Angel investors back more early-stage deals despite lower funding totals

New technologies, or "deeptech", attracted above average angel investment over the first quarter. Photo / 123rf

New Zealand angel investment groups remained active in the first quarter, with deal numbers holding up despite smaller cheque sizes and a more cautious investment environment, investment platform Catalyst says.

Angel investing involves high-net-worth individuals – or angels – providing capital and expertise to early-stage, high-growth start-ups in exchange for equity.

Catalyst said data showed $1.83 million was invested across 34 deals in 23 early-stage companies, supported by 134 active “angels” over the quarter.

While total capital deployed was down compared with recent quarters, deal activity increased compared with the same period last year, suggesting continued engagement from investors despite heightened economic and geopolitical uncertainty, Catalyst said.

“Angel investors began 2026 on a positive note, but momentum eased as the quarter progressed,” Catalyst chief executive Colin Magee said.

“While we’ve seen a pullback in cheque sizes, the number of deals completed shows investors are still actively backing early-stage companies – they’re just doing so more carefully,” he said.

The average individual angel investment fell to $9771, around 16% below theearly-stage

Despite softer dollar volumes, the diversity of companies funded points to a resilient pipeline of investable early-stage businesses.

Investment structures also shifted over the quarter, with SAFEs (Simple Agreements for Future Equity) and convertible notes accounting for 41.8% of total investment value.

“This move toward more flexible instruments may indicate that both founders and investors are seeking to defer company valuation decisions while uncertainty persists,” Magee said.

It could also indicate an increasing need for bridging finance, he said.

“The shift can be seen as a practical response to today’s conditions and helps keep deals moving.”

“Deeptech” – new technologies based on substantial scientific discoveries or innovations – accounted for 65.6% of total investment value, well above long‑term averages, while software investment fell to 21.2% of capital deployed.

“The reduced investment into software may reflect concerns from some investors about the implications of artificial intelligence on software economics, although it’s probably too early to tell for sure.”

Manawatū‑Whanganui emerged as the standout region, attracting 32.9% of total angel investment in the first quarter.

Auckland remained a key centre of early-stage activity, although its share of total capital dipped below longer-term norms, consistent with smaller deal sizes.

Magee said the quarter showed a market that is adjusting to increased global uncertainty, not retreating.

“Angels are staying involved, founders are still raising, and high-quality innovation continues to attract backing,” he said.

“That’s a positive signal for New Zealand’s early-stage ecosystem as we move through 2026.”

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

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