You are doing well, but are you "doing good"? Charity is a big part of being an entrepeneur. Angels are making a large and significant impact on startup companies in the US and NZ. Angel-funded (and bootstrapped) entrepeneurs create most of the jobs and much of the new wealth in the US.

1. Bill Payne
BNZ University of Auckland Business School
Entrepreneur in Residence
Angel Trends and
Implications for New Zealand

2. “But do you ‘do good’?”
?
Doing Well Doing Good

3. Thesis:
Angels are making a large and significant impact
on startup companies in the US and NZ
Angel‐funded (and bootstrapped) entrepreneurs
create most of the jobs and much of the new
wealth in the US
Both jobs and wealth creation are improving the
standards of living of the citizens of the US and
the world (doing good)

4. Agenda
Capital food chain for entrepreneurs
Trends in angel investing
Job creation in the US (and New Zealand)
The importance of private wealth creation

5. Investigation Feasibility Development Introduction Growth Maturity
The Capital Lifecycle
Proof of
concept
Pre‐Seed Seed &
Startup
Early First, Second, etc...
PROFIT
TIME
VALLEY OF DEATH
Government Sources
Friends & Family
Angel Investors IPO, Banks
Venture CapitalSelf

6. Trends in Angel Investing

7. Who are these Angels?
• Wealthy individuals – ‘accredited investors’
• Business savvy
• ‘Mad money’
• Generally $25K‐$250K per deal per angel
• Diversified portfolio (a dozen or more)
• Range of involvements
– Lead investor – Chairman of the Board
– Investor/advisor
– Passive investor

8. Activity of US Angels
• Fund startups with $20 billion per annum
– About ½ as seed/startup funding
– Most of rest in portfolio companies
• Investing in 50,000 startups annually
• Engaging as directors and mentors
• Working through angel groups

9. Professor Josh Lerner, Harvard University
[The Consequences of Entrepreneurial Finance: A Regression Discontinuity Analysis (2010)]
Regarding angel investors:
• Angels make a large and significant impact
on the success and survival of their
portfolio companies (p5)
• Mentoring and business contacts are even
more important than angels’ money (p24)

10. Why Angels join groups
• Provide easy access to entrepreneurs
• See more good deals
• Use a consistent, robust process
• Bring highly qualified mentors to startups

11. Growth in US Angel groups
0
50
100
150
200
250
300
350
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Center for Venture Research (pre 03 data) and Kauffman Foundation/ACEF (04‐09 data)

13. Update on Kiwi Angels
• Formed 16 groups in past 7 years
• Engaged with NZ Venture Investment Fund
• Created Angel Association of New Zealand
• Most deals syndicated among groups
• Rapidly adopting best practices

14. 2009 NZ Angel Deals
(NZVIF & Young Company Finance)
• NZ$127 Million since 2006 (‘09 = 63 companies)
– 2009 ‐ NZ$50 ‐‐ 2008 ‐ NZ$29
– 2007 ‐ NZ$27.4 ‐‐ 2006 – NZ$20.2
• Investment vs. Stage of Development – 09
– Seed and Startup = 78%
– Expansion = 22%
• Compares favorably with similar
demographic areas in US such as Boston

15. Conclusion:
Angels are making a significant
impact on the success of
startup companies in the US
and in New Zealand

16. Back to the thesis:
What About
Job Creation?

18. Quotes:
Dr. Bob Litan, VP Kauffman
• Companies less than five years old have
created 40 million jobs in the US in the
past 30 years
• Companies five years and older have, in
the sum, lost jobs in the past 30 years

19. American angels fund 20,000
new companies per year that
are in the sweet spot of
job creation in the US

20. What About
Wealth Creation?

21. • US management guru
• ‘02 Medal of Freedom
• Died at age 95 in 2005
Peter Drucker

22. Peter Drucker, cir 1993
• U.S. government programs to tackle a
social problems have not and do not work
• Independent nonprofit agencies have had
impressive results in education,
alcoholism, drug abuse, poverty, mental
health, healthcare and elsewhere

23. Peter Drucker, cir 1998
• Predicted that private sector wealth created
by entrepreneurs would prove to be the
most effective sources of philanthropy in the
21st century. Why?
– Entrepreneurs are creating huge wealth
– Entrepreneurs run charities like a business
• Bill Gates and many others are now proving
him to be correct

24. Three Successful
Entrepreneurs Who Are
Demonstrating My Thesis

25. Computer geek/entrepreneur
Founded eBay in 1995
eBay goes public, 1998
Net worth of US$8 Billion
Pierre Omidyar: Entrepreneur

26. Plans to give away 99% in
next 20 years
Currently gifting >$100
million per year
Funds non‐profit groups and
social change companies
Pierre Omidyar: Philanthropist

27. Co‐founded PayPal in 1998
Sold PayPal for US$1.5 Billion
PayPal alumni have invested
in dozens of startups with an
value of about $30 Billion
Peter Thiel: Entrepreneur

28. Founded Methuselah Foundation
for anti‐aging research
Founders Fund Management has
raised $220 Million for a new fund
to go after more early‐stage deals
Actively seeking investment
opportunities in New Zealand
Peter Thiel: Philanthropist

29. Sam Morgan: Entrepreneur
Founded TradeMe in 1999
(at age 24)
Sold TradeMe to Fairfax for
$750 Million in 2006
At that time, TradeMe
accounted for more than
60% of Kiwi web traffic

30. Investor in many early stage
businesses in New Zealand
Current passion ‐ helping others
• poor farmers
• illiterate children
• combating disease
Sam Morgan: Philanthropist
Africa

31. http://samfromwellington.posterous.com
Sam Morgan on Philanthropy
Validating Drucker’s Predictions of 1998

32. Conclusions
• Angels fund an important fraction of
new ventures in the US and NZ
• New ventures are a critical source of
job creation in the US and NZ
• Exited entrepreneurs will make a difference
to the world in the 21st century

33. Yes, Josh –
Angels and angel‐funded
entrepreneurs are ‘doing good’
after they ‘do well’ in their exits.

34. Recommendations
• Celebrate the importance of angels
and entrepreneurs to society
• Encourage and support entrepreneurs
• Motivate angels and foster new and
existing angel groups

35. For a copy of this slide deck, please contact
Emma Fitzgerald – emmya557@gmail.com