Pro Features Uncategorised

Business angels at the ready

Much-needed ‘angel’ funding is beginning to flow into local start-up businesses thanks to a new group that brings entrepreneurs and investors together.

Deals are being done between Hawke’s Bay entrepreneurs and members of a new group established to bring together local investors willing to provide venture capital to early- stage and growth businesses in the region.

The Hawke’s Bay Angel Investment Group (HB Angels) is a network of entrepreneurs and professional investors prepared to collaboratively invest in and support local entrepreneurial talent.

The group has more than 30 members and recently established a board chaired by Havelock North businessman Dean Prebble, a former New Zealand Trade and Enterprise trade commissioner.

Dean has been the driving force behind establishing the investment group, which held its first meeting in November last year.

“There is a tremendous pool of talent in the region and HB Angels will be able to provide capital and support to help those businesses grow and expand,” Dean says.

Other members of the newly-formed board are Jonathan Norman (vice-chair), Rick Cranswick (treasurer), Sharon Chapman and Ailne Bradley.

“The vision of using the private sector to unlock, support and attract fresh entrepreneurial talent to Hawke’s Bay through robust opportunity identification and the building of investment portfolios under a fund structure is a proven model nationally and will benefit the local and regional economy,” Dean says.

To date HB Angels has facilitated relationships with local private equity groups and Manawatu Investment Group (MIG), which has seen a number of early-stage Hawke’s Bay businesses receive time and capital from members.

The group is part of a national association of similar regional organisations – the Angel Association of New Zealand – and would typically make equity investments in businesses of anywhere between $50,000 and $1 million.

Rick, the former chief executive of the region’s largest chartered accounting practice Crowe Horwath, said it was encouraging to see the level of interest shown by both entrepreneurs and investors since the formation of the group.

Its board is made up of people with a broad cross-section of skills that would help the group move forward, he says.

“Entrepreneurship is alive and well in Hawke’s Bay and there is now a place to come to get support and perhaps funding. Importantly, the group works with The Icehouse to help entrepreneurs with businesses needing funding to get investment-ready, so they’ve got a better chance of getting deals over the line.”

Dean says the group’s previous meetings in November, May and August were supported by Napier City Council and were well attended, generating strong interest from potential members.

The New Zealand angel investment community has been going for about 10 years and clubs around the country have a total of about 650 members. Over the past decade, $500 million has been invested into nearly 1,000 deals.

“HB Angels is the 12th club in New Zealand,” Dean says.

“Although Hawke’s Bay has a lot of other groups and entities investing in start-ups, this is the first formalised angel investment group.”

Club members usually meet once every two months and at each event, members can expect between two and four presentations from start-up ventures based either within or outside the region.

Members are able to decide whether, and how much, to invest in any particular deal presented to the club and often several members will invest jointly.

Aside from investing directly through the group’s nominee company, members are also able to take a stake in what would be the group’s first start-up fund – a portfolio of least 10 investments.

This type of portfolio approach improves the risk/return profile of an investment. Given the start-up nature of the type of investments angels are making, long- term returns can range from zero to large multiples of the original investment.

For commercial investments, where several investors are involved in the same deal, the group plans to work closely with MIG, a Palmerston North-based group with a 10- year track record of angel investment.

“We encourage investors to become actively involved in the investment process,” Dean says.

“Opportunities to participate in due diligence and take on a ‘lead investor’ role are available to members, with coaching and support provided to fulfil these roles.”