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Angel investor Bill Murphy is seeking more angel investors in the South, hoping his recent visit to Dunedin will spark more interest in supporting young entrepreneurs.
Mr Murphy founded the Bay of Plenty angel investor group Enterprise Angels and is part of the team behind AngelEquity.
AngelEquity provided wholesale investors with access to a broad selection of early-stage investments presented by angel groups around the country.
Wholesale investors typically were sophisticated investors with at least $5 million of gross assets.
While in Dunedin, he met Otago Angels and the Opal Fund, seeking to spark more investment from local investors.
Nationally, angel investing reached up to $60 million a year.
"The angel investing model is the best way to invest in early-stage companies. Angel investors have a huge amount of experience in early-stage investments."
The investors put every investment opportunity through a rigorous pre-selection process, including due diligence, negotiating investor terms and company valuation, he said in an interview.
The United Kingdom had an established history of angel investing, followed by New Zealand. In the United States, the Government had just approved new crowd-funding rules which included more safety measures compared with the UK and New Zealand.
In the US, investors could only invest a certain amount of money, and that limitation might also come into New Zealand.
However, it was early days, Mr Murphy said.
He acknowledged early-stage investing was "very risky".
Angel investors lost between half and all their money in half of their investments.
At any time, AngelEquity had 30 companies coming to it for funding.
Each was subject to due diligence followed by a waiting period to see if early-stage investors would risk putting money into it.
All AngelEquity deals had passed due diligence and already had a minimum of 25% angel investment in their current funding round.
Once investors were in place, one of the AngelEquity investors was appointed to the board to help guide the company through its early stages, he said.
The market had moved on from the early stages of crowd funding where people asked for money for their bright idea and gave investors a T-shirt in return.
Seven crowd-funding organisations were licensed by the Financial Markets Authority.
Recent changes in the Financial Markets Conduct Act 2013 to the definition of wholesale investor meant more New Zealanders met the criteria, Mr Murphy said.
"Many high-net-worth individuals, or people with sophisticated knowledge and experience of financial markets, are now considered wholesale investors."
Mr Murphy acknowledged high-profile investors such as Sir Stephen Tindall and Sam Morgan were well known throughout New Zealand.
His task was to tap the next level down for new investors to help growing New Zealand companies.
"We need people who have built up their wealth in certain areas to realise how exciting it is to invest in these new companies. Usually, it is young, enthusiastic people with fresh and innovative companies looking to change the world. Investing in these companies can make a real difference — locally, nationally and internationally."
Asked how he became involved in angel investing, Mr Murphy said he was a certified public accountant with an interest in economic development.
He set up an economic development agency in Tauranga 15 years ago.
When he left, people continued to approach him for investment so he established Enterprise Angels in Tauranga.
It was now the largest in the country with 200 members across the Bay of Plenty and Waikato regions.