The Changing Landscape
2021 Annual Report on Angel Investing in Canada
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Lead Author
Report ReviewCommittee
Colin Mason Professor of Entrepreneurship, Adam Smith Business School, University of Glasgow, Glasgow G12 8QQ, Scotland, UK.
Bryan Buggey Director, Economic Transformation and Climate Action at Vancouver Economic Commission Ketaki Desai Vice President, Business De- velopment at Ontario Centre of Innovation Mark Dobbin Founder and President at Killick Capital Pieter Dorsman Angel Forum and E-Fund
Brenda Hogan CIO at Ontario Capital Growth Corporation Derrick Hunter President and CEO at Bluesky Equities Ltd.
Mary Moran Fmr President & CEO at Calgary Economic Development
He is also the lead author of the 2010, 2011, 2015, 2016, 2017, 2018 and 2019 reports on Angel Investment in Canada.
Marc Savoie Executive in Residence at East Valley Ventures Greg Shannon Partner at Gowling WLG Michelle Simms President and CEO at Genesis Centre Geneviève Tanguay CEO at Anges Québec Ray Walia CEO at Launch Academy Catherine Warren CEO at Innovate Edmonton Jeff White CEO at New Brunswick Innovation Foundation
We wish to express appreciation to the members of the Report Review Committee for their advice, direction and feedback during the formative drafts of this report.
Sheldon James CEO and Managing Partner at Bay Mills Investment Group Claudia Krywiak President and CEO at Ontario Centre of Innovation
All views are those of the respective author(s).
Publication Date: August 2021
Frank Leffelaar Investor and Advisor at VANTEC
Jennifer Francis Chair at Capital Angel Network Malcom Fraser President & CEO at Innovacorp Joelle Foster CEO at North Forge Technology Exchange
Christiana Manzocco Director at Industry Development & Investment Associate at Alberta Enterprise Corporation Sara Mohajerani Investment Analyst at Bluesky Equities Ltd.
Sandi Gilbert Managing Partner at InterGen
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The Changing Landscape
This evidence-based report is the 11th annual report conducted by the National Angel Capital Organization and has tracked $1.12 billion of investment. By highlighting both the invest- ment activity of angel organiza- tions in 2020, year-on year invest- ment trends and the impact of the COVID-19 pandemic, this report provides unique insights into angel investment trends in Canada.
2021 Annual Report on Angel Investing in Canada
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Thank You
Our national network includes many inspiring leaders that amplify the impact of our initiatives. We are grateful to the following organizations for their contributions to our work.
A100
BCF Ventures
City of Grande Prairie
Extreme Venture Partners
Accelerator Centre
BizField Angel Network
Co.Labs
Equation Angels
Alacrity Foundation of B.C.
Bright Spark
Communitech
Federal Economic Development Agency for Southern Ontario
Alberta Agriculture and Forestry, Food and Bio Processing Branch
Brilliant Catalysts
Creative Destruction Lab
FedNor
Business Development Bank of Canada
Dan Lok Business Group
Alberta Enterprise Corporation
Firstline Capital
Canada Economic Development for Quebec Regions (CED) / Développement économique Canada pour les régions du Québec (DEC)
Dentons Canada LLP
Alberta Innovates
FounderFuel
East Valley Ventures
Alberta IoT Association
Foresight Cleantech Accelerator Center
Economic Development Lethbridge
Angel Forum
Gamma
Canadian International Angel Investors
Edmonton Regional Innovation Network
Angel One Network
Genesis
Canadian Northern Economic Develop- ment Agency
Ekagrata Inc
Anges Québec
Georgian Angel Network
Entrepreneur First
Capital Angel Network
Atlantic Canada Opportunities Agency
GIC Merchant Bank
Entrevestor
Capital Investment Network
Bay Mills Investment Group
Golden Triangle Angel Network
Entrepreneurship Hatchery at University of Toronto
Centech
BC Tech
Government of Alberta
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Thank You
Government of Yukon
Ivey Business School
Niagara Angel Network
RVC Worldwide
GreenSky President’s Club
Killick Capital
North Forge East Incorporated
Spark Angel Network
HaloHealth
Keiretsu Forum Central Canada
North Forge Technology Exchange
Spark Commercialization and Innovation Centre
HaTCH
L-Spark
Northern Ontario Angels
Spring Activator
Highline Beta
LatAm Startups
Pacific Technology Ventures Ltd.
SOAN
iGan Partners
Launch Academy
Panache Ventures
SquareCircle Ventures
Ignite Atlantic
LaunchPad PEI
Pelorus Venture Capital
Southwestern Ontario Angel Group
Ignite Fredericton
Mariner Partners
Peterborough Region Angel Network
Startup Zone
Innovate Calgary
Manitoba Technology Accelerator
Planet Hatch
TandemLaunch
Innovation Cluster Peterborough and the Kawarthas
Maple Leaf Angels
Platform Calgary
Techstars Toronto
MaRS Discovery District
Plendify Inc.
