How Do Angels Invest? Visible Angels are Angels who participate in an Angel group and/or who want to be found by entrepreneurs who are looking for investment. Because we know who they are, they are counted in annual reports, and governments can track the important role they play in stimulating the economy. It is estimated that, in Canada, there are 10 times more invisible Angels who do not want to be found. We know this from company tax returns and because of comparisons with the number of US Angels, who tend to be far more visible than Canadian Angels. NACO estimates that there are 20,000 to 50,000 individuals who make Angel investments each year in Canada. (NACO National Angel Summit, 2015) According to the Angel Resource Institute (ARI), for most Angels in Angel groups, it appears that a general guideline for an individual is to invest around $25,000 in a first round of investment. This will vary from group to group. For example, the average for the Golden Triangle Angel Network (GTAN) or VANTEC is closer to $45,000 per deal. In addition to this first round of investment, most Angels also reserve some money to invest in the next (usually larger) round, if the company needs and deserves it. This use of “dry powder,” or the real options approach, is explained in section 1.3. NACO’s 2016 Report on Angel Investing Activity in Canada (Mason and Tjahjakartana) provides an array of statistics about Angel investing, and it is well worth the time to review its contents. You can benefit from knowing which sectors are popular, which Angel groups are performing well, and what deal structures they are using. Many of the infographics throughout this guidebook show highlights of the report.
Average Deal Size
2013 $945K
2014 $1.229M
2015 $1.160M
2016 $1.731M
12 A Practical Guide to Angel Investing
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