The Government’s Seed Co-investment Fund is being refocused to achieve greater commercial returns and provide better support to new start-up companies, Economic Development Minister Simon Bridges has announced.
The $50 million fund partners with angel investor groups to provide early stage capital into young start-ups.
“The fund has been a vital part of helping start-ups thrive, and is an effective tool in linking with angel investors to fund innovative new enterprises, partnering with 17 angel groups to date,” Mr Bridges says.
“Early stage capital markets have developed and grown since the early 2000s, therefore it is time to refocus the Fund to meet the needs of New Zealand’s growing start-up industry.
“We’re making some technical changes in how the fund invests in order for it to target improved investment returns and become self-sustaining. This will remove the need for further investment from the taxpayer,” Mr Bridges says.
Changes include raising the investment cap in companies to $1.5 million and removing the $250,000 funding round limit, and having a national $1 million minimum level of investment committed to each angel network partner.
“The changes mean the Fund will be more effective and able to back both the most promising companies alongside its angel partners. We expect this will improve returns, which New Zealand Venture Investment Fund will use to invest in more new and promising startups,” Mr Bridges says.
“Continuing the development of the early stage capital markets is vital, and the fund achieves this by matching entrepreneurs with high growth potential - but high risk - ventures with investors willing to accept the risks of investing with them.”
Other changes will enable the New Zealand Venture Investment Fund to take a more active approach to portfolio management rather than the passive approach required by its current mandate.
It will also be allowed to undertake investments with investors that are not an existing angel network partner if they are deemed to have the capability to support highly promising companies on their path to commercialisation.