AngelLink, a national angel investment network backing New Zealand high growth technology ventures, with an emphasis on life sciences, engineering and ICT, welcomes the inclusion of the Life Science Angels Network into its structure. The move is designed to create greater scale and focus in the life sciences angel investment space.

AngelLink’s members include some of the country’s leading biotechnology and high technology investors including Movac, K1W1 and Sparkbox. AngelLink has also partnered with the NZ Venture Investment Fund (NZVIF) through its Seed Co-Investment Fund.

AngelLink Chairman Chris de Boer says, “Our national network of angel investors and international partnerships provide excellent leverage for high-growth potential start-up companies that are seeking to develop unproven markets or technologies. Life sciences are a key part of AngelLink’s focus. The inclusion of the Life Science Angels Network helps AngelLink achieve greater scale and expertise in this area. As a result we’ll see more investment activity in the life sciences space which will benefit the network and the sector in New Zealand.”

The Life Science Angels Network was created by a collaboration between NZBIO, ICE Angels and Auckland Plus to validate the concept of creating a virtual network of angel investors who are interested in investing in life science technology deals.

Andy Hamilton, Director, ICE Angels says, “When it comes to early stage funding there is a case for some sectors, such as life sciences, to have specialisation. The ongoing viability of the sector depends on its ability to raise funds from a variety of sources and to complete value-creating deals. This access to funding is consistently one of the key constraints identified across the bioeconomy in New Zealand yet, based on international experiences angel investment has the ability to be a key part of the funding solution.”

“Having validated the need for The Life Science Angels Network we readily came to the conclusion that the natural home for the network was actually AngelLink as they already have in place a number of critical partnerships for deal flow in the life sciences space. As a small country we need to take every opportunity to achieve scale.”

The merger will include all research, contacts and emerging international partnerships, including the Australian Life Science Angel Network, Life Science Angels Inc (USA) and Bansea, Singapore.

NZBIO, the national bioscience industry group, has applauded the transfer to AngelLink.

Chief Executive Bronwyn Dilley says, “AngelLink’s strong focus on life sciences and nationwide coverage will be further strengthened by the inclusion of the Life Science Angels Network. Angel Investment is an important part of the investment landscape and a strong, focused approach is vital to the success of a mature New Zealand life science industry. It’s great to see AngelLink continue to gain momentum, as the result will be more early stage life science projects are spun out of the lab into the market with benefits to all.”

AngelLink, which was initiated by WaikatoLink, the commercial arm of the University of Waikato, connects investees to the full continuum of funding through its lifecycle from science to market spanning proof of concept, angel investment, early stage venture capital, expansion stage venture capital, and public markets.

AngelLink was launched at a function at NZX in August. The Minister for Research, Science and Technology, Wayne Mapp was the guest of honour.

At the launch, WaikatoLink Chief Executive Mark Stuart said, “At an industry level there is a real need to make some improvements to generate more economic benefit from life sciences and technology research. We need to start with the end in mind and bring the market in from the start. We need to encourage a co-ordinated approach and funding models that encourage collaboration rather than competition. AngelLink represents a step change in early stage company investment by formalising visibility to upcoming investment opportunities to all of the partners across the investment continuum”.

Dr Mapp said, “The highest priority for the New Zealand Government is growth. Future opportunities will depend on innovation and entrepreneurship and much of this comes from fundamental science. AngelLink will connect research and investors with the intent of getting science to the marketplace. Our future prosperity depends on getting this right.”

The first Australasian Life Science Angels Network Meeting today in Queenstown, part of the annual summit organised by the Angel Association of New Zealand, is the setting for the first meeting between AngelLink, the Australian Life Science Angel Network and Bansea, Singapore.

The latest Young Company Finance, the half-yearly publication describing the details of which deals have been done in the <$5m space, has just been released.

It has been an excellent start to the year for seed, startup and early expansion investment, with both numbers of investments (33) and amount invested ($30M) for the first six months of 2009 higher than for all of 2008.

