EXECUTIVE SUMMARY Government Support for Angel Investing
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A second way in which governments support angel in- vesting is by enhancing the quality of the investment opportunities available to angels. Initiatives to increase the supply of investment will be ineffective if there are insufficient investable and investment-ready business- es. Angel organizations reported that many of the busi- nesses that attracted investment from their members had received government support, notably in the form of non-dilutive funding. This largely comprised grants, loans and tax credits, notably the Scientific Research and Experimental Development (SR&ED) tax incentive, Industrial Research Assistance Program (IRAP), Input Tax Credit (ITC), and Ontario Centre of Innovation (OCI) funding. Atlantic Canada Opportunities Agency (ACOA) funding, Business Development Bank of Canada (BDC) loans, and Export Development Canada support were also mentioned. Firms typically raise this funding be- fore approaching angel investors for funding. This type of funding enhances the investability of businesses by
angels to invest more. They also enhance the efficien- cy of the angel market and have positive spill-over ef- fects on the ecosystem. These wider public benefits are especially significant in regions outside of large urban centres on account of their smaller population of inves- tors and fewer alternative funding sources for startups. Angel organizations need the management capacity to deliver these benefits but their ability to generate rev- enue through membership fees and sponsorship is lim- ited. The majority of angel organizations (71%) that reported have received government funding, primarily from the Federal Government, notably from NACO's Southern Ontario Angel Community funding program supported by FedDev Ontario, and less commonly from provincial governments. These angel organizations were unani- mous in stating that without this funding they would not exist.
2023 ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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