Tauranga's Enterprise Angels' investor group last night formally launched its first sidecar fund EA 1, targeted from $1 million to $5 million. Angel group sidecar funds typically operate alongside and co-invest in the same deals as angel group members.
"Angel investors have to create a portfolio of up to 10 or so investments because of the high risk nature of early stage investing," said Enterprise Angels executive director Bill Murphy.
"And it can be quite a challenge for some individual investors to assess each idea as it comes up and make a call on whether or not to invest. The beauty of the fund is that it will operate alongside the angel investors, so while angel members are investing individually in deals, the fund is investing alongside them and fund shareholders can quickly build up a portfolio."
EA 1 will be pitched to both the current 123 members of Enterprise Angels and also to qualified investors outside the group. It will be structured as a limited partnership and will be a closed fund - that is, once the fund is closed for initial subscriptions, it will not take further investments - and proceeds from liquidating investments would be distributed to investors not returned to the fund.
The minimum fund size will be $1 million, but Mr Murphy said there had been positive feedback from members and he expected that the fund would eventually come in at between $2 million to $5 million. Because the fund is too small to justify having a full time investment manager, the Enterprise Angels board will also act as general partner in managing the fund. There is currently only one other similar angel group sidecar fund in New Zealand, run by the Manawatu angels group MIGAngels.