An angel investor, that is.
Angel investors play a vital role in the world of start-up finance, filling the gap between informal networks of funding (such as borrowing from family and friends, or digging into personal savings) and the more formal, robust offerings available through venture capital or traditional banking sources.
The angel investment movement is finding its wings as a source of funding for Canadian start-ups. According to 2014 Report on Angel Investing Activity in Canada published by the National Angel Capital Organization, angel investors contributed over $90 million through 237 investments in 2014. This is a 66 per cent increase in new investments over the previous year, with the great majority (80 per cent) of funding going to the information technology and life sciences sectors.
Where can I seek angel investments for my start-up?
The National Angel Capital Organization is a not-for-profit umbrella group that aims to support the angel investment community in Canada, offering networking, professional development, and research to its 2,000 members. This is a great starting point to get background and intelligence on angel investing, and many searchable connections are available in one place.
Here are a few other Canadian sources for angel investments:
Five tips for pitching to angel investors
- The heart always knows what the mind tries to obscure: if you are delivering your pitch from the source of your passion and drive, your pitch is going to be heard. That’s the beautiful thing about a pitch that comes from the heart: there is no faking authenticity. If you sincerely believe in what you’re selling, and you’ve done the necessary homework to back it up, your legitimate enthusiasm will capture your audience’s attention, and help you score the big deal.
- The mind fills in the blanks the heart has skipped over: all passion and no reason can make a pitch sound flakey. While a few heartwarming reference points can charm a room and capture attention, be sure to fill in those heartbeats with hard, raw numbers that make a business case for your passion. Even the most heartfelt proposal coming from a good place will fall flat if there is not a market for your product, or if you haven’t done a thorough assessment of the cost to market your product.
- Own. Your. Pitch.: You need to be so familiar with your pitch that you could be woken up in the middle of the night and deliver it, without skipping a beat. This means all of the details, context, background, projections, sales, revenues, customer bases, demographics, and most importantly, your targets and exactly what you going to do with the investment you’re seeking. Many entrepreneurs will get lost in the numbers and will forget about the nature of the ask itself. Your angel wants to know exactly what you are going to do with the investment and how it is going to take your start-up to the stratosphere of success.
- The devil is in the details: what’s in it for me? Perhaps the most crucial question an angel investor is asking. For all of the potential behind your start-up, an angel is looking for a piece of your action, whether that means convertible debt, shares at an IPO launch, or a percentage cut of the equity of the business upon exit. How you slice it is up to you and your investors, but never take your eyes off the prize when it comes to knowing how you plan on paying back your investors and when you expect this to happen.
- A picture sells a thousand pitches: The data is in and it is clear: the use of powerful imagery can be a pitch-changer. It doesn’t matter whether it’s embedded in a tweet or projected on a digital overhead screen; strategically incorporating visuals into your pitch can achieve a variety of positive outcomes. You’ll create mood, empathy, humour, tone, and ultimately, a much more lasting impression and memory. The key word here is “strategic.” A picture for the sake of a picture is not even worth the bother, but a well-played visual can truly make or break a pitch.
Now that we’ve given you general advice, please stay tuned as we will have more specific tips and info from a leading industry expert and angel investor in the coming weeks!