Innovation Factory
The DMZ
Matr Ventures
ProChile
Innovate Niagara
The51
Mavan Capital
Propel ICT
Innovation Park at Queen's University
Think8 Global Institute
Millworks Centre for Entrepreneurship
Pycap Venture Partners
Innovacorp
Toronto Business Development Centre
Mississauga Business Enterprise Centre
Raven Indigenous Capital Partners
Innovation XL at Queen's University
Tree Frog
Mitacs
RBC
Innovation, Science and Economic Devel- opment Canada
University of Windsor
MVP Angel Investments Inc
Real Ventures
Valhalla Private Capital
NEXT Canada
RIC Centre
Invest Ottawa
ventureLAB Innovation Centre
New Brunswick Innovation Foundation
Roseview Capital
Island Capital Partners
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Thank You
Venn Innovation
VANTEC
VIATEC
Volta
Waterloo Accelerator Centre
Western Economic Diversification Canada
Windsor-Essex Capital Angel Network
York Entrepreneurship Development Institute
York Angel Investors
Yukon First Nation Chamber of Commerce
Yukon Venture Angels
Zinc Ventures
And many more
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T HANK YOU
Wewould like to recognize our global andnational communitypartners that supported the releaseof this report.
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Preface
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Spotlight on Start-up Visa
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Executive Summary
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1. Introduction
57 64
1.1
Angel Investment During COVID-19 Survey Design and Respondent Profile Investment Activity of Angel Organizations in 2020: An Overview
1.2 1.3
67 74
1.4
Summary
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2. Angel Organization Characteristics
77 78 80 82 83 84 86
2.1 2.2 2.3 2.4 2.5 2.6 2.7
Introduction
Structure of Angel Organizations
Fee Structures
Age of Organizations
Size of Organizations – Membership Numbers
Gender of Organization Membership Investment Activity by Organization
Contents
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3. Investment Activity in 2020
91 93 97
3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9
The Demand for Angel Investment
The Financing Funnel
Investments
105 108 112 116 119 122 135
Deal Structures
Valuations
Investment Characteristics - Industry Sector Investment Characteristics - Firm Size
Investment Characteristics - Region
Spotlight on Atlantic Canada
3.10 Spotlight on Alberta
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4. The Investment Environment
144 147
4.1 4.2 4.3
The Investment Climate for Angel Investing in 2020
COVID-19 Challenges
The Importance of Structured Angel Activity and Government Support
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172
5. Conclusion
173 174 177 178
5.1 5.2 5.3 5.4
Introduction
Investment Trends in 2020: Summary
Post-Covid: A New Normal for Angel Investing?
Implications for Policy-Makers
Preface The Changing Landscape
MA RY LONG - I RW I N Board Chair National Angel Capital Organization
C L AUD I O ROJ AS CEO National Angel Capital Organization
2 0 2 1 ANNUA L R E P ORT ON ANG E L I N V E S T I NG I N CANADA The Chang i ng Landscape
P R E FAC E The Chang i ng Landscape
This year’s annual report on angel investing in Canada takes an in-depth, data-driven reflection on the impact of the pandemic on early-stage investing and tells a multi-faceted story.
O n one side, we saw the resil- ience of our entrepreneurs who pivoted to seek out new op- portunities in the face of incredi- ble difficulties; investors who rose to the challenge, providing critical mentorship and capital in an uncer- tain climate; and responsiveness from our governments in their swift action to implement programs to support innovative companies and
small businesses. The other side reveals the potential fragility of the early-stage investment community, with a significant proportion of an- gel organizations reporting no in- vestments. This was coupled with an ongoing decrease in the aver- age deal size and a lower amount of total funds invested, all while a greater number of startups required capital.
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In 2020, NACO marked a milestone in angel activity, reporting $1.016 billion dollars invested by our members over the last 10 years. This incredible mile- stone was announced during a time of uncertainty for the angel commu- nity and our innovation ecosystem as a whole. The impact of the COVID-19 pandemic was felt across the country and our community of early-stage in- vestors and innovation leaders voiced concerns for the future of angel in- vesting. They warned of the reverber- ating impacts a decline in early-stage funding would have across the entire ecosystem, constraining the emer- gence of high-growth companies at a time when our local economies need them the most.
Milestone inangel activity.
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Making bold moves.
The roundtable series engaged over 6000 members of the Canadian innovation community and explored themes related to preserving our innovation ecosystem – but when it came down to it, the message was simple – it was about the importance of innovating at the speed of the crisis. Making bold moves would ensure that all entrepreneurs had access to the capital and community they needed to thrive in the face of uncertainty.
