Angel investing networks spend $90.5M on Canadian startups

Angel investment groups across Canada injected $90.5 million into Canadian-based start-up companies through 2014, according to the National Angel Capital Organization (NACO), which released its annual angel activity report.

Based on a survey of 30 Angel groups across Canada, the report shows they made 237 investments in 181 companies, amounting to $90.5-million, with an additional $110.4 million of funding leveraged into the investments.

“We’re deeply encouraged by the results of this year’s report, which shows that the increasing connectivity of our member Angels is helping to provide Canadian companies with the capital they need to continue growing locally,” says NACO executive director Yuri Navarro.

New this year, Industry Canada has contributed a section to the Report. To continue to grow Canada’s expanding knowledge-based economy, and compete globally, Industry Canada compiled a dataset of 110 Angel-backed firms over the past five years to gain a clearer economic profile. The data was captured in NACO’s 2014 Report on Angel Investing Activity in Canada: Harnessing the Power of Angel Investors (Angel Activity report), which has been released on its website.

“Our government is a proud partner and contributor to NACO’s report on the state of Angel capital investments in Canada. Through the Venture Capital Action Plan, we are committed to supporting entrepreneurs who invest and innovate, resulting in the creation of jobs and economic growth across Canada,” says Industry Minister James Moore.

“In addition to the large amount of Angel funding being put into innovative companies, we are seeing a direct connection between Angel investing and a stronger small business economy,” adds Michelle Scarborough, NACO Chair of the 2014 Report. “We see an increasing amount of high-paying jobs created, enabling a stronger, more vibrate and diversified economy in Canada.”

Across Canada, 30 Angel groups participated in the 2014 survey, representing over 1,700 investors coast to coast. Angels tend to invest in close geographic proximity, with a majority (63%) of Angels located in Central Canada, 30% in Western Canada, and 7% in Eastern Canada. Angels are essential to the Canadian economy, driving innovation and fueling job creation. This year’s report also included a review of data which shows that 88 Angel backed companies created 764 new high paying jobs between 2010 and 2012, and invested more per employee in R&D then non-Angel backed companies.

Over 80% of Angel funded startups fall primarily within 2 sectors: ICT (information-communication technology) and Life Sciences (health related companies) distantly followed by clean technology. Investments in Life Science firms tend to be double the investment in ICT or Clean Technology. Furthermore, the Angel activity report indicates that 75% of the deals are syndicated, involving capital outside the Angel Group.

Looking ahead at the future of Angel investing in Canada have identified a need to collaborate, share resources, tools, and best practices across groups for better deal flow