CROSSWAY CAPITAL Sydney, Australia Port Moresby, PNG Singapore Kuala Lumpur, Malaysia Taipei, Taiwan 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 firm? 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. 1