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T his report, and its predecessors, have demonstrat- ed the key role that angel investors play in the entrepreneurial ecosystem, providing the risk capital required by ambitious, high potential, innovative entre- preneurs to start their businesses and embark on their initial scaling, along with the skills, knowledge, mento- ring, support and networks that startups require. The role of angel investors is therefore both distinct from and complementary to venture capital firms, given how angels seed many of the businesses that fuel venture capital deal flow. The focus is on the organized segment of the angel market: professionally managed angel or- ganizations that comprise individual investors who in- vest collectively in businesses that typically have been screened by its management. Angel investors affiliated with angel organizations are better able to protect their own positions in investee businesses and provide these businesses with a longer financial runway, an eventu- ality whose probability is increased by the ability of
angel organization members to provide entrepreneurs with much-needed mentoring, especially in the early days of their businesses. Angel organizations also facil- itate larger investments than the vast majority of angels could make investing on their own, and with the capac- ity to make follow-on investments and bring credibility and professionalism to co-invest with both institutional and public sector investors in larger syndicated deals. The report has highlighted the role of angel organizations in expanding the pool of capital available for early-stage deals by attracting investors who would not otherwise have chosen, or have been able, to participate in the market, and in enabling active angels to invest more. Angel organizations also enhance the efficiency of the angel market and have positive spillover effects on the ecosystem. A thriving angel investment community that is underpinned by angel organizations is therefore crit- ical to ensuring the vitality of Canada’s entrepreneur-
2022 ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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