Business partnerships made in heaven

SIMON COLLINS reports on a service matching entrepreneurs with business "angels" wanting to invest in new companies.

Aucklander Craig Ellmers is hoping that skyrocketing credit card fraud will soon earn him a fortune. No, he's not planning a scam. But after 17 years working to minimise credit card fraud risk for banks, he has a product he believes the whole world needs - urgently.

He has also found an "angel" who has sunk $250,000 into giving him a chance to make it work.

Matching Mr Ellmers with his angel, Patrick Draper, is one of the first success stories of a new business "dating service" called Mentor Investor Network Events, or Mine. The next Mine event is on November 29.

"We expect to gross $2 million in the first 12 months, conservatively," says Jenny Durno, the founder of Phoenix Recruitment and now a director of Mr Ellmers' company, Safebiz, after he went to her for contract work while developing the business.

"I couldn't find him any contract work, but I loved the business," she says.

While the internet has made buying and selling much easier, it has made fraud easier too. Fraud on non-face-to-face credit card transactions has risen from 1.3 per cent to 5 per cent of all transactions, and is still rising.

Mr Ellmers has used his years of experience to develop a set of almost 80 risk factors that can now be used to ring alarm bells right from the start.

"For example, if the address of delivery and the address for the bill to be sent to are different," says Ms Durno.

"There may be nothing wrong with that. I may order wine to be delivered to me at work and ask for the bill to be sent to me at home."

But if enough of the risk factors raise similar doubts, the merchant may be well advised not to accept the sale.

Safebiz is developing the software to allow all 80 risk factors to be assessed in just three to five seconds, producing a recommendation to either accept or decline the transaction.

The company is negotiating with insurance companies, who will offer policies guaranteeing all transactions where Safebiz recommends acceptance.

Patrick Draper, a successful entrepreneur in his own right, says he decided to back the business because he was looking for "a global product that had huge potential".

"We liked Safebiz, and we liked the people behind it."

Mr Draper founded Esteem Jewellery a few years ago with business partner Dermot Kelly. The jewellery business is now turning over $8 million a year.

"We have freed up time from there and are looking at new opportunities," he says.

"They [Safebiz] get their idea to market. We bring in the capital and ... whatever else the enterprise needs to get to market."

Mr Draper and Mr Kelly have formed a new company called the Department of New Ideas, and are already looking for other investments.

When they read in the Herald about the first Mine seminars earlier this year, they approached the organisers, Industrial Research, and helped put together the invitation list of 48 potential angel investors for two seminars in Auckland and Wellington.

About 700 would-be entrepreneurs answered advertisements seeking the chance to promote their business ideas to the angels. Mr Draper and Mr Kelly helped to whittle these down to just 12, who were given 10 minutes each at the Auckland seminar, and eight in Wellington.

The next seminars are in Auckland on November 29 and Wellington on December 6.

Industrial Research's general manager of business development, Geoff Todd, says he hopes to extend the idea to Christchurch and Palmerston North next year, and is looking for funding from Industry NZ.

"We figure that we can build the network up to the next level where the value we provide everyone can at least be enough to cover the cost," he says.

"In the US, these angel networks are usually sponsored by someone until they become self-sustaining. We'd take some fee from successes."

GEM Special Report