WESTERN Australian entrepreneurs and start-up companies will be the main beneficiaries of a new funding collaboration, Founders Forum, that is designed to harness the wealth and knowledge of WA’s angel investors.
Angel investors are crucial in the innovation funding chain and typically invest anywhere from $50,000 to $2 million at early stage company development.
Forum’s founder and interim chairman Matt Callahan said there was about $9.3 billion invested by angel investors in the 1990s in Australia but there was the potential to triple that figure through initiatives such as Founders Forum.
Mr Callahan, also a WA Business News 40under40 winner, said gaining access to angel investors was difficult for emerging companies because the “angels” wanted to remain anonymous.
On the other hand, he said, research showed angel investors were finding it difficult to track down new investment potential.
“I had been through this process myself. I was trying to arrange money from angel investors and not getting anywhere. I found it very inefficient,” Mr Callahan said.
“Due to research I’ve done with colleagues, there is a noticeable gap between angels and companies looking for investment.
Modelled on the Founders Forum launched in Queensland three years ago the WA forum’s aim is to bring together angel investors with companies seeking investment while maintaining the angels’ anonymity.
“This provides a process whereby early stage companies can get in front of investors and pitch their cases,” Mr Callahan said.
“We act as the organiser and to help screen and coach projects for presentation at the forums.
Mr Callahan said the group would also help spread the investment risk among angels, which was a popular angel investor group model in operation in the US and Europe.
Speaking at the WA Founder’s Forum launch last Thursday, The Evandale House Group executive director Sciona Browne said there were many benefits evident from angel groups operating in the US and Europe.
“Angel groups in the UK and the US have huge success rates,” she said.
“They are better financed than individual investors and the groups provide an extended network.”
Queensland’s Founders Forum was the brainchild of Rick McElhinney who attended the WA Founders Forum launch.
“We talked to the investors to understand their concerns and fears for not investing,” he said.
“We worked out how to ease those fears. It’s sometimes easier to go home and tell your wife you’ve invested $100,000 and lost it, but five other people did too rather than losing $500,000.”
Mr McElhinney said one in three projects get money invested in them.
Mr Callahan said the forum would help unearth business mentors who are crucial to the development of emerging businesses.
“This will hopefully activate the tier two angels,” he said.
“Tier one angels have an abundance of money but not very much time to invest their business knowledge in a company.
“Tier two angels have less money, but still money to invest, but they have time to invest as well.”
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