Quite when the general public realises that more new investment is taking place outside thesharemarket than in it is anyone’s guess. Or, put another way, thank goodness for the angelinvestment sector.
The first half of 2010 has seen a record level of activity from high net worth individualspunting on young companies, with more than $31 million invested.
In the year to June 30, 2010, $52.2m was invested, easily beating the previous year’s high tothe same month of $42.7m. Cumulatively, $160m has now been invested into young companies by angelssince the Young Company Finance Index began collating data since 2006.
“Angel investors are making new investments but also supporting existing investee companies asthey grow,” says NZ Venture Investment Fund chiefexecutive, Franceska Banga. “As more companies are invested into, more companies are receivingfollow-on investments, providing a snowball effect.”
She says as young angel-backed companies develop, they need new sources of growth capital, andthe challenge for NZ’s capital markets is to improve the availability of growth capital to keepbuilding these companies.
The $31.6m of investment for the first half of 2010 was split into:
•$13.4m – firstround investments
•$18.2m – follow on investments
In terms of the stage of investment:
•$3.9m – seed investment
•$20.5m –start-up stage
•$4.8m – early expansion stage
•$2.5m – expansion stage
So far, 35 deals have been completed this year, compared to a total of 64 deals in 2009.
Since 2006, the regional breakdown of investments has been:
•49% - Auckland
•17%- Wellington
•11% - Christchurch
•8% - Dunedin
•7% - Palmerston North
•4% - Hamilton
The investment type breakdown has been:
•27% - software and services
•26% -pharmaceuticals/life sciences technology
•13% - hardware and equipment
•11% - foodand beverage