When COVID-19 changed the world in March of 2020, NACO pivoted and launched a national roundtable se- ries in response to the pandemic and its effect on en- trepreneurs across Canada. These collaborative events brought together entrepreneurs, investors, policy-mak- ers, prominent government officials, academics and innovation sector leaders to harness the power of the community and inform the development of economic policy and programs.
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
P R E FAC E
Digital Experiences
P R E FAC E The Chang i ng Landscape
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The tremendous encouragement we received was foundational in our shift to what we now call – NACO 2.0.
world returns to in-person meetings and events, NACO endeavours to continue empowering entrepreneurs in investment-constrained regions and industries with equitable access to national opportunities for connec- tion, capital and growth. As we look towards economic recovery, NACO is fo- cused on bridging the gap between innovative entre- preneurs and the capital and community they need to build Canada’s future. Working alongside our partners in local communities and government, we are commit- ted to creating new pathways to inclusive prosperity.
Our 20-year-old organization needed to reimagine its purpose and with your feedback, we have. We know that entrepreneurs in all regions and from all backgrounds need equitable access to resources that may not be readily available in their local areas. Well-executed dig- ital experiences can foster greater levels of national connectivity, enabling entrepreneurs to engage with the resources they need to expand locally as their com- panies grow globally. To shine a national spotlight on Western Canada and Atlantic Canada, we hosted two virtual summits with over 2000 delegates, engaging in- vestors and leaders from nearly 40 countries. As the
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Creating Pathways toCapital Preface
T his year’s report once again shows a geograph- ic imbalance in structured angel investment activity. Structured angel activity takes on a vari- ety of forms and provide entrepreneurs with access to angel investors who provide crucial mentorship, capital and networks to help companies scale and grow. Access to an angel investor was once near- ly completely predicated on knowing the right peo-
ple and having access to a certain kind of network. Structured angel activity removes these barriers, put- ting entrepreneurs in close proximity to angel investors from varying backgrounds with expertise across a vari- ety of sectors. Without structured angel activity, many entrepreneurs and particularly those from underrepre- sented communities, face barriers to secure the funding and guidance they need to grow their companies.
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P R E FAC E Cr ea t i ng Pa t hways t o Cap i t a l
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In consultation with NACO, new an- gel organizations are under develop- ment in locations like Winnipeg and Grande Prairie and planning is un- derway for new angel organization formation in communities across Canada. Change is on the horizon.
tured angel activity development in communities across Canada and has helped guide economic de- velopment agencies, accelerators, incubators and business leaders who are looking to address gaps in their local innovation ecosystems.
In 2020, NACO released a new re- port in partnership with the Govern- ment of Yukon titled Mobilizing An- gel Activity in Yukon: An action plan to support entrepreneurs in Cana- da’s emerging ecosystems. This re- port provides a blueprint for struc-
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
P R E FAC E Cr ea t i ng Pa t hways t o Cap i t a l
In addition to geographic gaps, we continue to see entrepreneur knowledge gaps related to angel invest- ing. The understanding of what makes a company at- tractive to investors and how to attract that invest- ment is not intuitive. To address this challenge, NACO launched new angel-readiness programming in 2020, offering live and on-demand workshops and resourc- es to entrepreneurs as well as one-on-one mentoring with angel investors. We continue to build on this pro- gramming in 2021 with new workshops and resources under development.
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Creating Pathways to Investing Preface
A ngel investing is crucial to ensuring we have a strong pipeline of growing companies and the need to bring new investors into the ecosystem is more important now than ever before. To activate a new com- munity of angel investors, we will need a multi-pronged approach that includes creating accessible entry-points, complementary policy mechanisms, education and out- reach initiatives, many of which are well underway.
We have seen an increase in women angels thanks in part to the work of NACO members The51 and Wom- en’s Equity Lab, and the launch of new groups aimed at addressing the needs of underrepresented founders, such as Backbone Angels. In communities across Can- ada, angel organizations are not only creating new path- ways to capital for entrepreneurs but are creating new pathways to investing by activating new investors and addressing structural barriers.
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New policy mechanisms have added fuel to the fire by easing restrictions related to who can invest in early-stage, private companies.
investment activity over the long term. NACO is committed to mak- ing educational resources available to active and aspiring investors, es- pecially those outside of major ur- ban centres. To drive this momentum, we must work to introduce entrepreneurs to potential investors and raise the profile of early-stage investing.
New and seasoned investors con- tinue to turn to the acclaimed NACO Academy curriculum which leverages the collective wisdom of over 4000 angel investors, helping participants to attain the knowl- edge and real-world skills needed to thrive in the competitive investment industry. With new investors enter- ing the ecosystem, access to edu- cation is key to ensuring informed decision-making and sustainable
The Alberta Securities Commission and the Financial and Consumer Affairs Authority of Saskatchewan launched a pilot program to expand the accredited investor definition following consultations with NACO and other key stakeholders. And new exemptions related to equity crowdfunding were also announced recently, providing potential entry points for those who are new to startup investing.
