What is angel investing?
An angel investor provides initial seed money for a startup business, usually in the form of equity or ownership in the company. This differs from venture capitalists, who also invest in early-stage startups. Venture capitalists manage a pooled fund of money for investors, whereas Angels invest their own money into a business, usually in exchange for ownership equity or as a loan (convertible debt). Angel Investors are typically successful cashed-out or retired entrepreneurs and corporate executives.
Part of the start-up ecosystem, angels are financially sophisticated with specific industry experience. Angels Invest between $10,000 to $1 million into a single company- but a typical cheque size is $25,000. Angel money is “Smart Money as many angels tend to give back in expertise/mentorship as a Board Director or Advisor.
How Can I Become an Angel Investor?
To invest in this asset class, you must meet the accredited investor guidelines the Ontario Securities Commission (OSC) set out. When joining an angel group as a member, you will sign a document (Accredited Investor Certificate or Attestation Form) stating you meet the minimum thresholds.
- Alone or with a spouse — assets (not including principal residence) that have an aggregate realizable value (before taxes but net of liabilities) exceeding CAD $1,000,000; OR
- Net income before taxes exceeded CAD $200,000 in each of the past two years, and a reasonable expectation of exceeding that net income level in the current year; OR
- Net income before taxes, together with a spouse, exceeded CAD $300,000 in each of the past two years, and a reasonable expectation of exceeding that combined net income level in the current year.
The OSC makes and enforces rules to govern the securities industry in Ontario. They work to protect investors from unfair, improper, or fraudulent practices, as well as foster fair, efficient, and competitive capital markets and confidence in capital markets. To learn more about the Ontario Securities Commission and how it protects investors, please visit getsmarteraboutmoney.ca.
You should only invest money in this asset class you are prepared to lose- and no more than 10% of your net worth. Angel investing- and every single investment decision- is a personal choice. You must decide if an investment aligns with your personal investment thesis, risk profile, and criteria.
Why Angel Invest?
You may choose to invest into this asset class for a variety of reasons, but some of the most common reasons we are here are:
- Increased Capital Diversification
- Significant possible financial return (considerable risk asset class)
- More Favorable Valuation and Terms in Comparison to VCs
- Socially responsible or impact investing
- Providing experience to help an entrepreneur: rewarding
- Supporting the economic growth of your region
- Giving back to your community
About Angel Investors Ontario
At Angel Investors Ontario, we aim to grow Ontario’s Angel investing ecosystem to build prosperity, create jobs, and strengthen communities.
Over the last 15 plus years, the mission of Angel Investors Ontario has been to grow Ontario’s angel investing community to build prosperity, create jobs, and strengthen our society. Since its inception, Ontario’s angel investing community and entrepreneurial ecosystem have grown rapidly. Since 2007, there have been 16 angel groups created in the province, and these folks have invested more than a whopping $800 million back into Ontario’s economy to support founders and builders at the earliest and riskiest stages of entrepreneurship.
Angel Investors Ontario (“AIO”) convenes Ontario’s Angel investors, who directly provide capital and volunteer mentorship to innovative start-ups province-wide. Ontario’s Angels represent approximately 60% of Canadian organized Angel investments into entrepreneurs, many of whom are leading the charge in the Canadian innovation economy. Organized Angel groups are regarded as the most effective means to help entrepreneurs attract critical funding and experienced mentors. AIO fosters the success of Ontario’s angel groups by sharing information and educational tools to transfer the best practices across the angel-investing ecosystem. Ontario’s angel groups are drivers of economic development and job creation. In addition to events hosted by your angel group, Angel Investors Ontario organizes events for angels to network with like-minded professionals and sharpen their skills throughout the year.
AIO organizes many events throughout the year, from networking socials to golf tournaments to education sessions, there is surely something for you! The best way to stay updated on ecosystem system news in Ontario is to follow us on social media (insert socials).
We encourage you to sign up for AIO’s newsletter so that you can stay in the loop about all the events in the angel investing community and everything that is going on in Ontario’s innovation ecosystem!
Interested in becoming an Angel Investor?
If the idea of joining a community of professionals and industry leaders, investing in innovating start-ups, and providing mentorship to promising entrepreneurs interests you, click here to learn more.