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The new ‘Shark Tank’ app for newbie tech investors
By David Swan
A new “Shark Tank”-style platform is enabling mum and dad investors to back the next Australian billion-dollar technology businesses, as the ongoing fundraising freeze begins to thaw and start-ups begin to again seek external investment.
The new online platform, dubbed AngelClass, is free to use and designed to match prospective investors with start-ups, better educating them before they dive in and cut their first cheque.
AngelClass is the brainchild of Inhouse Ventures partner Elliot Spiegel, who said opportunities to back high-growth start-ups such as Canva have typically been limited until now to sophisticated investors.
Inhouse Ventures partner Elliot Spiegel wants more people to feel capable of investing in tech start-ups.Credit:
AngelClass is capitalising on Australia’s 20/12 rule, says Spiegel, which allows a company to make offers to as many as 20 investors in any 12-month period without needing to prepare a full prospectus.
Anyone with $10,000 or more to invest can become an angel investor on his platform.
“Angel investing is risky by nature, and we’re providing all the tips and tricks they need,” Spiegel told this masthead.
“Once they’re set up, they get access to Inhouse Venture’s large community of founders where they can play shark and search our community for the next money spinner.”
The platform is industry agnostic – it features AI companies, AgTech and everything in between – and Spiegel said it now features more than 900 founders who have created start-ups at all levels of maturity and size.
“This is an opportunity for people to enter the ecosystem,” he said. “Years back, I was seeing all the Blackbird investment news and AirTree news and thought I should get involved, but there wasn’t an easy bridge for me to do that.
“That’s why we’ve created this – it’s a way for mums and dads who might have an investment property for example, they might want to expand their portfolio and start dabbling in start-up investments. This platform can help marry them with the types of founders they might be interested in based on their industry and insights.”
Canva has made millionaires out of its early backers.Credit: Bloomberg
Data from Cut Through Venture shows that after a prolonged investment drought, the capital raised by Australian start-ups is up 30 per cent year-on-year, with interest particularly strong in AI and big data start-ups.
Already on the AngelClass platform are high-profile local angel investors including Peter Moore, who sold his company to Atlassian in 2010, and Simon Rossi, Uber Eats Australia’s first employee.
The investors appear in a series of masterclasses, where they share their learnings and insights on how to improve and refine an investment strategy or make fewer mistakes, as well as tips for “unicorn” hunting.
“There are so many start-up investment opportunities out there that finding and picking the right ones is the critical component,” Rossi said.
“The traditional way of start-up investing is knowing somebody who knows somebody, and then it always happens over email. This is a much better way of doing things.
“I don’t know if it’s right for everybody, because it is high-risk so you need to be able to stomach that risk appetite. My approach to angel investing is very much about going wide, and what that means is making more smaller investments and knowing most will fail, but you make your returns on the few that do hit.”
The AngelClass program joins a number of similar existing programs, including Airtree Explorer and Aussie Angels, which are both designed to encourage more people to become angel investors and educate them on dipping their toes in the water.
Maxine Minter is an angel investor in start-up companies.Credit: The Age
Maxine Minter is an angel investor on the AngelClass platform and said that Australia still collectively invests a tiny proportion of capital into tech start-ups compared with investors in the United States.
“It’s awesome to see these education offerings pop up; they’ll do a lot for the local sector,” Minter said. “You’re going to have folks out there deploying $10,000, which becomes $20,000 and then $100,000 over the course of 10 years, if they’re good at it.
“And for start-ups, their cap table should be like a group of Avengers, all bringing different things to the business – ideally, very strategic things.”
A recent court stoush between mattress maker Sleeping Duck and its largest investor, Adir Shiffman, highlighted some of the common pitfalls of angel investing, Spiegel says.
Last month, Melbourne’s Supreme Court ruled against Shiffman, who had sued Sleeping Duck alleging he had been frozen out of the company and “oppressed”, or effectively omitted from key product and marketing decisions.
Spiegel said common pitfalls for first-time investors included putting too much money into their first investment round so that they couldn’t support future rounds, and falling in love with the founder rather than doing due diligence on the business model or problem.
Sleeping Duck co-founders Selvam Sinnappan (left) and Winston Wijeyeratne.Credit: Daniel Hartley-Allen
“If we can help more founders succeed, and more investors succeed, and do that at scale then that’s our job done,” Spiegel said.
“We want to be able to improve the success rate of Australian start-ups.”
Johnny Timbs is a co-founder of EdTripper, a start-up for time-poor teachers to find educational activities outside the classroom. EdTripper recently raised $50,000 through Inhouse Ventures.
“EdTripper is my fourth start-up, and I wish they had been around sooner,” Timbs said. “Inhouse takes all the scary stuff out of looking for investment. Raising capital is such a time-consuming process at any stage of a business, and taking the first step is always the hardest. The way Inhouse connects founders to investors is personal and meaningful.
“I would love to see more everyday Australians as angel investors, but also anyone who is in a position to think about angel investing has more to give than money. Being part of the community and joining a founder on their journey is often the best part; your experience and knowledge are often much more valuable than a cheque.
“I think the collective knowledge of the community is of huge benefit to the start-up ecosystem, and getting a 10x exit beats any super fund by a country mile.”