Angel investors provide record funding for young companies

Monday 20th September 2010

New Zealand angel investors, punting on young companies springboarding to high growth, have put a record $31 million into 35 deals during the first half of 2010.

Cumulatively $160 million has been invested by angel investors, typically high net worth individuals, since 2006 when Young Company Finance begun its index.

“Angel investors are making new investments but also supporting existing investee companies as they grow,” said New Zealand Venture Investment Fund chief executive, Franceska Banga.

“As more companies are invested into, more companies are receiving follow-on investments, providing a snowball effect.”

She said there is now a considerable pipeline of young technology companies looking to grow following consistent and significant growth in the angel investment sector in the past few years.

“As these promising young angel-backed companies develop, they need new sources of growth capital,” Banga said.

“The challenge for New Zealand’s capital markets is to improve the availability of growth capital to keep building these companies.”

Of the $31.6 million invested by angels in the first half of the year, $13.4 million was into first round investments and $18.2 million comprised follow-on investments.

In terms of the stage of investment, $3.9 million was seed investment, $20.5 million was at the start-up stage, $4.8 million at the early expansion level, and $2.5 million at the expansion stage.

Deal flow for the year was maintained at the high level of last year. In 2009, 64 deals were completed. So far in 2010, 35 deals have been completed.

Since 2006, by region, 49% has been invested in Auckland, 17% in Wellington, 11% in Christchurch, 8% in Dunedin, 7% in Palmerston North, and 4% in Hamilton.

Software and services received 27 percent of the amount invested, followed by pharmaceuticals/life sciences technology (26%), hardware and equipment (13%), and food and beverage (11%).

Businesswire.co.nz

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