Overview

Anyone can see the value of an investment once it has taken off. The trick is identifying the potential before too many others jump on board and drive the price up.

In recent years, early stage investing has become more popular. According to the Australian Association of Angel Investors some 16,100 angel investors put $1.7 billion into around 5,000 early-stage companies in 2008.

Traditionally the opportunity to invest in a business before it floats (what I call ‘early stage investing’ has been the province of professional investors, venture capital funds, private equity funds and well connected high net worth individuals, with ‘retail’ investors only given the opportunity when the firm goes public in a Stock Exchange float.

The Chart on the right shows the notional investment stages and the likely cash flows of an emerging enterprise. Most Venture Capital firms have moved upstream, partially because they need to chase bigger deals, and partly because they want higher proof of concept or more market validation.   This has left a gap in funding availability for early stage companies who may have raised money from friends and family but are not mature enough to attract most Venture Capital firms.   These types of investments have also become more affordable, and it is common for companies seeking support in this arena to offer parcels of below $50,000 and as low as $15,000, with multiple parcels available.

The typical early-stage investor is a relatively high net worth individual who has the ability to make speculative investments, but even this is changing with a range of offers available, and more self-managed super funds looking to spice up their returns a little. After recent losses on the ASX, many investors might be cautious, but it seems they are more likely to consider alternatives.

There are other advantages of this type of investment – it generally means you get a closer look at the business and can become more involved in its success. It is a more personal, involved style of investing. There can be opportunities for direct assistance, and of course if all goes well there are considerable bragging rights.

Because unlisted shares are not traded as readily as a listed stock, they don’t experience the same level of fluctuations and volatility, they are longer term value-accumulating investments.

Many new ventures tackle important social and environmental concerns and the opportunity to support these and help create employment at the same time appeals to some investors social conscience (although this should always be a secondary benefit behind the commerciality of the opportunity).

By registering as an investor with Transition Capital (required under Corporations Law), you will enter into an exclusive club with access to the deals that we are putting together and promoting from time to time.

Only by registering will you gain access to The Transit Lounge – where all our deals are listed and more detailed information such as Offer Documents or Information Memorandums can be downloaded.

As active consultants in this area, we are constantly evaluating business opportunities and helping entrepreneurs to build their futures. Our involvement and specialist advice mitigates some of the risks to investors, as only propositions we have confidence in are put on our site.