Caution amongst angel investors has seen a big drop in the amount invested in start-up companies this year, according to the latest index.
New Zealand Venture Investment Fund's index showed angels were still supporting a high number of deals but the actual amount invested had dropped considerably.
The first half of 2012 saw $14.5 million invested across 43 deals involving young New Zealand companies.
This compared to $17.6 million across 53 deals in the first six months of 2011.
Year-on-year, a total of $27.6 million invested into young companies in the 12 months to 30 June was a third less than the previous year's $42 million.
The drop in the amount invested could be attributed to factors like overseas economic uncertainty, particularly in Europe, said Angel Association executive director Suse Reynolds.
Another factor was the lack of new venture capital funds to emerge between 2007 and 2011 which could have provided follow-on investment.
"Many angel investors have been supporting their existing companies rather than investing in new companies and adding to their portfolios," Reynolds said.
Angel investors were typically wealthy people who chose to provide capital to help a company get off the ground.
Releasing the latest Young Company Finance Index, Franceska Banga said that despite the slowdown, angel investment was an important part of New Zealand's capital markets.
Software start-ups and pharmaceutical/bio-technology start-ups were the most popular investment options for angels, she said.
"Over the last four years, software start-ups have consistently received around 30 per cent of angels' investment and pharmaceuticals and bio-tech start-ups receive about a fifth."
Since 2006, more than half of investments were made in Auckland, largely because this was home to a number of angel investment networks.
Wellington, Christchurch and Dunedin start-ups each received about 10 per cent of total investment.
"This reflects the regions where universities, research institutes and incubators are located," Banga said.
Breaking down the $14.5 million invested so far this year, 63 per cent was follow-on investment and 37 per cent was new investments.
In the same period last year, 54 per cent was follow-on and 46 per cent was new.
Reynolds said two new venture capital funds had been established in the past year which should improve the flow of growth capital for angel-backed companies.