Angels spreading investments further

Franceska Banga. Photo / Supplied

The number of investment deals by angel investors who provide capital for business start-ups rose in the first half of 2011 but the amount invested fell from the previous year's record level, according to the Young Company Finance Index.

The trend reflected a broadening of the angel investment market in New Zealand, with investors becoming more inclined to take a portfolio approach towards a number of projects, said the New Zealand Venture Investment Fund, which compiles the index.

NZVIF, which administers venture capital and seed co-investment programmes for the Government, said angel investors put up $17.8 million across 53 deals involving young companies in the first half of 2011. In the first six months of 2010, $29.6 million was invested across 37 deals.

In the 12 months to June 2011, $41.5 million was invested in young companies, down from the previous year's record of $52 million, but similar to the 2009 result.

Cumulatively, $206 million has now been invested into young companies by angels since the Young Company Finance Index began in 2006.

NZVIF chief executive Franceska Banga said the average size of angel investments was dropping but at the same time the overall number of deals being done was increasing, with the last five quarters showing rises in the number of angel deals being done in the range up to $250,000.

Banga said angel investors were looking to invest smaller initial amounts into these companies than they had done in the past.

"They will then look to continue to support companies with further investment down the track, so long as those companies make good enough progress utilising that initial investment," she said. "Angels are adopting a portfolio approach to their investments whereby they invest smaller amounts across a number of companies." APNZ