue and increases audiences for bands using our integrated social media promotion and sales platform. Bands working with MusicHype use our platform to implement album and tour promotions while reaching across Twitter, Facebook, YouTube and the wider web.

MusicHype is a game-changing model, built on globally and scalable technology, backed by a dedicated and internationally experienced team.

Accomplishments to date:

We’ve validated the business model albeit on a small scale in New Zealand.  After our first outing with the iconic NZ band The Mint Chicks, we’ve produced some brilliant metrics.  In our first three months, working with one band, we achieved:

• 24,902 site visits
• 11,183 unique visitors
• 5:04 minutes average time on site
• 1740 members (15.5% conversion rate)
• Excellent montisation per member at significant gross margins.

We have been approached by numerous bands and labels in New Zealand and overseas who want to work with us.

Development plans:

• We plan on launching in North America as soon as possible
• We will be seeking a US-based CEO for that operation
• Rapid scale

Key Challenges:

• Deploying on-the-ground resources in North America
• Speed to market
• Selecting the optimal growth rate

Principals & Previous Experience:

Jeff Mitchell – MD & Solutions Architect – Jeff has over 10 years of experience in web application development and management. Jeff’s expertise lies in platform development and strategy, social network integration and mobile technology.

Annabel Youens – Digital Strategist – Annabel has been working with e-commerce sites and online social communities before they were buzz words. Annabel’s expertise lies in communications, community management and business development.

Dave Moskovitz – Chairman – Dave has founded and funded numerous online startups, and is passionate about rebuilding a sustainable music industry. As Chairman of WebFund, Dave brings extensive experience, capability, and networks into the mix.

What they want from an investor:

MusicHype is seeking NZD 400K in equity to enable a North American launch.  The ideal investor will have some music industry experience and contacts, and be want investment exposure to creative / collaborative communities and social media.

Who the offer is open to:

The offer is open to eligible persons as defined in Section 5 (2CC) of the Securities Act 1978 who invest either directly or syndicated through AngelHQ / AngelLink.

Contact details:

Marie-Claire Andrews, AngelHQ
Email: Marie-Claire.Andrews@growwellington.co.nz
Tel: +64 21 81 4224

Note: If you plan to act on any information on this site, please be sure to read the disclaimer.

This week’s launch of AngelLink could mark a pivotal moment in the development of New Zealand’s innovation space.

Conceived and managed by WaikatoLink, AngelLink is a new national angel investment network specifically designed to commercialise intellectual property from universities and CRI’s, and is backed by the country’s most experienced and well-resourced hi-tech and biotech investors.

It brings New Zealand angel investment to the next level.

This is exciting news for a number of reasons:

• Movac, K1W1, Sparkbox, Neville Jordan, Waikato University, AUT, and SCIF are coming together to actively collaborate. While these players have co-invested with each other on a tactical basis before, this is the first time they’ve all agreed to work together in a more formal, strategic framework.
• Research institutions generate considerable intellectual property that until now has never seen the light of day, due to limited resources and commercialisation experience in the niche investment spaces and geographic locations that they occupy. A national network will increase the likelihood of successful commercialisation of some of New Zealand’s best IP.
• Conversely, angel investors nationwide have had limited access to university-sourced IP. AngelLink will give access to opportunities to a wider group of experienced investors.

The common theme is that all of the stakeholders – inventors, entrepreneurs, incubators, investors, and government – all understand that there are huge gains to be realised by working together, and have the appetite to make it happen. People realise that the pie can be made disproportionately bigger by relinquishing some ownership and control.

There’s a word for that – maturity.

And the experience and professionalism is evident from the start. AngelLink achieved SCIF accreditation prior to launch. Although based in the Waikato, they chose to launch at NZX in Wellington to underscore the national nature of the network. AngelLink is not a small club of wealthy dentists and farmers. At the launch, Chris de Boer, AngelLink’s chairman, said that he’d never seen such a broad spectrum of New Zealand investors in one room, ever. The gathering included people like Wayne Mapp (Minister of Science Research and Technology), Mark Weldon (CEO NZX), Franceska Banga (CEO NZVIF), Sir John Anderson (Chancellor Waikato University), Jim Bolger (Chairman NZ Post), Neville Jordan (Endeavour Capital), Mark Stuart (CEO WaikatoLink), Greg Sitters (Sparkbox), Phil McCaw and David Beard (Movac), Suse Reynolds (Angel HQ), John Errington (CEO VicLink), as well as a number of familiar faces from the local Wellington angel scene. Exposure to the entire investment food chain is compelling.

Chris said that they already have pipeline with four deals ready to go on day one.

There is some potential risk in setting up a new national angel network that has some overlap with the existing regional clubs. Some of New Zealand’s fledgling angel clubs are struggling to achieve and maintain critical mass, both in terms of investment capacity and ability to attract quality opportunities. But that shouldn’t be a problem so long as AngelLink sticks to institutional IP, and doesn’t compete with clubs for deals coming from local incubators and garage entrepreneurs. Syndication is all about sharing expertise, resources, risk and reward in such a way that everyone benefits.

And if AngelLink continues in the same manner as it has started, everyone will benefit from commercialising previously hidden IP.

New Zealand will be the winner.

The Angel Association in conjunction with Angel HQ and Simpson Grierson ran a workshop at PwC in Wellington yesterday on Term Sheets.  The instructional part of the course was well delivered by Simon Vannini (Simpson Grierson), but the most interesting part of the afternoon was the panel discussion led by David Beard (Movac), Brent Ogilvie (Pacific Channel), Andrew Turnbull (ICE Angels) and Gavin Milnes (No 8). The attendees liberally related war stories and shared past foibles in a frank yet lighthearted way, which was worth the price of admission.

