24 May 2023

When it comes to investments, traditional options like shares, fixed interest, and real estate are the usual suspects in portfolios. But have you ever heard of angel investing? It's a lesser-known avenue that can bring in some serious cash and excitement to your investment strategy. Angel investing involves putting your money into early-stage start-ups in exchange for a stake in their business. In this article, we'll explore why investors in NZ should think about diversifying their investments and becoming angel investors, adding this dynamic asset class to their portfolio.

The potential for massive returns

One of the main reasons you should consider angel investing is the potential for huge returns. By getting in on the ground floor of promising start-ups, you can grab a piece of the pie at a low valuation. If the company takes off your investment could skyrocket in value. Some of the biggest success stories today, like Uber, Airbnb, and Facebook, all owe their initial funding to angel investors who believed in their potential.

Diversification and risk management

Angel investing lets you diversify your investment portfolio beyond the usual suspects. By allocating a portion of your capital to start-ups, you can reduce your exposure to the rollercoaster ride of the stock market while still enjoying the upside of a well-rounded portfolio. Since start-ups can grow exponentially, a few successful investments can more than make up for any losses you might experience elsewhere. The key is to spread your bets across different industries and stages, so you don't put all your eggs in one basket.

Getting hands-on and feeling the thrill

Unlike traditional investments where you sit back and let others do the work, if you so choose, angel investing lets you roll up your sleeves and get involved in the growth of early-stage companies. With your industry expertise, network, and business smarts, you can provide guidance and mentorship to the start-ups you support. Being an active participant in their journey can be incredibly rewarding, both personally and professionally.

Access to cutting-edge innovations

Being an angel investor means getting a front-row seat to cutting-edge innovations and emerging technologies. Start-ups are all about pushing boundaries and shaking up industries. By investing in them, you become part of the action, fuelling transformative ideas and breakthrough technologies that have the power to shape the future. It's a chance to be intellectually stimulated and gain insights into trends and emerging markets that might slip under the radar otherwise.

Rubbing shoulders and expanding your circle

Angel investing opens doors to a fantastic network of like-minded individuals, including other angel investors, entrepreneurs, and industry experts. This network can lead to new investment opportunities, business partnerships, and collaborations with forward-thinking minds. The collective wisdom and expertise within the angel investing community create an environment where you can share knowledge, learn from others, and broaden your professional horizons.

In conclusion, adding angel investing to your investment portfolio comes with a whole host of benefits. From the potential for high financial returns to diversification, hands-on involvement, exposure to innovation, and networking opportunities, being an angel investor lets you tap into the world of early-stage companies. Yes, there are risks and regulations involved, but with thorough research and a well-diversified portfolio, you can navigate those challenges and reap the rewards of supporting the next generation of game-changing start-ups. So, if you're after an exhilarating and potentially lucrative addition to your investment strategy, angel investing is definitely worth consideration!

Register for the next Dunedin FoundX meetup

We are hosting our next Dunedin FoundX meetup on Tuesday, 20 June at 5:30pm – 8:30pm where we will explore the fundamentals of Angel Investing. Join us for a night of networking, information, and inspiration.

FoundX is designed to help empower regional entrepreneurship, connect communities and inspire innovation.

Register now