Ambitious SME Seeks Angelic Investor for Mutual Growth

By MARK ABERNETHY, The Australian Financial Review, 7th November 1995

WHILE governments devote money to the matching of cashed-up investors with small and medium enterprises, a private investor-matching service has been making inroads in Melbourne.

Business Angels Pty Ltd is a Melbourne human resources company that once specialised in the matching of tenants for share housing, house-minding and joint house buying.

In 1992, however, company director Ms Christine Kaine saw the changing face of Australian business from a social perspective, and started a service that would match equity investors with SMEs that needed growth funds.

The result is a business that thrives despite competing with two publicly funded Chamber of Commerce projects ? the South Australian "Ideas and the Investor" scheme and the Victorian "Business Finance Support Program".

Ms Kaine's idea of turning her interviewing and human resource management skills to matching investors and business came about when she was looking for a business angel herself.

"I thought to myself, 'We match people all the time? why can't we do it in business?' "

Business Angels was formed, Ms Kaine started matching investors and business people, and she even found her own business angel to buy into her business and share some of the expenses.

Business Angels charged both investors and business people $300 to enter the database. All applicants were rigorously interviewed and advised to seek help from their lawyers and accountants before signing a deal.

Three years later, Ms Kaine has made "hundreds" of business introductions, many of which have become full success stories. Just recently, one of her introductions yielded an investor willing to invest $1 million in an SME.

"We are seeing an incredible influx of investors here at the moment. The typical profile would be retired men coming out of the corporate sector. They have these fabulous skills and all this experience ? and they can all lay their hands on $100,000."

Ms Kaine said Australia was experiencing a major social upheaval that saw an increasing number of executives retiring early or being forced out, and then not wanting to return to the corporate arena.

"I say this often, but I believe it's true ? the leaking of Australia's executive class and the growth of investors wanting equity in small business are absolutely linked. This is a human resource issue, not a financial one. We should start treating it as a social issue.

"There are many more free agents now than there were in the '80s. Some of these highly skilled people are placed on contract by a corporation, rather than being employed as such. It doesn't suit everybody, and now a lot of these men want to buy equity in an SME and work alongside. They want to throw themselves into a challenge and do something for themselves.

"Many of the angels listed in our service are being head-hunted by the corporations left, right and centre. But they just don't want to know about it. From our experience, corporate Australia is losing its best people, and it'll never get them back."

Ms Kaine said although many of the investors on her books had large amounts of capital available to invest in the right company, it was not always money that small businesses wanted.

"A significant number of our businesses do not really need capital ? they are doing all right on that front. What they're looking for is a partner to come on board with his skills, his experience, and most importantly, his contacts."

Business contacts became especially important when SMEs wanted to expand into export markets, she said. From the investor's perspective, the attraction of buying equity in a smaller business was as much a social consideration as an economic one.

"These investors want autonomy and independence. They're dropping out of the rat race and opting for individuality, which is the very essence of the SME."

Ms Kaine said her interviews with the angels showed that many of the investors had committed so heavily to going it alone with equity investment that they no longer even wanted to play the stockmarket as a form of investment.

Return to the press articles page