ACCESSING ANGEL CAPITAL IN CANADA Special Guest Speaker GERARD BUCKLEY Presented by: CBBN “The Bulgarian Chamber” in association with BCCTC “The British Chamber” and BCBC “The Belgian Chamber” In short referred to as The 3 B’s
Jul 14, 2015
ACCESSING ANGEL CAPITAL IN CANADA
Special Guest Speaker
GERARD BUCKLEYPresented by:
CBBN “The Bulgarian Chamber” in association with BCCTC “The British Chamber” and BCBC “The Belgian Chamber”
In short referred to as The 3 B’s
Accessing Capital From an Angel Investor NetworkYour First Professional Investment – Who, What, When, Why, Where and How?
3
• What is Angel Investing
• Who is an Angel Investor
• Why Invest in Early Stage Companies
• Angel Network in Canada
• NACO 2013 Survey
• Angel Investing is a changing
• The Benefits for Entrepreneurs
• Q & A
Agenda
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
4
• I am Gerard Buckley– Founder & CEO of Jaguar Capital an Advisory Practice for Growth Companies in
Governance, Financial Management & Funding Strategies
– Chairperson of Board of Directors, Maple Leaf Angels Corporation & Investor in eight early stage companies
– Corporate Director, Maple Leaf Angels Capital Corporation the General Partner of MLA48LP1 an Angel Backed Pre-seed Investment Fund
– Nominated & Finalist for National Angel Capital’s Angel of The Year in 2014
– Certified Corporate Director of the Institute of Corporate Directors
– Previously Entrepreneur in Residence with Incubes (An Internet Company Accelerator)
– Past member of Small & Medium Enterprise Committee of The Ontario Securities Commission
– Investment Committee of Mount Saint Vincent University, Halifax, NS
– 32 yr. Career with Scotia Capital as a Financial Risk Management Advisor to Fortune 200 Companies: Rogers, Irving Group, Empire Co., Four Seasons, Bruce Power, OPG, Province of Ontario, Ford etc.
Who Am I
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
What is Angel Investing
• Angel Investing is individuals investing their personal money in the equity or debt of a Early or Growth Stage Company
• Often referred to as Smart Money, it is where individuals wish to invest their time or experience as well money in a start-up company.
• People wishing to give back their experience so others may benefit which is often referred to as mentoring or serving on a company Advisory Board or Board of Directors
• Angel Investing is Active Investing not Passive
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Who is an Angel Investor
• Angels are investors who leave out the control. They essentially bundle Advice and Money
• A person prepared to invest their personal or family money
• A person who can add value to the company• An accredited investor as defined by OSC 45-106• A member of an angel network• The majority of angel investment in Canada is
completed by individuals >85%• Estimate of Cdn Angel Investment is 916mm in
approx 1500 companies (VC about 2b)
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Profile of an Angel - Median
Years investing 9
Number of Investments 10
Total Exits 2
Years as a Entrepreneur 14.5
Number of ventures founded 2.7
Age 57
Percent of net worth 10%
Education Masters Degree
Angel Resource Institute Source: Wiltbank Study 2007
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Why Would Someone be an Angel Investor
• Qualified Opportunities
• Opportunity referral
• Increased Capital Diversification
• High Risk Asset Class …. Seeking High Returns
• Favourable Valuation and Terms in comparison to VCs
• Networking
• Portfolio company mentoring or engagement
• Shared Due-Diligence
• Advisory Board and Board of Director Roles
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
What Type of Companies Do Angels Invest In?
• Companies who are in seed and early stage.
• In technology, life sciences, ict, health care devices, med tech, clean tech, power solutions, fin tech, …..
