According to recently released figures from the National Angel Capital Association (NACO), more angel investments were made in 2012 in Canada compared to years prior. Particularly, the number of deals nearly doubled as compared to 2011.
However, the average amount per investment was down, likely due to the fact that over half of the investments were made to tech companies.
The 2012 Report on Angel Investing Activity in Canada pulled numbers from 20 angel groups in Canada, about two thirds of identifiable angel groups in Canada. The report revealed that last year there were 139 investments reported, compared to just 71 in 2011 and 66 in 2010. This translated to $40.5 million invested, compared to $35.7 million in 2010. That’s a 96 percent increase in the number of investments, but just a 13 percent increase in the total value of investments from 2011 to 2012.
NACO defines an angel investor as “often experienced, well-educated, high-net-worth individuals who invest personal funds in the businesses of unrelated individuals.”
“Angel investors are frequently former entrepreneurs or business professionals who have much to offer to new businesses in terms of financing, networks and mentorship,” read the report.
Trends also showed that angels made investments in groups (of 11 to 25 members) far more often in 2012 than in 2011. “Angel group/network investing is a relatively new phenomenon in Canada, one that is making a significant contribution to support the Canadian entrepreneurship ecosystem,” read the report.
Reported angel investments nearly doubled in 2012, but the financials reflected a modest improvement of overall angel capital flowing to Canadian companies. The numbers showed that the amount of money per round was significantly smaller in 2012 than in 2011. This likely reflects a trend towards more investments in tech companies and less in pricier clean technology and life sciences companies.
Last year, 54 percent of investments were made to IT companies. But 2011 and 2010 both saw IT investments fall just under half of all investments, marking a larger proportion made to cleantech or life sciences.
Geographically, Ontario and Quebec-based angel groups wrote the most cheques. 82 percent of investments, or $33.4 million over 115 investments were made by groups in those two provinces. Just two percent, or three investments for $670,000 came from angel groups based in the Maritime Provinces.
As expected, many of these angel investments were made with support from the provincial and federal government, a very Canadian model of investment (much to the chagrin of Canadian investors who wish to see more participation by private investors). The majority of the reported investments leveraged government support. The top three were FedDev Ontario’s Investing in Business Innovation (IBI) program (33 percent), the Northern Ontario Heritage Fund Corporation (21 percent), and The National Research Council’s Industrial Research Program (NRC- IRAP) (17 percent). A number of investments took advantage of more than one government program.
The report also noted that accelerators play an integral role in bridging the relationship between entrepreneurs and angel investors. In fact, 2012 was the first year that the organization collected data from accelerators.
Average capital investment by accelerators was $50,000 per startup company, while firms in accelerators received a total of $13.65 million in investment. Information and communications technology (54 percent), new media (19 percent) and clean technology (10 percent) were the top three sectors for accelerators. Accelerators provide start-up companies with the services and training they need to successfully grow in national or global markets.
The top five angel groups last year by dollar amount invested were: Golden Triangle Angel Network, Angel One Network, Northern Ontario Angels, Capital Angel Network, and VANTEC.