Where Angels do not Fear to Tread

By SUE MITCHELL, The Australian Financial Review, 8th February 1994

A MELBOURNE woman with little experience in the world of finance or investment has done what employer associations and private enterprises have been trying for years to achieve.

Ms Chris Kaine has set up a "business angels" bureau, matching small businesses in need of equity capital with investors with money to spare.

Business Angels Pty Ltd was launched just over a year ago. In that time, more than 100 businesses have registered, and eight matches have been completed.

Meanwhile, the Victorian Employers Chamber of Commerce and Industry has been developing a business matching program for almost two years and is seeking funding from the Federal Government for a pilot program.

In Sydney, a consortium of companies and business people has spent more than five years developing plans for an electronic noticeboard of private businesses seeking equity, but has been bogged down by securities market legislation.

Ms Kaine didn't give a second thought to potential bureaucratic hurdles when, almost two years ago, she saw a newspaper article about business angels and immediately registered the name.

She had run a share accommodation and house-minding service in Melbourne for several years and believed her experience in matching people would help her match businesses with investors.

Ms Kaine looks first at the personalities of the parties, then at the skills they have to offer and lastly the amount of money involved. At that stage, clients are advised to discuss the investment with their accountants or legal advisers.

"A good way of describing what we do is a third generation Yellow Pages with personal intervention," she said.

Ms Kaine believes small businesses need to think seriously about selling equity in exchange for the finance or skills of investors who could help them.

The banks aren't there to lend risk finance, so why don't those businesses, rather than mortgage their homes, sell some equity in their business for five years and get the help of the investor," she said.

"The company will be developed and in five years the owners can buy back that equity or another business angel can come in and develop it further.

"We've got a new wave of people made redundant who have terrific skills to offer small businesses needing that help," she said.

Clients on the Business Angels register are typically seeking about $100,000, while most investors have between $20,000 and $50,000 to invest.

Ms Kaine is keen to see a national network of business angels established  not necessarily under the auspices of her own company  and has discussed the issue with the Federal Government's small business unit.

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