09/07/2019 - 13:13

Angels are invested in outcomes

09/07/2019 - 13:13

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Greg Riebe and the Perth Angels have been working for the past decade to grow the angel investment sector in WA.

UNEQUAL: Greg Riebe says while there has been a growth in entrepreneurship in Perth, there has been no commensurate growth in private investment. Photo: Gabriel Oliveira

Greg Riebe and the Perth Angels have been working for the past decade to grow the angel investment sector in WA.

When Bernadette Olivier returned to Perth from a stint with a London hedge fund, she brought back more than valuable international experience – she also had plans to launch an online dress hire and share service

Several years after that initial idea was formed, in June 2016, Ms Olivier established The Volte, which she describes as the Airbnb of fashion.

While her business grew at a rate of 20 per cent month, as a first-time entrepreneur she knew more capital was needed if it was to improve basic functions such as website usability.

“We were looking to raise pre-seed [capital] because we had felt we had just launched a beta product,” Ms Olivier told Business News.

Introduced by associates to Greg Riebe, Ms Olivier was soon invited to pitch her business to the Perth Angels, a group of private investors that provides funding to early-stage, high-growth ventures in exchange for an equity ownership interest.

Pitching The Volte to investors, Ms Olivier successfully raised pre-seed funding before raising a full-seed round at the end of 2018.

While she appreciated the funding, she said many of the investors who provided pre-seed capital ended up joining as advisers, working closely with the business to help raise capital as well as provide assistance with the company’s outlook.

“Up until that point we were a bit isolated; there were just four of us, and because we were so busy running a startup, we hadn’t engaged with the Perth community to that point,” Ms Olivier said.

Perth Angels were such a valuable resource for us.”

Angel investment enjoys a solid reputation throughout the US, the UK and Israel as an alternative investment class.

In Perth, knowledge of the practice has increased in recent years as Perth Angels has ramped-up efforts in the local business community.

For Mr Riebe, who helped co-found Perth Angels in 2009, the organisation came about because he and other founders saw a gap in available funding for early-stage ventures in Western Australia.

“One thing we’ve found is that Perth knows how to buy investments through the listed environment or through property, but it isn’t quite as aware of the disciplines of engaging in early-stage ventures,” Mr Riebe told Business News.

“WA punches above its weight in a raft of different areas, and though there has been growth on the entrepreneurial side, there hasn’t been commensurate growth in the private investment community in how to get to the early stage.”

He said that challenge had become more pronounced as a result of the ASX and Australian Securities and Investments Commission’s requirement that businesses hold higher amounts of capital before they can engage publicly.

“The lack of capital has put more pressure on those early-stage ventures,” Mr Riebe said.

“When we see a growth in entrepreneurialism that’s not commensurate with private investment, there are fewer opportunities for the ventures to grow because they need capital to take off.”

According to Mr Riebe, Perth Angels has provided $4 million in funding to startups across the city since 2010, with some of the organisation’s most notable graduate including Rhinohide, Renewable Energy Solutions Australia, and The Volte.

Primarily, the organisation interacts with startups through quarterly pitch nights, as well as annual breakfasts and education events held during angel investment month.

So far this year, investors have already provided $60,000 in funding to Perth startups with two deals under due dilligence, with $796,000 disbursed in 2018.

Ramiz Boulas, a researcher with a background in green technology, had previously addressed the Perth Angels, and in June went back to pitch his new business, Veratin.

The business, which started when Mr Boulas considered novel uses for human hair, eventually developed Verigrow, a product that converts low-grade sheep wool into a liquid fertiliser rich in amino acids.

Though Mr Boulas had pitched to the group before, he said the feedback and the chance to communicate his idea to a more general audience was valuable to him.

“I’m a scientist. I’ve spoken at many conferences and I’ve had my share of media exposure, but of course when you have an idea close to your heart … criticism might be hard to take on board,” he said.

“But there are things that you sometimes don’t think about that someone from the outside sees differently, and that diversity of perspective is valuable.

“There was a lot of interest from my pitch and insights I took on board which will help with the future direction of the business.”

As entrepreneurs such as Mr Boulas return to pitch new ideas to Perth Angels, an awareness of angel investment and private investment generally in Perth will likely follow.

Likewise, Mr Riebe said he was starting to see entrepreneurs who had achieved a level of success feel confident in their ability to grow a business.

“They’re applying their own financial capital and intellectual capital into helping other early stage ventures grow,” he said.

“There are a lot of exciting emerging ventures, which, if you know how to participate at that early stage, you can help grow and do very well.”

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