ANGEL ORGANIZATION CHARACTERISTICS Organizational Structure manager’s screening process are then invited to pitch to the group. Managers often work with entrepreneurs to help them prepare, improve and refine their pitch- es. Third, for those opportunities that attract sufficient interest from members a subset of angel organization members is established to undertake due diligence in order to decide whether or not to recommend it to the wider group to invest. It is important to emphasise that in this model the angel organization does not invest as an entity: each member makes their own investment decision. These types of angel organizations primarily operate on a not-for-profit basis. Costs are covered by membership fees and, in some cases, application fees from businesses and success fees from businesses that attract investment. Other angel organizations are structured as profession- ally managed pooled investment vehicles that raise cap- ital from private individuals. Here, individual members play a much more passive role, with the management of the angel organization taking on the responsibility for
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the entire investment process. Some member-based angel organizations operate under a hybrid model, run- ning a side-car fund in which individuals invest on a passive basis to co-invest in deals that its active mem- bers make. There is considerable diversity in the practices of an- gel organizations. Most focus on specific geographical regions. A minority focus on particular industries or sectors, or on a specific type of entrepreneur, such as women and indigenous founders, or on specific types of investors, notably women. In Canada, the majority of the organizations operating in 2022 (68%) were structured as not-for-profit entities. A further 29% were for-profit entities (Figure 2) and 4% were Limited Partnerships. This represents a break with the trend for the proportion of for-profit organizations to increase over time (27% in 2018, 23% in 2019, 31% in 2020; 42% in 2021). This may reflect the higher re- sponse rate of nonprofits in 2022 because submission of data is now a requirement of the funding that they receive from NACO.
2023 ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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