Start-up fund fails to draw investors

Plans to set up a new $5 million fund to invest in start-up technology and high-growth Kiwi companies have failed to raise enough money.

The Halo Fund, a joint venture between the Government-funded New Zealand Venture Investment Fund and seven angel investor groups, was launched in November last year and officially began raising money in May.

The fundraising was supposed to be completed by the end of November but yesterday the fund's manager said it would be redesigning the investment scheme after receiving commitments of only $2 million.

Halo Investment Management chairman John McDonald said the fund had got the timing wrong, While interest had been strong in Auckland, it had struggled to gain traction in the rest of the country.

"We raised a reasonable amount of money from Auckland, but we didn't really get marketing momentum in the rest of the country."

He put that down to the global financial crisis and said it was also tough outside Auckland because the angel networks - groups of wealthy investors who want to invest and mentor start-up companies - were not as developed.

McDonald said all deposits had been given back to investors and the fund would relaunch next year when there were signs the economy was beginning to grow again.

"Obviously we were disappointed. But it is better to know when you are not successful."

McDonald said it was planned to change the scheme to allow investment in companies that had already received backing from the New Zealand Seed Investment Fund and NZVIF.