The Financing Funnel 3.2
A ngel investors invest in only a small proportion of the companies that approach them for funding. The angel investing process can be characterized us- ing a financing funnel. A large number of companies ap- proach angel organizations to seek funding. The majori- ty of these companies are rejected by the organization’s management at the initial screening stage, being con- sidered unsuitable for presentation to the group’s mem- bers. Some will be deemed uninvestable, while others may not fit the organization’s investment focus. Others may be judged as having potential, but may not yet be
investment-ready. Of those that do attract initial inter- est, some will be rejected following a more detailed as- sessment. However, such outcomes are not necessarily negative as rejected entrepreneurs are likely to receive valuable feedback which may help them become invest- ment-ready in the future, or be directed to more appro- priate sources of funding. To quote one angel investor: “the first business plan that an entrepreneur writes is not the one that gets funding.”
2022 ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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