Monday, January 08, 2007

Angel investment in NZ

story in today's herald here.
Angel investment is typically seed funding from a single individual personal wealth. It's the next step up the ladder from friends, families and fools...
NZ doesn't really have an institutional VC community (i'm not counting govt, that's called a subsidy or kick-back...) or serious efforts to find international VC's. It's one of those vicious cycles where successful people fund start-ups but with the start-ups, there's fewer successful people...

One thing that jumped out at me was this:
ICEAngel Investments

* Biomatters, biotech software $988,000
* Nexus6, drug delivery and health information technology $500,000
* Calcium, e-marketing software development $200,000
* Optima Corporation, software $1.2 million
* Go Virtual, medical software $930,000
* Data Brake, intelligent brake light system $500,000
* Total ICEAngel investments $4.23 million

They're mostly IT funding. This may reflect on where the investors made their money and I agree that if you're going to invest, invest in something you have a credible opinion on. My question is: what makes NZ think it can succeed in software? or are they targeting one particular niche like medical software? targeting a niche makes a lot of sense but as you can see from the figures (and in the story), it's just not much money. About the only thing you can do with $250,000 NZD is buy a half dozen workstations, a server and 3-4 bodies for 2 years.
Are we focusing on software because we think we can be competitive in a couple of niche areas or... are we doing software because it's the only thing we can afford to invest in?

For instance, if you wanted to do some serious genetic work (or anything phys sci) $250,000 NZD is about what you'd budget for equipment. Where does NZ make it's foreign exchange? Dead animals, animal products and tourists. You can't do any serious research with a half-mil on the DNA of our animal products (and farmers seem to think the govt should pay for it anyway) and I haven't noticed any software specifically targeting tourism - maybe it's out there and is just busy getting on with it...
Just my opinion but if I was picking something that NZ is truley world class in already (nz wide, you need an ecosystem of businesses to hedge your entrepeneur risk) and looking to make software that i'd sell/lease around the world, tourism would have to be high on the list. So where are they? am i missing something here?





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