Got What It Takes? An Accredited Investor in Canada is an individual who, either alone or with a spouse, owns financial assets (not including principal residence) having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1 million; or whose net income before taxes exceeded $200,000 in each of the two most recent calendar years; or whose net income before taxes combined with that of their spouse exceeded $300,000 in each of the two most recent calendar years; and who, in either case, reasonably expects to exceed that net income level in the current calendar year. (See National Instrument 45-106. ) An Angel investor , also referred to as a Business Angel , is an Accredited Investor who privately invests their own money in a business, usually in exchange for ownership equity, debt or other terms. (An “angel” is a spiritual being sent by the celestial powers to give money to entrepreneurs who need it. This imaginary creature has never been found in reality.)
This book will help distil the wisdom of hundreds of Angel investors who came before you. They will share their tips about things that worked and things that didn’t. I hope you’ll learn from their mistakes before going out there and making your own.
The Good, the Bad, and the Reality Good news – you are wealthy enough to make private investments! Bad news – most of your investments will be complete losses! The reality – you should invest in a portfolio of 20-plus companies in order to gain average investment returns of 27% per year.
Who Are Angels and Why? Most mortals are restricted from Angel investing and must invest exclusively in highly regulated financial asset classes, such as public stocks, bonds, GICs, T-Bills, money markets, mutual funds and insurance. Most countries’ securities regulations allow exemptions for certain high net worth individuals to be accredited investors and make private Angel investments. Angels are expected to sign a formal document declaring their eligibility to make Angel investments. Canadian securities regulation National Instrument 45-106 requires an Angel to earn over $200,000 per year ($300,000 as a couple) or have over $1 million in assets, not including their principal residence. (See NACO Online Sample Documents: Investor Declaration .) Most recently, Angels with less than $5 million are also required to sign a Risk Acknowledgement Form #45-106F12 (RAF). (Volker)
How to Achieve Good Returns
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