• Solve a Problem, Secret Sauce or technology ....... USP, validated business model, Great management team
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Equity Capital Life Cycle
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
What Angels Look For
• High anticipated growth rate – Scalability
• Experienced management team
• Sustainable competitive advantage
• Barriers to entry ie. Exclusive IP
• Clear strategy for commercialization
• Proof of concept or enterprise level validation
• Business model anchored in Reality
• Investor exit strategy in 5 to 8 years
• Investing in what you know – vertical expertise
• Coach ability of the entrepreneur
• Amount of dilutive capital required
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Factors that appear to impact investor outcome
• Due diligence time: More hours of due diligence positively related to greater returns (> 40 hours)
• Experience: An angel investor's expertise in the industry of the venture being invested
• Participation: Angel Investors that interacted with their portfolio companies at least a couple of times per month mentoring, coaching, providing leads and monitoring performance experienced greater returns.
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Selection Criteria
• Pre-seed Investments up to $200k
• Seed investment should be from $250k to $500K
• Early stage investments should be from $350k to $1,500K
• Valuation 1.5 to 4.5 million (Halo 2013 median 2.5m)
• The stage, quality of the management team, valuation and technology of companies are more important than the sector criteria
• Quality is more important than quantity
• In Canada 5% of companies get funded (95% don’t)
• In Silicon Valley (1/300) get funded
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Angel Network’s in Canada
• NACO – National Angel Capital Organization
• 32 Angel Groups in Canada
• They have collectively over 2100 investors
• Three large groups accounted for 58%
• The majority have fewer than 50 members
• 75% of groups set up since 2007
• 68% not-for-profit, 14% for profit & 18% not incorporated
• Vast majority do volunteer shared due diligence
• 12 Angel Groups in Ontario
• Keiretsu Forum & Golden Horseshoe Venture Forum are Private For Profit Angel Groups
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Canadian Angel Group Investment Activity 2013
• 199 Investments in 2013 totaling $89 m, an increase from 2012 of 139 investments and a increase in investment from 40.5 m
• Average investment is $504k up fr $314k 2012
• Of over 2100 investors 78% - Ont & Que, 21% West, 1% Atlantic
• ICT (45%), Life Sciences (33%), Clean Tech (13%)
• Valuation – Median $5.0m, Mean 2.06m
• 61% of transactions involved a co-investor
• Of 3775 applications in Canada 5.2% get funded by networks
• Angels in Canada appear increasingly able and willing to provide follow-on funding to carry companies through to the next stages of growth
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Traditional Angel Network is Changing
• Currently Southern Ontario Angel Investment community has 12 Angel groups
• Government programs ( IAF, MaRS, OCE, IBI)• Online - Angel List, Syndicates, Funders Club, The Funded, Gust• Y Combinator, Tech Stars, 500 Start-ups, +110 Accelerators in
Canada …. Consolidation occurring to access gov’t funding• Incubators & Accelerator funds • Crowd funding such as kickstarter.com and equity crowd funding
will follow• Introduction of OM - Offering Memorandum will have an impact• Super Angels & Micro-VC’s• “Future of Venture” – unbundling of advice, money and control• Super Angels & Micro-VC’s
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
17www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
18
Entrepreneur Benefits
• Large capital source
• Broad pool of Knowledge & Contacts
• Efficient Process
• Capital Connections
• In many provinces there is investor tax credit
• Leverage sources of funding (IAF, IBI, BDC etc.)
• Focus on value-add and advice, not the biggest cheque
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
Questions Entrepreneurs Should Ask Angels or Venture Capitalists
• Where does your deal flow come from?• Do you charge for presentations? Or charge for due-diligence?
Or Performance Fees?• How much management Fee do you charge? How much
interest carry do you charge investors? • How often do you hold pitches?• Do you help prepare pitches?• Do you invest together or make a investment decision
separately?• Do you have a fund or make pre-seed investments?• Do you disclose your investment process?• Who will your board nominee be?
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels
20
Gerard Buckley, BBA, FICB, ICD.DPresident and CEO Jaguar Capital Inc.(C) 416-884-9522
www.jaguarcapital.ca
Twitter: @jaguarcapitalTwitter: @gerardbuckleySlideshare: Jaguar Capital
Contact Information
www.mapleleafangels.com | [email protected] | 416.646.6235 | @mapleleafangels