NZVIF have a Guide to Term Sheets (including sample documents) which covers most of the material we talked about, and is a great place for entrepreneurs and angels to start.

The newly-formed Angel Association New Zealand will be holding its inaugural conference on 5 November 2008 at Cable Bay Vineyards on Waiheke Island.  The conference theme is “Growing Global Companies through Angel Investment”, and features speakers including Stephen Tindall, Joe Platnick (Pasadena Angels, California), and Prof Tom McKaskill (Bond University – he literally “wrote the book” on Angel Investing).

Attendance is by invitation only to members of affiliated angel groups – contact your local angel club (eg ICE Angels, Angel HQ, Manawatu Investment Group, Powerhouse Ventures, Venture Accelerator or Upstart Angels) if you’re interested in going.

Angel Association New Zealand
Media release
1 July 2008

Angel investor groups have formed a new industry body – the Angel Association New Zealand – to advocate for and to promote best practice within the fastgrowing investment sector.

The association’s members consist of 15 angel groups from around New Zealand. Andy Hamilton, CEO of business growth centre The ICEHOUSE, is the inaugural chairperson of the association’s council.

“Angel investing – individuals and groups investing in early stage businesses – is an emerging industry which has the potential to be a key asset class and a very influential player in commercialising New Zealand innovations,” says Andy Hamilton.

“Overseas, we have seen national angel bodies formed once the sector reaches a critical mass. Establishing a national body in New Zealand is a sign of the recent growth of angel investing in our local market.

“The Angel Association New Zealand will set a national vision for the sector, and help to raise the capability and knowledge of angel groups, many of which are at relatively early stages in their maturity and mainly focused on their own issues and challenges.”

Clyde Rogers, from Auckland regional economic development agency AucklandPlus and a member of the establishment board, says a key role for the Association will be to advocate for initiatives which will assist the sector’s growth and development.

“To date, in New Zealand, much of the growth in early stage investing and the formation of angel investor groups has been organic and informal, rather than market-led.

“As an investment class looking to attract more investors, it is important that newcomers to angel investing have confidence in the practices and methods which make this type of investing unique from others. The Association will develop ‘best practice’ models and training for business angels and entrepreneurs.

“It will also provide greater visibility and promotion of the sector, so that entrepreneurs with innovative ideas can more easily find potential investors.”

Andy Hamilton says the United States is the most developed and advanced angel investment market, and may of the current trends there bode well for the sector’s development in New Zealand. In the US, for example: 

• The number of accredited investors who are entering the angel world is increasing each year by over ten percent.
• There is an increase in the number of investors per deal with an average of four to five investors joining together to fund an entrepreneurial venture.
• The number of angel groups has grown, as have the number of ventures receiving investment from angel groups.
• Angel groups fund over thirty times as many entrepreneurial companies as the formal venture capital industry, investing three to five times more money in total.
• Angels continue to be the largest source of seed and start-up capital, and there has been a dramatic increase in post-seed funding by angels.

“While angel investing in the US has been a feature of its economy for a considerable period, it is the significant formalisation of the asset class over the last ten years – and the subsequent significant growth – which is most striking. “The trends occurring in the US are also occurring in Europe and the Asia- Pacific, which are more advanced than New Zealand in terms of the maturity of their angel sectors, and in having established national angel associations.

“The establishment of a national body will provide fresh impetus to the growth of angel investing in New Zealand,” Andy Hamilton said.

Background

The Angel Association New Zealand’s establishment is being supported by the NZ Venture Investment Fund and AucklandPlus, the economic development agency of the Auckland Regional Council. Law firm Minter Ellison has provided legal expertise.

The inaugural council members are: Andy Hamilton, Phil McCaw, Mark Houghton-Brown, Richard Palmer, Dean Tilyard, Steve Hampson, Norman Evans, Greg Sitters, Clyde Rogers, Mark Robotham.

Questions and Answers

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.

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 15 established groups in New Zealand. They include ICE Angels, Pacific Channel, Chrysalis, CureKids Ventures, K1W1 and Sparkbox in Auckland, Angel HQ & MOVAC in Wellington, the Manawatu Investment Group, Powerhouse Ventures in Christchurch, Venture Accelerator in Nelson and Upstart Angels in Dunedin. 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 2-3 years it has become increasingly vibrant with the launch of several angel networks modelled on similar organisations offshore. The New Zealand Venture Investment Fund’s Seed Co-investment Fund has been a catalyst for the formation of formal angel networks and evolving practice standards – the Angel Investing Guide is an example.

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, 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.

How many members does the Angel Association New Zealand have? At its establishment, the Association has 15 member groups. [Note: we are an association representing angel groups rather than individual angel investors. To be involved with the Association, an individual needs to be a member of an affiliated group.]

What is the next step for the Angel Association New Zealand? The Association is now an incorporated society. It has an establishment board. Members will be encouraging other angel networks to become involved in the sector, and promote the sector to potential new angels and entrepreneurs.

Wellington’s AngelHQ will be running an education evening on Due Diligence on 7 May 2008 at CreativeHQ. Rod Drury and Dion Mortensen (MOVAC) will be address issues including what questions you should raise during due diligence, what information to review, how to make a decision, what advice to take, how much time due diligence typically takes … everything you always wanted to know about due diligence but were afraid to ask.

AngelHQ is a new organisation, and is shaping up to be a great resource for Wellington-based angels.

For more information, contact the ever-helpful Marie-Claire Andrews.