Phil Holliday reckons he learned one of the most important lessons of angel investment early on - there's strength in numbers.
The veteran tech entrepreneur is a pioneer of the New Zealand angel scene, setting up his business growth and angel investment company Holliday Corporation with business partner Dave Tinkler about a decade ago.
Although the pair knew they wanted to be active investors, Holliday said initially it was still a shock to learn just how time consuming being "smart money men" could be.
"In the end it's the smart rather than the money that's important to most early-stage companies. Sure they need money to expand to the next stage, but it's the experience they don't have that we were able to bring that they really need," Holliday said.
Holliday Corporation has so far invested in five companies, with one paying off big time.
That company - hospital software innovator Emendo - was acquired in 2012 for an undisclosed sum by the 14th largest company in the US, health IT giant McKesson Corporation.
"But here's the rub - it took nearly all of our time," explained Holliday, who ended up working as Emendo's CFO, and Tinkler its CEO. "The danger is if you're going in as smart money it's going to take a lot of your time ... and your portfolio is very thinly spread. Going through a group, you spread the risk and you probably get a much better return."
Realising early on they couldn't gain enough exposure to a range of businesses going it alone, the pair decided to invest through angel funds instead.
In Holliday's case, that was Christchurch-based PowerHouse Ventures, which he co-founded and remains a part owner of.
"We have an investment committee, which I chair, who make the decisions on whether we'll invest or not and how we'll invest," Holliday said. "Then the management team do the leg work."
To date PowerHouse has invested in around 20 firms, with a portfolio that includes Invert Robotics, which creates climbing robots; hybrid vehicle battery company ArcActive; and BimStop, which produces 3D content for architects.
Originally from the UK, Holliday came to New Zealand more than two decades ago, setting up his electronics and wireless firm Holliday Group in Christchurch. After selling the company in 2000 he became an angel investor as a way of giving something back to the tech sector.
"There are various reasons for investing. You always want to get your money back - or you hope to get your money back - but there are also philanthropic reasons," he says. "Having your own business - and if you've invested in an early-stage business, you are involved in it, so it becomes your own business - is the best fun you can have. It's also the scariest thing I know you can do."
Ultimately, he says, the sector is vital for our economy.
"You don't have to put a lot of money in and don't expect to get it back quickly, but this is the lifeblood of New Zealand business ... . There's a lot of bad press about exits by New Zealand companies to overseas companies and corporations, but it brings in money, it creates more jobs and adds stability. This is ultimately where the big businesses are going to come from eventually."
Produced in association with the Angel Association New Zealand.