By YOKE HAR LEE
"Angel" investors tend to be men in their middle years, and they typically reject more deals than they accept.
But beyond that the informal venture capitalists defy attempts to classify them too much.
Associate Professor Kevin Hindle, who is also director of entrepreneurship research at Swinburne University of Technology in Melbourne, told the Business Herald that most international studies tried to classify angel investors.
"The only really big thing to emerge is business angels defy categorisation ...
"By definition they are informal providers of risk capital," he said.
"They operate outside any official programmes. Each one has his own rules or behaviour network."
However, common features emerged in studies done in Britain, the United States, Japan, Singapore, Norway, Finland and Australia:
* Angels were almost all middle-aged men.
* Whatever their educational level, almost all had management experience.
* They were likely to have direct experience at starting businesses.
* They usually invested close to home.
* They invested in earlier stages of projects than formal venture capitalists.
Professor Hindle said understanding how angel investors behaved was becoming important as informal capital was an increasing factor in high-growth businesses.
"What you want to know about is the guy who will fund your business ... Everybody in these sorts of studies seems to want to search for the average family with 2.3 children or average angel with 3.1 characteristics.
"Surely that's not the point. The point is to be as knowledgeable about the process as you possibly can, and then get into the particulars of the person relevant to you to build the relationship.
"We started with the view, in the international study, that some insight might be revealed," said Professor Hindle.
"But our conclusion was the differences between the samples ... make it unsafe to draw overall conclusions on most aspects of angel attitudes and characteristic."
Studies showed that business angels tended to reject fewer deals, but they also invested smaller amounts and used a wide variety of sources to find the businesses.
"This has implications for services who try to do the matching-type business," Professor Hindle said.
"They tend to think they can be the one-stop shop. I think that's going to be proven a myth."
The demands that business angels made of their investments also tended to vary, he said.
Australian angels, for example, wanted a return on their money in three years.
Japanese angels, however, could be quite patient, waiting as long as seven years.
Similarly, entrepreneurs who had relied on angels for funding could either speak highly of them or not.
Those who had angels with backgrounds in formal capital found them useful for management expertise and market networking.
Otherwise, they could be a pain.
Professor Hindle said it was hard to pin down how much angel money was sloshing around.
"It is being facetiously said in Australia that for every dollar of formal capital available, there is 10c of informal money available."
But he thought angels probably outspent venture capitalists, and in the United States informal money was even more common.
"In the US, there is a kind of unsubstantiated rule of thumb that for every dollar that would go to formal funding for venture capital industry, there is $10 that would come from the informal venture capital."
Australia, and possibly New Zealand, did not have the same entrepreneurial culture, said Professor Hindle.
"America understands it more, values it more. It deals with it everyday."
'Angel' investors defy attempts to pin them down
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