ArchAngel, a new network of investors in Kitchener-Waterloo, has launched an angel-stage fund to support Canada’s “high potential entrepreneurs and proven innovators.”
The ArchAngel Network of Funds had been in the works prior to the onset of COVID-19, though the founders noted the decision to officially launch the fund is in response to the global pandemic. The group is a consortium of superangels and venture capitalists from the Toronto-Waterloo ‘innovation corridor.’
“Because of the COVID-19 pandemic we are compelled to act now.”
The investment thesis behind the angel fund is to “accelerate the development and commercialization of any solution that has urgent, national or global need,” said Benton Leong, general partner at ArchAngel and angel investor with Golden Triangle Angel Network (GTAN) and Equation Angels.
ArchAngel was founded by nine individuals, which includes six general partners, Leong, Randall Howard, Ellen Fang, Ehsan Mirdamadi, Jacky Chen, and Peyvend Melati. Co-founder Amber French is serving as principal, with Todd Bissett as legal advisor, and Danielle Graham leading ArchAngel’s investment committee.
The group told BetaKit that it is targeting a starting fund size of $10 million and already has “significant commitments, including a strong GP commitment.”
“Our model is to provide scarce seed capital and to optimize unleashing co-investment such that the total funding will be many times that,” ArchAngel said. “Because of the COVID-19 pandemic, we are compelled to act now which will be by using those initial commitments to unlock crucial investment in critical innovations urgently needed right now.”
The fund shared with BetaKit that its investments will focus on seed-stage, B2B startups. It plans to cut cheques of between $100,000 to $300,000, spanning 30 to 50 deals over a five year period.
According to ArchAngel’s website, the fund’s goals are to make angel investment accessible to investors “who otherwise are not able to participate,” help scale-up Canadian startups into the United States and global markets, and reinvest back into the angel ecosystem.
ArchAngels noted the idea around COVID-19 funding is to “augment” efforts of federal and provincial governments.
Currently, the fund is looking to support companies that provide solutions for the “difficult economic and health challenges that this unprecedented situation presents to our local and global communities.”
ArchAngels noted that the idea around COVID-19 funding is to “augment” the efforts of the federal and provincial governments by providing additional capital, global partner networks, and expertise.
“We have a more pragmatic or practical and more specific approach, custom to specific situations,” said Leong.
The launch of the angel-backed fund comes as the Business Development Bank of Canada (BDC) is exploring ways to provide matching investments to angel investors and angel-backed startups. The crown corporation recently launched the BDC Capital Bridge Financing Program for venture-backed companies.
The National Angel Capital Organization (NACO) has been in talks with BDC about extending the Bridge Financing Program to the angel community. Sources have indicated to BetaKit that NACO could potentially play a role in accrediting angel members and funds (such as ArchAngel, for example) that would then qualify for matching investment.
While ArchAngel is currently focusing on startups that can provide a COVID-19 response, in the future, it plans to support innovation “of all types” that could have social and economic impact. Its website points to smart manufacturing, green technology, and health sciences as focus areas.
As part of its launch announcement, ArchAngel noted that investors in its fund will “benefit from the fund’s general partners, their deep expertise, and the network of 200 angel investors, VCs, and research institutes” that have been brought together for this angel network.
On Thursday afternoon, Leong is set to provide more information on ArchAngels during NACO’s weekly roundtable webinar. BetaKit’s editor-in-chief Douglas Soltys is set to interview Leong during the webinar.
Image courtesy ArchAngel