Angel investing goes beyond simply providing funds to start-up ventures. It is an opportunity to give back to the community and shape the future economy. Unlike Venture Capitalists, Angels are often actively involved in the start-ups they invest in. This difference is what makes Angel investing the rewarding experience that it is.
Angel investors are typically formally educated, high net worth individuals, who invest personal funds at arm’s length in businesses owned and operated by unrelated individuals.
Personal funds are invested on a long-term basis in exchange for repayable or convertible debt or equity in the company.
Profile of a typical Angel investor in Ontario:
- Formally educated
- High net worth
- Former entrepreneur or business professional who can provide new firms with financing, contacts and business acumen
- Recognized by the Ontario Securities Commission as an “accredited investor”, as defined by the Ontario Securities Commission’s Rule 45-802, such as:
- An individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;
- An individual whose net income, before taxes, exceeded $200,000 in each of the two most recent calendar years, or whose net income, before taxes, combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years, and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
- An individual who, either alone or with a spouse, has net assets of at least $5,000,000; and
- A person, other than an individual or investment fund, who has net assets of at least $5,000,000, as shown on their most recently prepared financial statements.
For the complete list of definitions and other relevant information, please refer to the Ontario Securities Commission’s Rule 45-802 (National Instrument 45-106). There is also an unofficial consolidation of National Instrument 45-106, effective October 5, 2016.