Guide for investors

How to become an angel investor in Australia

Learning how to become an angel investor in Australia starts with the rules, then moves quickly to deal flow and judgement. This guide covers eligibility, tax incentives, how to find startups and why most angels invest alongside others.

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General information only, not financial or legal advice.

Angel investors at an Innovation Bay event in Sydney

How do you become an angel investor in Australia?

To become an angel investor in Australia, most people first qualify as a sophisticated or wholesale investor, which lets startups offer them shares without a full disclosure document. From there, you build deal flow, decide how much to put into early-stage startups, and usually invest alongside other angels through a network, syndicate or community.

Many angels are former founders or operators, but the common thread is patience: angel investments are high risk and can take years to return money, if they do at all.

Sophisticated investor rules

Under the Corporations Act, startups can raise from sophisticated investors without a prospectus. The most common way to qualify is a certificate from a qualified accountant confirming you meet the net asset or gross income thresholds set in the law.

The thresholds have been under review, so check the current rules with your accountant or adviser before you invest.

Tax incentives for early-stage investors

Australia offers tax incentives for investing in eligible early-stage innovation companies (ESICs), including a tax offset and a capital gains tax exemption on qualifying shares held for a minimum period. Whether a company qualifies depends on its size, age and innovation criteria.

These rules change and have limits, so get tax advice for your situation.

Building deal flow

Good deal flow comes from being known and trusted by founders and other investors. Most angels see deals through their networks, angel groups, syndicates and pitch events.

Innovation Bay's Angel Investor community connects experienced angels backing early-stage startups across Australia and New Zealand, and its rolling pitch events bring founders to the investor community. Founders looking for the other side of this can read about meeting angel investors in Australia.

Deciding how much to invest

Most experienced angels spread their money across many startups, because a small number of winners usually make up for the losses. Only invest money you can afford to lose and leave untouched for years.

Set aside funds for follow-on investments in the companies that do well.

Investing alongside other angels

Investing with others spreads risk, shares due diligence and gives you access to better deals. It also means learning from angels who have been doing it for longer.

That is the idea behind angel communities: a peer group of investors who compare notes, share deals and back founders together.

Hear from angels who have done it

Innovation Bay's Angel Voices series interviews experienced angel investors about how they think about deals, founders and portfolios.

20+years connecting founders and investors

3,000+members across Australia and New Zealand

$40M+raised through the Innovation Bay network

190+podcast episodes from founders and investors

"One of the features of the ANZ technology renaissance has been the collaborative and supportive nature of the community. We all have a shared goal - to see Australia's technology community thrive."
Craig Blair, Partner and Co-Founder, Airtree

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Innovation Bay runs a dedicated Angel Investor community for experienced angels backing early-stage startups across Australia and New Zealand. Apply through the membership form and flag that you are an investor.

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Apply to pitch at an upcoming investor event to our angel and venture capital communities. Open to startups in every sector, with no membership needed.

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Becoming an angel investor in Australia: common questions

How do I become an angel investor in Australia?

Most people first qualify as a sophisticated or wholesale investor, usually through an accountant's certificate confirming they meet the net asset or income thresholds. They then build deal flow through networks, angel groups and pitch events, and often invest alongside other angels.

Do I need to be a sophisticated investor to invest in startups?

Startups can only offer shares without a disclosure document to certain investors, most commonly sophisticated or wholesale investors. Equity crowdfunding is another route open to retail investors. Check the current rules with an adviser.

Are there tax incentives for angel investors in Australia?

Yes. Investors in eligible early-stage innovation companies (ESICs) may receive a tax offset and a capital gains tax exemption on qualifying shares. Eligibility and limits apply, so get tax advice.

How much do angel investors typically invest?

It varies widely. Many angels invest relatively small amounts per company and spread their money across many startups, keeping funds aside for follow-on rounds. Only invest money you can afford to lose.

How do I find startups to invest in?

Through networks, angel groups and syndicates, pitch events and communities such as Innovation Bay's Angel Investor community, which connects experienced angels with early-stage founders across Australia and New Zealand.

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