Published in the National Business Review of 29 February 2008

Bill Payne is a rich white American in his mid 60s who trained as a ceramics engineer, now has a touch of arthritis and a golf handicap of 15. He lives in the town of Henderson, outside Las Vegas and travels the world helping entrepreneurs and angel investors to get to know each other.

"Entrepreneurs typically have never sold anything and they aren't deal makers. On the other hand angel investors are either entrepreneurs who have exited their businesses well cashed up, or they are people who have otherwise made a fortune by being deal makers."

After selling his own business in 1980 he became an angel investor. He's invested in 45 businesses. "Some were successful, others not. Most angel investors stick to the knitting. Mine is in software, but I have lost money in low tech, high tech and no tech."

Angel investment is a key source of capital for the 60% of companies not represented in the public markets, according to a background paper prepared by the New Zealand Seed Company for the angel investment workshops Mr Payne held in Auckland and Wellington last week.

He's affiliated with the Kauffman Foundation, founded by a Kansas City businessman who sold his business to Merrill Dow in 1959 for $6.3 billion and gave $1.3 billion to the foundation to promote skills in entrepreneurship.
The Kauffman Foundation asked Bill Payne to develop six workshops on angel investing. This is his third visit to New Zealand and he was here as a guest of Grow Wellington, the region's economic development agency
The workshops introduced local angel investors to best practice, including the use of the "term sheet".

The term sheet is a crucial item as it embodies the mutual expectations and obligations of the parties. "it's an outline of the agreement between the parties to invest in and develop the business" Mr Payne says.

"Entrepreneurs tend to be product people, and they don't necessarily know much about sales, finance and other parts of business.

"They have to learn how to pitch their products and their business, so there is a huge training aspect.

"The New Zealand environment encourages people to be successful. Therefore there is a need for capital, therefore you need angel investing."

Public or unlisted companies represent a significant segment of New Zealand's economy that is effectively out of reach for the average investor, the NZSeed Co paper says.

A report from Infometrics in 2004 estimated the angel capital market in New Zealand at "roughly $1 billion of invested and un invested capital, representing between 1000 and 20 000 individuals.

Angel investors in New Zealand are usually high net worth individuals who typically invest between $20 000 and $250 000 per business and are usually involved in two to ten investments.

What Angel are you?

Entrepreneurial angel - an investor who has already built and sold a business

Trailblazer angel - an experienced investor from a venture capital network

A godfather angel - a retired angel who still has energy, capital and wisdom to invest and pass on

Guardian angel - an investor with relevant industry experience, a strong network and an interest in providing advice

Operational angel - an investor with experience in senior corporate roles

Hands-off angel - a busy professional without the time to be more than a passive investor

Disciple angel - an investor who follows the instincts and decisions of other angels

Serial angel - an angel who has done it before and likes to do it over and over again

Tire kicking angel - an investor who likes to look at deals but won't commit just yet.

On the web
Ewing Marion Kauffman Foundation