News
Issue No. 38 - December/January 07/08
Business Angels fill the gap
A funding gap at a very important phase of business startup is holding SA innovation back and the Venture Capital Board is hoping for divine intervention to plug it.
While programs such as VCB’s Equity Ready can help ventures take off commercially, how they get funded from there - to the point where a major investor will take interest - is too often an open question.
‘Business Angels’ can fill the gap - if there are enough available and the startup is properly packaged. The VCB hosted a session recently to update the business community on business angel activity with presentations from three local angel investors.
When he arrived three and a half years ago, technology entrepreneur Matt Michalewicz was startled by the “very limited visible capital” available in SA. He says lack of “the seed capital that gets things going” is a “very limiting force” since innovators need early stage, high risk capital to prove their concepts because embryo stage is too early for VCs.
This is vital work, Matt points out, because if startup funding is scarce, fewer projects get to market and fewer jobs are created “all because a critical part of the cycle is missing”.
“We need more visible capital sources for entrepreneurs and innovators to access,” Matt says, and describes business angels’ work as “building linkages in the capital pipeline”.
Matt had plans to create a $5 million ‘Angel Fund’ but found Australian financial regulations are “not conducive to funds of that size”. So he joined others in SA Angels, a recently established, informal group suited to entrepreneurs looking for first-round capitalization.
Matt says many entrepreneurs and innovators don’t know how to package their opportunities and don’t know what investors expect. His TechMentor program, which offers entrepreneurs advice, guidance, and motivation during the start-up and fundraising phases, now has 26 ...
