Business Angels Come Forth to do Good Works

By SUE NEALES The Age 2nd July 1992

Ray Spencer doesn't look much like your average angel. But, in the latest jargon of the American and British corporate world, the former concrete sales manager from Templestowe is a business angel of the highest order.

Along with hundreds of other business angels in Australia, Mr Spencer has sunk $100,000 of his early retirement lump sum into a plaster moulding business run by a younger partner, Mr Michael Peck.
And, with lack of venture finance being the most common reason that so many new firms fail, these so-called business angels are starting to seem like manna from heaven for struggling small businesses being run on a wing and a prayer.
Dr Colin Mason, a British specialist on the business-angel phenomenon who was recently in Australia, estimates that these investors are now a more common source of business capital than the tight-fisted banks.
Most business angels find their prospective partners by chance or through previous business contacts, but Dr Mason talked to Australian business groups and the Minister for Small Business, Mr Beddall, about making the haphazard system more effective.
"These small, growing businesses typically only want between $50,000 and $200,000 financial backing," Dr Mason said. "But they are too small to go to something like the Australian Stock Exchange to raise the equity, and the banks will only provide them with loans which would make them too vulnerable because a lot of their profits would be taken up paying interest. So that's where the business angels come in."
Dr Mason said that in Australia, Britain and the US, most business angels are in their mid-50s. Most are executives or entrepreneurs who have either taken early retirement or sold off their own companies, leaving them with spare cash
And most want to buy into a small firm where they can benefit from a sound investment return, while also being able to play a part-time role in advising and, sometimes, managing the business.
Mr Spencer openly admits that when he became a joint investor with Mr Peck in the Gippsland-based plaster factory three years ago, the investment motive wasn't the only reason.
"I wanted to do my own thing and get more job satisfaction, but preferably in an investment related to the building industry which was what I knew best," Mr Spencer said yesterday.
"And while I didn't particularly want a full-time job, I did want to buy myself a part-time job because I knew at my age I wouldn't be getting too many outside job offers."
In common with many business angel relationships, Mr Peck and Mr Spencer have divided the running of their Architectural Custom Moulding business along their own lines of expertise. While Mr Peck runs the Heyfield factory and the production side of the business full-time from Gippsland, Mr Spencer works two to three days a week in Melbourne in sales and accounts.
"It's been a partnership which has worked out well," said Mr Spencer. "We both have the same cultural background and want to see the business succeed financially, without treading on each other's toes."

This is where it all started - Christine Kaine read this article in The Age and realised that she had the business systems to match investors with businesses. She registered the business name on the same day this article appeared.

Return to the press articles page