An angel at the board table

John Dow, of Nelson, has angel investments in nine companies. Photo / Herald on Sunday

The New Zealand Venture Investment Fund would like to hear from the more angelic among us.

The drive continues to find angel investors - well-heeled individuals prepared to invest their time and cash in early-stage startup companies.

Two years ago, Crown-owned NZVIF launched a campaign to increase New Zealand's choir of angel investors to 1000.

Almost two years and a global financial crisis later that target hasn't been met. Andy Hamilton, chair of the Angel Association, believes they may be halfway there.

The sector has decided to take its eye off the magic 1000 but to continue to actively recruit angels.

"We are very focused on continuing to bring new networks, new groups into this area," NZVIF chief executive Franceska Banga says.

"And we're certainly still looking for new partnerships."

Angel investing has grown despite the recession, she says, with $50 million invested by the country's 12 angel networks last year, the largest amount yet.

NZVIF is planning another recruitment drive this year, as are some of the individual networks such as Ice Angels, the angel investing group attached to the University of Auckland's Icehouse business incubator.

The Herald on Sunday spoke to three angel investors to discover the light and the dark side of angelic business activity.

Wins and a loss, all fun

When John Dow returned to New Zealand five years ago to semi-retire he decided he needed something "to keep myself active and professionally involved".

"Somebody suggested I get into investing in startups, but I hadn't heard the term 'angel investor' until after I had done a couple of deals."

The former Australasian chief executive of global gold producer Newmont Mining Corporation says he was used to taking significant business risks.

The Nelson resident first joined the Ice Angels in Auckland, and helped set up the Nelson Venture Accelerator Network providing opportunities for investors in his local area.

After four years of angel investing Dow knows how important their contributions are to help expand a new business in New Zealand.

"Entrepreneurs get to that point where friends or family or neighbours can no longer offer the significant funds they need to get to the next stage - say $200,000 or $300,000."

Dow is invested in nine companies - it was originally 10, but one was a "spectacular flameout".

The investor is philosophical about the collapse. "Short of a quick win, a quick loss is not bad either, because you don't spend a lot of time and effort on something that wasn't quite as smart as you thought it was."

Two or three of the other companies are looking "very encouraging".

Dow says he contributes between $20,000 to $100,000 at the first round of funding for startups, depending on the company and his knowledge of the business or industry. Like most angel investors, he has about 10 per cent of his total investments in his angel portfolio.

Dow takes a hands-on approach and acts as a director for two of them.

"The reason I do it is because New Zealand is a land of a lot of bright ideas, a lot of bright sparks live here."

Dow is yet to see huge returns, but most angel investors don't see results for five to seven years.

"It's good fun. Have I made my fortune from angel investing? No. Am I hopeful I will? Well, we'll wait and see."