Most of the activity was in Q2; in other words, we’re on a steep upwards trend:

NZTE Escalator were particularly active with seven investments, along with ICE Angels (5), Cure Kids Ventures (3), MOVAC (2), Pacific Channel (2), Powerhouse Ventures (2) and others taking lead roles.  It was especially interesting that 85% of the deals involved syndication partners, significantly higher than previous reporting periods.

Even more telling is that the number of deals where SCIF was the only co-investor has dropped from 12 in 2007 to 8 in 2008 to only 2 in the first half of 2009.

That’s excellent news for the industry.  Investment groups are taking risks together, and not relying on gummint.  NZTE Escalator is taking tiny bets on embryonic plays where even angels fear to tread.

We’re coming of age.

Download the report.

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 ICEHOUSE is looking for an Executive Director to lead the ICE Angels and ICE Accelerator business units.  This is a rare opportunity to make a huge difference to the start up scene in New Zealand, bring cool business concepts to fruition, matchmake between angels and entrepreneurs, and spend your working hours at the heart of one of NZ’s largest and most exciting innovation centre.

Position Description:

Title:  Director, Start Ups
Reports to:  CEO, The ICEHOUSE
Status:  Full time
Location:  Auckland
Remuneration:  Upper $100k’s

The ICEHOUSE was established in 2001, in recognition of the importance of SME’s to the NZ economy.  The principal aim is to create, assist, support and grow successful businesses which are world class.

Its story is compelling, in six years they have worked with 50 start up’s and more than 1,000 businesses, raising $30M for the start up’s and growing earnings.

The ICEHOUSE is seeking an Executive “Start Up” Director to lead and manage the ICE Angels (angel investment) and ICE Accelerator (incubator) business units and play a key role on the leadership team. Reporting to the CEO and ICE Angels Board; the Director, Start Ups will be responsible for the strategic and operational management of these key parts of our business.  Key responsibilities include: new business development – attracting “talent” to the incubator, angel membership development & growth, portfolio management stakeholder and investor management.

The key success factors are:

• a passion for assisting start up and early stage companies
• strong general management and leadership skills and extensive commercial experience
• exceptional communication skills
• a high level of energy and enthusiasm for helping others to succeed
• an ability to effectively manage a wide range of stakeholders and manage and deliver a range of projects.
• demonstrated ability to create results in challenging and complex environments
• experience within an entrepreneurial environment
• want to make a real difference to growing NZ businesses

If you are interested, or know someone who might be, please email Roger Branch on roger@kinross.co.nz.

Want to invest in the next Google, Navman, or TradeMe?  A ‘De-Mystifying Angel Investment’ seminar is being held in Auckland tomorrow to explain the mechanics of angel investment to people interested in investing in early stage businesses.

Event details: “Demystifying Angel Investment”, 11 November, 5.30pm at Otago University, 385 Queen St, Auckland.  Contact NZVIF by email or phone (09) 951 0170 to register.

Angel investors is the term given to experienced business people who invest not just money but also some time and effort to help new businesses to grow.

New Zealand Venture Investment Fund chief executive Franceska Banga said attracting more people to angel investing could help to increase the amount of capital available to young companies with high growth potential.

“New Zealand produces quality research and innovation which we struggle to commercialise because of the difficulty in finding capital.

“The current investment climate is making capital even harder to find in the short and medium term for young companies.  So increasing the pool of high net worth individuals who want to engage in angel investing is, arguably, more important than ever.

“More angel investment will be good for New Zealand’s economy.  We need more seasoned angel investors willing to invest in young companies with innovative products and high growth potential.

“The Auckland seminar will introduce potential angels – generally people who have done well from a successful business and are looking for new investment opportunities – to the mechanics of angel investing.  It will also introduce them to some Auckland-based angel groups such as Sparkbox, and ICE Angels.

“Currently, there are around 250 experienced angel investors active in New Zealand, although many more will be doing it on an ad hoc basis.  A pool of around 1000 active angel investors would greatly expand the
capital available to young companies.”

The Auckland event is one of a seres which are being held in centres throughout New Zealand by NZVIF, in conjunction with the Angel Association NZ and local angel groups.  The presenters include representatives from NZVIF and ICE Angels.

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.