It makes salmon and cooked shellfish red. It's in demand from marathon runners, performance athletes and the sports recovery market as a food supplement and its antioxidant qualities mean it may be beneficial in treating cardiovascular, immune and neurodegenerative diseases.

But Tony Dowd was alerted to astaxanthin's properties by chance.

He heard of the compound while investigating the commercial potential of algal-derived biofuels in 2007.

Astaxanthin is found in microalgae in salmon, trout, krill, shrimp, crayfish and other crustaceans and internationally commands between $8000 and $10,000 a kilogram, so Dowd was intrigued to discover there were relatively few manufacturers.


Encouraged by this, he engaged independent research body the Cawthron Institute to analyse how effectively he could grow a local strain of the microalgae that yields astaxanthin in a closed-door environment.

Most firms that make astaxanthin propagate the algae either in outdoor ponds or enclosed outdoor facilities rather than indoors under lights - so they can lose a substantial part of their yield through seasonal variations and contamination, says Dowd.

"We had to make a year-and-a-half's worth of mistakes before we got it right, but in the past 18 months we've been pretty much producing continuously."

Auckland businessman and angel (or early stage company) investor Ray Thomson also stumbled across astaxanthin and Dowd's fledgling astaxanthin company Supreme Biotech while at the Natural Products Conference in Nelson in 2010.

Thomson was there representing another firm he's involved in, honey products company Manuka Health, but soon the entrepreneur and the investor were talking business.

Thomson invested in Supreme Biotech, secured a place on the board and introduced the firm to other investors through Auckland's Ice Angel network.

Supreme Biotech had an $800,000 funding target last year, but given its popularity at the most recent Auckland investment showcase - where several firms present their wares to angel investors - it was able to extend its round and raise $1.95 million.

Traditionally New Zealand angel investors have been reticent about biotech but the sector's image has been boosted recently by the outstanding performance of cancer diagnostics company Pacific Edge, says Thomson, who's also chairman of the NZ Angel Association.


With revenue now at about $1 million a year, Thomson predicts Supreme Biotech is about six months away from breaking even and unlikely to need another angel funding round. The $1.95 million raised is being used to cover the company's operating costs, strengthen its management team, build its AstaSupreme product portfolio and develop an international distributor network.

Angel investing is fundamental to New Zealand's future wealth, says Thomson, and using the knowledge and experience of successful executives to mentor early-stage entrepreneurs as angels do is crucial in whether a new company succeeds or not. "[It] isn't just about money. It's about giving these entrepreneurs some real leadership and help along the way, that's why it's so exciting."