Australia’s Angel investor community is investing in Adelaide and Sydney at double the rate of other cities.
The good news for local start-ups comes from an annual survey of Angel investors launched at the National Angels Conference, held at the Stamford Grand in Glenelg, South Australia.
The survey also showed that private business investors helped fuel 26,500 jobs in 2009 and invested $1.4 billion in more than 5,000 companies across Australia.
The event was the largest yet for the organisation founded in 2007, attracting over 130 people, including high net worth individuals from Australia and several of the world’s wealthiest people to share their war stories.
“The benefit of our organisation is that it is now easier for investors who belong to Angel groups in one state to invest in a company based in another state,” said Jordan Green, deputy chair of conference organiser Australian Association of Angel Investors (AAAI). “They can do this alone or in a syndicate.”
Adelaide’s Angel groups are SA Angels and BioAngels. The term “Angel investor” is derived from the description of the investors who backed theatrical productions in London early last century.Greg Boundy, CEO of InnovateSA, which helped bring the conference to Adelaide, said that investing in a start-up can be challenging for both investors and investees if they don’t have a strong network of advisors around them.
“Our organisation is committed to providing the knowledge and networks to our local innovators, to foster entrepreneurial skills that create wealth,” Mr Boundy said.
Switzerland-based Brigitte Baumann, President of the European Business Angels Network (EBAN), observed that, “Too much cash can kill entrepreneurial hunger in a start-up”. In the heady late 1990s, Baumann spun out a mobile start-up pre-revenue for 50 million Euros. “Those days are a little bit gone,” she added.
“With that kind of cash in the bank, it was really hard to get people not to talk about how big their office was – the successful entrepreneur is always on edge of being hungry.”
Nick McNaughton of Blue Cove Ventures said that inflexible boards of directors who won’t shift with the times could also kill off an investee company. McNaughton stressed that the innovation pendulum is moving to Asia.
“We should start to build relationships with North Asia,” McNaughton said. “China has 240 companies manufacturing electric vehicles. The Chinese have realised it’s a platform change to electricity. There are 30 companies in China building wind turbines.
“We could attract Asian ...investors who respect Australia for our legal systems, governance, innovation and general fairness.”
The surveys shows that local investment has focused on consumer software and web services, but SA BioAngels drove the state’s results, with “more deals, better documented” than any other group.
Initial public offerings are down overall as an exit strategy but Australia’s merger and acquisition “nuclear winter” is over, delegates heard, with a doubling of M&A activity.
Dan Mothersill from Canada’s National Angel Capital Organisation (NACO) had the last word: Angel investing, he said, “is God’s way of telling you you have too much money”.
Australian Association of Angel Investors Ltd
AAAI promotes a vibrant Angel community and culture in Australia through the promulgation of best practice, fostering the development of Angel Investor groups, providing continuing education for Angel Investors, nurturing international relationships with the global community of Angel Investors and representing its members through policy advocacy and collaborative initiatives with Australian governments to encourage and develop an efficient and effective risk capital market in Australia.
As a community of peers the AAAI is redefining the nature and practice of early-stage investment in Australia. This association provides thought-provoking discussions and valuable information in an atmosphere of inclusive collaboration.
Jordan Green, Deputy Chairman, AAAI