New Zealand angel investors are backing too few start-ups and should broaden their portfolios if they want to improve their chance of a return, according to Angel Association chairman Marcel van den Assum.
The success of software companies such as Wellington-based Xero had helped foster an environment where start-ups can flourish, though local angel investors have been reluctant to expand their portfolios, van den Assum, who was part of the successful sale of local software firm GreenButton to Microsoft earlier this month, told an audience at the Lightning Lab demo day in Wellington yesterday.
"A lot of angel investors looking to hit home runs and that places unreasonable pressure on ventures and boards," van den Assum said. "We need to start encouraging angels to broaden their portfolios, and as they start to build the portfolio, it improves their chance of ultimately achieving a successful return."
Van den Assum warned against getting too carried away by the success of the local digital sector, with last year's listings of Wynyard Group, SLI Systems, GeoOP,and the upcoming initial public offerings of Gentrack and Serko.
"We need to be careful we're not marching ahead of expectations," he said.