Port Moresby, PNG
Kuala Lumpur, Malaysia
What is an Angel Investor?
Originally, the term “angel” was coined to refer to the people who financed
Broadway plays when all else failed. Today this term has become common
among the investment community to refer to a high net-worth individual that
invests their own personal funds in various businesses. In Australia, it is
estimated that there are well over 200,000 potential angel investors that
annually invest approximately $500 million in Australian businesses and
currently own over $1 billion in existing equity. This represents roughly 7% of
what the banks are investing. As well, statistics show that this figure trumps
that of venture capital lending. The Australian labour market and productivity
centre estimates that angel investments have financed approximately twice as
many firms as any other form of external equity investment, including
institutional venture capital.
Who is a typical Angel Investor?
Angel investors are often retired entrepreneurs or executives, who may be
interested in angel investing for reasons that go beyond pure monetary return.
These include wanting to keep abreast of current developments in a particular
business arena, mentoring another generation of entrepreneurs, and making
use of their experience and networks on a less-than-full-time basis. Thus, in
addition to funds, angel investors can often provide valuable management
advice and important contacts.
What is the difference between an Angel Investor and a Venture Capital
Angels make their own decisions as opposed to a board or group of people
making a decision for investors that have pooled money together. Angels tend
to be more involved in the businesses that they invest in and provide
assistance in ways that venture capital firms do not. Angels typically do not
own as large a stake in the company as a venture capital firm would. Another
benefit of being an angel investor is the reception of certain tax incentives
from investing in Australian controlled small businesses.