Angel investing grows up

Angel investors seem like a secret and elusive club, huddling together and singling out one lucky startup after another, gifting them the chance of developing their business-baby. In reality, they’re not so secret, but they are, in many instances, a close network of experienced business-savvy people that often bring more than just deep pockets. They are a community of experienced and skilled investors mentoring and supporting the innovation and ingenuity of future businesses. Investors are obviously seeking out the winning startups, but the founders are on the lookout for talented investors they can trust just as much. It’s hugely important to our economy and society that these great partnerships are forged in the early stages of business, as without them we risk economic growth and technological advances.

Young company investments (angel and venture capital) have steadily increased from over $30 million in 2008 to over $100 million in 2018¹. The New Zealand tech sector economy is now starting to see the fruits of these investments with growth starting at $6.3 billion in 2008 to $11.1 billion in 2018¹. Ten years ago a startup relied on the high wealth of a few local investors for a capital raise. Now there are angel networks in our major towns and cities with busy calendars of pitch nights and mentoring sessions that are matching up Kiwi innovation with available capital. Ten years ago an investor might have ‘gambled’ on one local business, now this asset class has evolved and matured it requires more respect and better handling.

Angel investing is unique. An investor, to spread risk, would have a large number of investments running concurrently. Each one being at such a vulnerable stage in their life-cycle is potentially very active; there might be frequent updates, valuations, fund-raising or product developments. This early stage of business funding can be strategically short, with angels exiting in subsequent fund-raising rounds.

These numerous investments need to be contained and monitored and the Syndex investor portal is ideally placed for angel investment management. Once an investor moves past 5 investments, it is difficult to keep track of where they are in their cycles and valuations. The one-stop hub holds all investor portfolio records, reporting and documents, as well as analytics.

The functionality of the Syndex platform is there to make transacting easier and quicker. Regulatory checks are completed once, rather than as a repetitive task for each deal. Communication between parties becomes easier as it opens up a direct channel between investor and startup (ideally the startups keep a consistent dialogue with their shareholders to increase investor confidence). Exiting deals, via the Syndex secondary market opens up options and makes investing much more attractive. All documents and term sheets sit in one accessible place to assist in due diligence and managing the deal flow.

As the asset class matures it needs good infrastructure and rigour in it’s management of both the companies it invests in and the expectations of their investor base. Syndex is providing the solution bringing all involved more confidence in their trading and more credibility in their portfolio.

1 https://www.pwc.co.nz/insights-and-publications/2019-publications/startup-investment-magazine.html

To view our latest angel investment offer click here.

Ross Verry

Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.