It's not just heaven that's missing an angel

There is a major lack of angel investment in the biotech industry in Australia, according to investment groups such as Tinshed and Rothschild Bioscience.

Angel investors are private investors who invest small sums of money into start-up companies at an early stage of financing. Investment is usually relatively small, from as little as $100,000 to $5 million.

Over the last few years they have played a vital role in the early-stage progress of many Australian biotechs, but they are elusive by nature -- and there aren't enough of them.

Australian Venture Capital Association Limited (AVCAL) CEO Andrew Green said that it was hard to track the amount of angel investment into Australia companies.

"Angel investors are by nature private," Green said.

"Commonly, people who would invest in biotech would usually have made money in biotech" -- and as the industry was still young in Australia, there were probably not many people around who fit that category.

"We don't have a large number of high net worth individuals in Australia yet," he said.

Janusz Hooker, managing partner for Tinshed, one of the leading angel investment groups in Australia, said that at present the group was not focussed on angel investment into the biotech industry.

"It is an area we would like to get into, but we haven't had the time," said Hooker, explaining that currently the group doesn't have the right in-house skills for investing in biotech.

But Tinshed does co-invest in biotech venture capital funds, such as the Rothschild fund.

Hooker said that he believed there was a hole in the biotech investment market when it came to angel investment.

"There is a huge opportunity for some earlier-stage investing in the biotech industry," he said. But the long-term nature of biotech commercialisation and the specialised knowledge required to evaluate opportunities were complicating factors for investors.

According to Jeff Swingler, managing director of Alpha Centauri, angel investors tended to be selective. Alpha Centauri provides "filtering services" for investors, he said.

"For most of the angel investors that have money, they see more proposals than they have the capacity to invest in," said Swingler.

Rothschild Bioscience's Dr Julian Northover said that the Federal government was aware of the gap in early stage funding and was in the process of setting up a pre-seed fund to address this gap.

The Pre-Seed Fund is a competitive fund to assist the commercialisation of public sector R&D. The fund will be matched by the private sector in a 3:1 Commonwealth to private capital ratio.

"There is absolutely a need for individuals and groups to invest in early-stage biotech," Northover said.