Bay of Plenty-based Enterprise Angels has launched a unique new online equity crowd-funding platform. AngelEquity offers wholesale investors the opportunity to invest in a broad selection of early stage investments presented by angel groups from around the country.
"The angel investing model is the best way to invest in early stage companies," said Enterprise Angels executive director Bill Murphy.
"Angel investing is high risk. Angel investors have a huge amount of experience in early stage investments and we put every investment opportunity through a rigorous pre-selection process including due diligence, negotiating investor terms and company valuation."
Mr Murphy said that AngelEquity differed from other crowd-funding platforms in the NZ market.
All AngelEquity deals must have been through due diligence and have already raised a minimum 25 per cent of their current funding round before being listed. In addition, the platform is only available to certified wholesale investors, not the general public.
Mr Murphy said there were two key drivers behind setting up the platform. One was the opportunity for angels to leverage the work they put in doing due diligence and preparing companies, by being able to raise more capital outside the angel community.
The other, was a concern that after angels did all the preparation, companies might then go to the available public crowd-funding platforms, which would then take the deal fees for the further investment.
"I thought there was an opportunity there to further strengthen the angel industry by enabling the angels themselves to leverage the work they do on their own deals."
Recent changes to the definition of wholesaler investor in the Financial Markets Conduct Act 2013, mean that more Kiwis now meet the criteria, he said.
"Many high net-worth individuals, or people with sophisticated knowledge and experience of financial markets are now considered wholesale investors," he said, adding that they still needed to be certified as qualified investors when they came on the site to invest.
Bridget Unsworth, investment director of New Zealand Venture Investment Fund, said the AngelEquity initiative would help deepen the pools of capital available, as well as providing investors with the comfort of knowing that deals had been vetted by experienced angel investors.
"Angel investment is at healthy levels, but there remains a demand for more capital, particularly as companies develop and need new rounds of investment to maintain their progress."
Suse Reynolds, executive director of the Angel Association of New Zealand, agreed. "Early stage, high growth companies are always looking for capital. Without capital, the growth path is exponentially slower."
Ms Reynolds said she believed there was still plenty of room for growth and specialisation in this end of the capital markets.
"It's a highly risky part of the market to play in, but absolutely vital for New Zealand's future economic and social wellbeing," she said.
"These companies are the Xeros and F&P Healthcare companies of the future. And what these companies need as much as the capital, is exposure and support - the expertise and connections that the capital can help deliver."
• For the past several years, angels have invested over $50 million a year in NZ companies, says Enterprise Angels.
Enterprise Angels executive director Bill Murphy says angel investing is now a vital part of the worldwide economy.
"And it's not just about financial return - the most important part is the skills we put in, because that's where these companies really benefit. We are making a difference by investing our time and money in exciting young companies."
The new crowdfunding platform AngelEquity launched on Tuesday with three investment opportunities:
• Roholm - the BOP-based developer, marketer and distributor of the world's first Inverse Hair Conditioning system, which uses sub-zero temperatures to lock in moisture and restore the health, strength, condition and appearance of women's hair - no chemicals, no heat and no cords. Roholm is seeking $500,000 - $1 million with a pre-money valuation of $7.84M.
• Quantec - Quantec is a Waikato agritech company taking its patented discovery of a novel milk protein and developing applications into human and animal health applications. Quantec is seeking $750,000, with a pre-money valuation of $9m.
• EA Fund 2 - Enterprise Angels second "sidecar" fund, which has already raised just under $2.3m, close to EA Fund 1. It offers a portfolio of investments in early stage companies across a range of industries, spanning seed, start up and expansion phases.
"EA Fund 2 is an ideal platform for wholesale investors because it gives them an immediate portfolio spread," said Mr Murphy."