Mark Abernethy is a professional writer and financial journalist who has made business angels an area of his expertise. David Heidtman is a partner of the Sydney firm David Heidtman & Co, specialising in small business and venture capital. BUSINESS ANGELS • How to be one • How to find one • How to use one Mark Abernethy with David S. Heidtman ALLEN & UNWIN Copyright © Mark Abernethy and David Heidtman 1999 All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without prior permission in writing from the publisher. First published in 1999 Allen & Unwin 9 Atchison Street, St Leonards NSW 1590 Australia Phone: (61 2) 8425 0100 Fax: (61 2) 9906 2218 E-mail:
[email protected] Web: http://www.allen-unwin.com.au National Library of Australia Cataloguing-in-Publication entry: Abernethy, Mark, 1964-. Business angels: how to be one, how to find one, how to use one. ISBN 1 86448 740 2. 1. New business enterprises. 2. Venture capital. 3. Angels (Investors). I. Heidtman, David. II. Title. 658.15224 Set in 11/13pt Sabon by DOCUPRO, Sydney Printed and bound by Griffin Press, Adelaide Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the relevant copyright, designs and patents acts, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publisher. eBooks Corporation Contents 1 What is a business angel? • In the beginning • Angels of theatre • Migrant angels • Angels today • A motley crew • The foreign examples • Australian angels: an overview 1 2 Business angels: one name, many breeds • Retirement • Redundancy • Cash-out angels • Women angels • Career angels • Buy-out angels • Money-only angels 19 3 Angels: why do businesses need them? • Cash flow • Growth capital • Management skills • Essential skills and expertise • Risk capital • Accountable staff • Succession 35 4 How do they meet? • Personal networks • Business networks • Networks in the subgroups • Accountants and solicitors • Introduction registers • Conclusion 55 5 The courtship and the deal • Screening • Getting to know you • Weighing up • The exit 77 6 Finalising the deal: accountants and lawyers • Due diligence • Comprehensive warranties • The agreement 103 v BUSINESS ANGELS 7 8 Living together • Rules for living together Meet some entrepreneurs and business angels • The conservative angel