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Australia needs to get better at angel investment: Spreets founder

Thursday, 9 January 2014 | By Rose Powell

Spreets founder Dean McEvoy has called for local angel investors to get better and faster at investing in start-ups at a recent angel investor education program.


“We all need to learn a little bit more about angel investing,” McEvoy said. “It’s so important we build the education of the angel community here because we need to be better angel investors because if we don’t we’re going to miss out on all the good deals.”


McEvoy shared he had pitched Spreets to some people in the room, but would have loved to speak to more of them because he would rather have given an 18 times return on their money to an Australian angel rather than some strangers in Europe he didn’t know that well.


“It’s not Aussie versus US investors. It’s really about tech versus non-tech investors,” McEvoy said. “The Australian investors here who have technical experience act exactly the same way, if not better, than the US investors.”


McEvoy explained local angel investors could brand themselves as smart, big or fast money.


He added that as most angel investors don’t have the cash to be big money and many lack experience running a tech start-up and couldn’t be smart money, that left fast money.


“You’re only option is to be fast money here in Australia, because if you can’t be the fast money you’ll miss out on the good deals which will find the smart or big money elsewhere,” McEvoy said, adding angel investors should try to make their decisions within two weeks.


Serial angel investor and partner at Blackbird Ventures Bill Bartee said angel investors need to know what they’re getting themselves in for.


“The idea is you can do angel investing for a whole range of reasons: to make money, to have fun, because it’s a passion or a hobby,” Bartee says. “You have to remember that even though angel investing is hard and fun, many die, some survive and a few thrive. You have to have that in mind when you do invest because that’s just the nature of the game.”


He went on to outline the angel investment ecosystem in the US and Australia.


“In the US it’s quite a big market,” Bartee said, citing statistics from the most recent Halo Report that revealed $US20 billion is invested in angel deals each year in the US.


These funds went towards 60,000 companies, 80% of which were seed companies. Bartee described the average deal size as between $10,000 and $100,000.


The Australian angel investment scene is still emerging. Bartee said they were 12 to 14 angel groups and incubators, including Innovation Bay, Pollenizer and Startmate, as well as several micro venture capital firms such as Tank Stream Ventures, Carnegie and Blackbird.


McEvoy added the local community needed to be careful as it developed.


“There is a bit of high-fiving when a great deal is done, but actually there are a few people who’ve been screwed over and we need to make sure we’re not going to axe our own angel community here,” he says.


Angel investor community Innovation Bay and entrepreneurial community hub Pushstart coordinated the series. They’ve recently uploaded videos of the key presentations here.