When entrepreneurs are looking to secure capital for their business in New Zealand, the first two rounds of funding usually consist of Seed Capital and Venture Capital.
If you’re an entrepreneur based in New Zealand looking to start a brand-new business then you’re going to need something called Seed Capital. What is Seed Capital? This is the initial money that you start your business with, basically the first stage of investment for entrepreneurs. Seed Capital covers all the preliminary funding that is required and used to help establish the brand.
When it comes to finding seed capital, most people in New Zealand will use their own savings or borrow funds from family and friends. Typically, most new businesses start out this way. You may also hear of people funding their business idea on their credit card or with personal loans, but this isn’t always a good idea, since if your business isn’t successful straight from the get go, then there is not a lot of room financially to turn things around since you’ll have expensive debt to pay back which can cripple a new business.
Some larger ideas may require angel investment, but in many cases if the business has not actually been established yet it is then considered a high-risk investment and will likely reduce the
number of investors willing to make that initial investment. At the same time, many angel investors like to invest seed capital if the idea is right, as they will usually take a percentage of the business, which could amount to a decent return if all goes well.
If you’re looking to start a brand new business in New Zealand and you think that you’ll need support from an angel investor for your seed capital funding, then you will need to ensure that the business plan for your business is very detailed and in good shape. Investors will need to see this and be confident in the potential of your business. They will also need to learn more about who they are investing in, so ensuring that you can highlight why you are the right person to grow your new business is also important.
What exactly is Venture Capital funding? When companies start up, they often need further financing to expand. This is where Venture Capital comes into play. This is a private investment that usually comes from a group of investors, generally buying a percentage of shares in the company, often known as a limited partnership.
New businesses that have gone past the preliminary stages and are in full operation, may still have trouble securing bank loans, and thus seek out further investment from angel investors and venture capitalists. Because this is a high-risk investment, venture capitalists usually play a role in the company's key decisions, and often become a partial owner of the company.
In return, since these investors tend to make investments in a market sector that they are interested in, they often have contacts and experience which adds value to their offer.
If you need to raise seed or Venture Capital for your new business, then the Angel Investment Network can help. The New Zealand Investment Network connects local entrepreneurs with angel investors and can help you raise either seed or venture capital, depending on which stage your business is at. We are an online community that gives entrepreneurs the ability to reach potential investors from New Zealand and countries around the world. Investors looking for business opportunities in New Zealand can find your business idea and then connect with you to discuss the potential of investing in your idea or business, helping it grow and taking it to the next level.