The Angel Association of New Zealand (AANZ) was established in 2008 in order to bring together the business angel networks and early stage funds towards a unified national vision. KITE Invest spoke with Suse Reynolds the Executive Director of AANZ to profile this small but dynamic and engaged angel investor community.
KITE: How would you describe the Business Angel and entrepreneur communities within and around New Zealand today?
Suse Reynolds: Having just returned from the American Angel Capital Association (ACA) conference, I would say that today New Zealand angel and entrepreneur communities are doing well. A reflection of the strength and enthusiasm of the NZ angel scene was the fact we were the largest delegation at ACA after Canada – and they just had to hop across the border. We all flew for 12 hours to be there!
New Zealand’s startup and angel investment scene have a number of competitive advantages, starting with the fact that we are a small nation. This compels us to collaborate, invest together and be supportive of each other. For our angel backed companies to truly scale and achieve meaningful exits, they have no choice but to “go global”. As there are probably one in a hundred investments that could scale and generate the type of return domestically that angels expect; its imperative that we look to investment, growth and value enhancement in offshore markets. Our distance and size makes us very tenacious as an entrepreneurial and angel community. Not to say that other angel communities do not have the same level of tenacity, but rather I would say we have a sharper focus because we are looking to global markets from day one.
KITE: To look more deeply into the New Zealand angel investor community, could you provide some of the current figures and statistics to give a better sense of the lay of the land?
SR: The AANZ has just announced that for the second year in a row and for the first time ever angel investment has surpassed $50 million per annum, which for a nation of about 4.5 million people is pretty significant. Moreover, for two years in a row angel investors in New Zealand have done over 115 deals. In comparison to when we started in 2006, angels invested $25 million in 45 deals per annum. There is meaningful growth there for sure. In terms of valuation, in general terms, we are providing our angels with deals at relatively lower valuations than Europe and North America.
KITE: In addition to being the Executive Director of AANZ you are also a Co-founder of the Angel HQ, the Wellington region’s angel network. In your experience what are some of the main differences between a regional angel network and an angel association?
SR: The key difference between the angel association and angel network is that the angel association is the industry representative body and clear about championing early stage investment as a whole, including crowdfunding initiatives and early stage fund raising.
The regional angel network is a group of individual angels and an active, engaged angel club. In Angel HQ’s 6 or 7 years in existence we have grown to around 60 members and have done $8 million worth of investment in ventures. New Zealand angel networks and funds syndicate every 4 out of 5 deals.
KITE: This October the Asian Business Angel Forum 2015 is taking place in Queenstown, New Zealand and is being hosted by the AANZ. What is the focus and aim of the ABAF? What does the AANZ hope to take away from the occasion?
SR: Our primary motivator for the Asian Business Angel Forum is to use it as an opportunity to do business together. We have themed the Forum around doing deals and doing business together. We will be hosting a showcase of companies who are actively seeking investors.
Underpinning all of this is the need as a community to respect each other, to trust each other and to work together, and a forum like this is so powerful because it gives us the opportunity to come together and create all these important components of investing together too.
KITE: In this same theme of coming together through initiatives like the ABAF, what are some other ways in which the AANZ is crossing boarders and internationalizing its community?
SR: One of the things we have been doing for the past couple of years that we have found incredibly powerful is supporting some of our lead investors with a small gesture of a couple of thousand dollars to attend international conference themselves. There is nothing like being in market; the same applies to lead investors to get off shore and be in market and talk with peers. Events have the ability to create powerful connections and offers lessons to be learnt. This is one of the things we are doing that has been really well received and been incredibly valuable. Another powerful thing about doing this is that it is our way of saying thank you to those lead investors as well. They do amazing work and give so much to the founders and ventures they back.
The other thing we have done is invite investors to our part of the world, providing a tightly concierged program. We just had John May, Chair Emeritus from the ACA for a month, Bill Payne, and Allen Yeung from the Hong Kong Business Angel Network have visited in the past. Having investors visit us and us visiting them has been one of the powerful initiatives we have undertaken.
KITE: Lastly, what are some future targets and goals of the AANZ and in particularly following the upcoming ABAF?
SR: We estimate that there are about 700 eligible investors working in the formal angel space currently in New Zealand. In the short term, I would love for that number to grow over the next year or two to 1000 investors.
We are getting the input side of the ledger pretty well sorted with 700 investors, investing a meaningful amounts per capita, getting good deal flow and good support from the government. What we need to do now is translate all that into outcomes. We are going to start focusing really tightly on those companies we have invested in to get to exits. With that in mind we have developed a course on governance, which focuses on how, as an angel backed company director, one helps get those companies strategically focused on the capital life cycle, where the exit is and how they are going to get there. We are also going to run a special investment evening for those companies that see a year or two years to get to the exit and raise a small amount of capital to help these companies get to that exit. This is important because these companies can act as a lightening rod for other companies who are approaching exits and as well for the community to encourage and support those companies close to the exit stage.