EXECUTIVE SUMMARY Government Support for Angel Investing
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ing, enabling angels to spread their capital over a larger number of deals.
enabling them to achieve some early milestones, hence angels respond positively to investment opportunities where this type of funding has been secured. Angel tax incentives are another way in which govern- ments seek to increase the pool of early-stage capital. The rationale for this form of support is that investing in new and early-stage ventures is high-risk. Returns are highly skewed, with most investments failing to gener- ate a return. Tax incentives reduce the downside risk if a tax credit is applied to the amount invested and in- crease the upside if capital gains are not taxed. A further form of intervention is the creation of gov- ernment funds that co-invest alongside angel organiza- tions. These funds leverage the investment of angels, providing additional capital that increases the deal size, giving businesses a longer financial runway and de- creasing the time that they have to commit to fundrais-
2023 ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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