Canada sees rebound in angel investments as industry calls for more federal support

Angel investment activity in Canada in 2024 continued to rebound from post-pandemic lows, according to a report from the National Angel Capital Organization (NACO). However, the organization argues that the government must do more to incentivize early-stage investing.

The report found that overall angel investment was $146.2 million in 2024, up 27 percent from the year before. Among associations that reported numbers in 2023 and 2024, total investments rose nearly 14 percent across 500 cheques written.

Overall angel investment was up 27 percent in 2024 compared to the year before

Colin Mason, emeritus professor of entrepreneurship at the University of Glasgow, authored the report surveying 38 Canadian angel networks. He warns that the numbers are a “significant underestimate” of angel investment activity in Canada, as they only include investments made by members of official organizations, and other organizations don’t report.

Across all organizations, the average investment per company was $245,237, while the median hovered around $111,000, up from $84,000 in 2023.

To keep the talent and ambition of Canadian founders in Canada, “we must strengthen the infrastructure that enables it: the angel networks, pre-seed funds, and ecosystem partners that provide mentorship and capital to help ventures scale,” Mary Long-Irwin, NACO board chair, said in a statement.

In NACO’s view, strengthening that infrastructure comes through increased federal support. In its pre-budget submission, the organization called for more money for early-stage investment and changes to tax structures.

Among its requests are a $450-million early-stage matching fund program complementary to the Venture Capital Catalyst Initiative (VCCI), delivered through a public co-investment model, with a focus on national defence and tech. It also recommends $200 million in operational funding for a new program that would support early-stage investment organizations like angel groups and pre-seed funds.

On the tax side, NACO is asking for a capital gains reinvestment deferral and a 30-percent refundable National Investment Tax Credit for investments in Canadian-controlled venture capital (VC) funds or private placements.

At the NACO Summit earlier this year, NACO CEO Claudio Rojas argued to BetaKit that a tax credit like this would “require, from a fiduciary perspective, all wealth managers to bring the [innovation] asset class to their clients’ attention.” Rojas encouraged “bold leadership” from investors and builders, while attendees told BetaKit that Canadian risk appetite needed to increase.

NACO, founded in 2002, represents more than 4,000 angel investors and over 100 member organizations. According to the report, most association memberships come with a price tag of more than $1,100 per year. Women angels make up about 35 percent of membership, a slight decrease from the year before.

According to the report, Canada’s angel investing landscape diverges from its traditional venture investments, which have deflated since the highs reached in 2021. In 2024, venture deals in Canada were on par with 2023—a little more than half of what they were in 2021—but the amount invested was propped up by a handful of megadeals, per the Canadian Venture Capital & Private Equity Association (CVCA). In particular, pre-seed and seed funding deals have slumped.

The CVCA and NACO are aligned on certain demands from the federal government. The two associations sent a joint letter to finance minister François-Philippe Champagne arguing for a unified strategy to ensure that innovative companies have the funding required to launch and grow in Canada. The CVCA has been pushing for a renewal of the VCCI program to the tune of $1 billion, supported by an advertising campaign on LinkedIn.

Feature image courtesy NACO.