If you are working on a startup, already own a small business, or invest in property in New Zealand, you will probably need some form of investment to grow your business to its fullest potential. You may ask the banks to get the funds you need, however it can prove quite expensive (their terms and interest rate), or may not be the ideal method for you, based on the type and status of your business.
Fortunately, there are investors in NZ actively looking for business opportunities to put their cash or expertise to good use. These investors are willing to fund any opportunity that has the potential to make them a solid return in the future. This article explores these sources of funding, and provides a few hot tips on how you can access it.
Are Investors the Best Choice for Your Business?
Before exploring investment opportunities, it is crucial to evaluate if using investors is the right source of funding for your business. You’ll need to ensure that you can meet the following:
- You are willing to give up some equity
- You need funding to bring a product to the market or expand, but not to bail out the business
- The business has the potential for growth and a ready market for your products
- Most investors will go to businesses generating revenue with a proven commercial model.
Popular Investor Networks in New Zealand
Here are some of the most popular investors in the country:
The Government
While the government may not be classified as an investor, it offers funding to small and medium-sized businesses through various initiatives. Its terms are more affordable for most small and medium-sized businesses, and the interest rates are low.
The only disadvantage is that you will compete against hundreds of similar businesses. Its funding is also not available at all times. Earlier in the year, the government announced that it would be buying minority stakes in small businesses.
Angel Investors and Venture Capitalists
According to the Angel Association of New Zealand, there are two types of angel investors in the country: angel investors and early-stage funds. Popular investment groups include Angel Investors Marlborough, AngelHQ, Alt Ventures, ArcAngels, Brandon Capital Partners, Bridgewest Ventures, and Canterbury Angels. There are several other angel investors around the country.
Many Angel investors are focused on very specific business niches or sizes, and you have to check if you meet the criteria before making an application. They would also want to check on your accounts and, of course, your strategic plan.
Crowd-based Investments
The 2013 Financial Markets Conduct Act allows crowdfunding in New Zealand, and it can be a popular choice. How it works: a licensed financial provider acts as a link between individual investors and businesses seeking funding. Some popular crowdfunding platforms include Lending Crowd, PledgeMe, and Crowdsphere. You can read more about these on the Financial Markets Authority website.
Private Investors
A little-known category of investors are private investors, who aren’t part of an Angel network. These investors are willing to spend anywhere from a few hundred to millions of dollars on businesses with strong growth potential.
Unlike with other categories, businesses deal directly with private investors on the terms, duration, and amounts of investment. They also have less strict terms and are more reachable to businesses than other categories. Where can they be found? Platforms like InvestaMatch provide the connection between these investors and businesses seeking funding.
To Sum Up
The investor funding market in New Zealand is a vibrant one, and investors are out there ready to help grow your business. Just make sure you conduct proper due diligence and seek accounting assistance before getting investor funding.
InvestaMatch connects businesses and hundreds of private investors looking for such opportunities. We provide resources and a list of advisors to help both parties understand this investment landscape, its requirements, and the funding process. Join now to get the connection.