Home' Forge : Vol 3 No 1 Contents 40 // cover story
funds are emerging that take a
portfolio approach to investing,’
he says. Examples include Artesian
Ventures and 500 Startups, both in
the United States.
‘Angel investors are also starting
to rely on accelerators, incubators
and other programs as a filtering
mechanism, and to make sure that
proper due diligence is undertaken
on the start-ups to minimise risk
around their investment, and that
they are adequately supported
throughout their early development
stages,’ says Townsend.
He says that incentives
introduced under the federal
government’s National Innovation
and Science Agenda, such
as a tax offset on early-stage
investments and capital gains tax
exemptions, are also attracting
more angel investors and more
capital to the start-up ecosystem.
In terms of what it takes to
successfully attract an angel or
group of angels, an essential
element is a clear focus on what the
business or product’s unique selling
proposition is, and the market
for which it has been developed.
Angels also want to understand
how the team is structured to pursue
opportunities and drive growth.
Townsend is presently invested
in OMX Solutions, a medical
technology company using digital
innovation to address surgical
‘The founder has a clear vision of
improving patient outcomes in
the craniomaxillofacial surgery
field to transform surgery and
the lives of patients. OMX
Solutions has a well-defined
focus, a world-leading product,
and a very strong team in design,
engineering and marketing, which
makes [the company] an attractive
investment,’ he says.
Technology is the main game
While medical start-ups are
popular with angels at the moment,
technology more generally is also a
focus for these investors.
Bevis Cheng, CEO and co-founder
of The Hacker Exchange, says
there’s currently a lot of excitement
around virtual reality (VR) and
augmented reality (AR).
‘These are still very nascent
platforms with limited content.
The recent success of Pokémon
Go has shown the commercial
viability and success of AR in
gaming. But beyond that, there is
still a lot of application in other
sectors, particularly in tourism,
real estate and even medical
fields,’ says Cheng.
He says that among angel
investors to whom he has been
speaking in Silicon Valley,
artificial intelligence (AI) and
machine learning are also areas
of particular interest, particularly
their applications for big data.
‘There’s huge potential in being
able to structure and provide
meaningful output from vast
volumes of unstructured data,’
Given their saturation point in the
market, however, Cheng says that
apps are an area about which angel
investors are more circumspect.
‘There’s already an app for
everything. Whatever app new
entrants are pursuing, chances are
there are already dozens of people
out there doing exactly the same
thing. Alternatively, it’s likely that
something similar already exists,
and the incumbents are most likely
better resourced and better financed
than the new guy,’ he says.
When it comes to securing funding
from an angel, Cheng says that the
angel needs to be confident that the
founder and his or her team have
the ability to build a commercially
‘We want to know that the team gets
along, and we need to understand
their chemistry. We also need to be
comfortable that we can work with
Other factors he considers before
committing funds to a project
include an assessment of the market
size, and a close appraisal of the
solution to ensure that it addresses
a real problem or creates a new
market, including how profitable or
defensible it is.
‘Each angel group has its own due
diligence checklist,’ says Cheng.
‘These are the key aspects of the
business they would look at first.’
Angel investment is a powerful
form of funding, as well as a source
of expertise and contacts for early-
stage ventures. Founders who can
show that they have a point of
difference or a genuine solution to
an existing problem have a good
chance of attracting an angel or a
group of angels to help take their
company to the next stage.
See next page for more on crowdfunding.
CEO, Neo AI
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