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
P R E FAC E Cr ea t i ng Pa t hways t o I nves t i ng
According to 2021 data, 1 Canada (11,010) ranks fifth on global high net worth population scale (defined as individuals having greater than $30 million USD in net worth), behind the United States (101,240), Chi- na (29,815), Japan (21,300) and Germany (15,435). In Canada, if these individuals were to invest a mere 1.2% of their aggregate $1.2 trillion into local startups, we would mobilize nearly $14 billion of investment to sup- port our country’s entrepreneurs. More than capital, these individuals would bring mentorship, relation- ships, and access to growth networks. Of the many vehicles we are leveraging to introduce early-stage investing to a new community of potential investors, we are excited about the upcoming release of NACO’s Pathways magazine – Canada’s only print publication at the intersection of innovation, capital and entrepre- neurship.
1 http://go.wealthx.com/world-ultra-wealth-report-2021
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
Creating Pathways toCanada Preface N ACO is a proud partner with the Canadian Gov- ernment to administer the Start-up Visa Program and we see incredible potential to increase the impact of this important program. As we look forward to a new world post-pandemic, the need for economic recovery is crucial to continue our accelerated growth as a leading innovation economy. The pandemic has taught us that we can compete globally from Canada and it’s clear that immigration will be part of our competitive advantage.
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P R E FAC E Cr ea t i ng Pa t hways t o Canada
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We need more success stories like ApplyBoard, the $4 billion edtech unicorn company founded by brothers Martin, Massi and Meti Basiri from Iran. ApplyBoard, established inCanadaunder theStart-upVisaProgram, offers a proprietary online platform that helps match students with institutions and assists them with each step of the application. Students can apply to multiple schools at once through ApplyBoard’s standardized application. ApplyBoard has created more than 900 jobs and has helped 150,000-plus students apply to educational institutions worldwide. With new targeted programming to better support our network of angel organizations, incubators and accelerators, Canada will be well-positioned to attract more newcomer en- trepreneurs to build their high-growth, job-creating businesses here in Canada.
$4billioncompany. 900 jobscreated. 150,000+ students helped.
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Looking Forward Preface
W e have called this year’s report The Changing Landscape not only because we want to cele- brate increasing diversity across the early-stage invest- ment community, but because we think building back better means building differently. In 2020, we cele- brated the launch and growth of initiatives and orga- nizations to engage a new community of investors and create new pools of capital for historically underrepre- sented and underserved entrepreneurs. One such ini- tiative is The Black Presidents Club, a group of business leaders charged with investing in, guiding and champi-
oning young Black entrepreneurs, launched in partner- ship with the Bay Mills Investment Group. There is much to celebrate and so much more to do. The early-stage capital ecosystem provides more than just investment dollars. These investors provide pa- tient capital, mentorship and network access to grow- ing companies in local communities across Canada. By increasing the diversity of our investor community, we can create more equitable and accessible environments for Canada’s entrepreneurs.
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P R E FAC E Look i ng Fo rwa r d
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Building differently means identify- ing and amplifying new voices and creating new systems and struc- tures that provide all entrepre- neurs with the tools they need to bring their ideas to life. Entrepre- neurship can build and grow local communities by generating wealth, creating jobs, and introducing new innovations that provide a greater quality of life for our citizens. Together, we can build an innovation ecosystem that lifts up all Canadians.
We are fortunate to have partners who are committed to working alongside NACO and our mem- bers to bring increased levels of diversity and investment capital to communities across Canada. And we wish to thank our members, community partners, corporate partners and government part- ners for joining us in this import- ant and ambitious work. In order to create change in our early-stage capital ecosystem, we will need to walk in lockstep with community leaders, policy-makers, educators, entrepreneurs and investors to- wards the goal of an equitable startup ecosystem.
MA RY LONG - I RW I N Board Chair National Angel Capital Organization
C L AUD I O ROJ AS CEO National Angel Capital Organization
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Préface
MA RY LONG - I RW I N Présidente du Conseil National Angel Capital Organization
C L AUD I O ROJ AS PDG National Angel Capital Organization
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l'évolution des activités d'inves- tissements providentiels, ayant at- teint plus d'un milliard de dollars in- vestis par nos membres lors des 10 dernières années. Cette étape char- nière a été annoncée en pleine péri- ode d'incertitude pour la commu- nauté des anges financiers et pour tout l’écosystème d'innovation. Par la suite, l'impact de la pandémie de COVID-19 s'est fait sentir dans tout le pays. Notre communauté d'an- ges investisseurs et de leaders de l'innovation ont alors exprimé leur inquiétude quant à l'avenir de l'in- vestissement providentiel, craignant que le déclin des investissements en démarrage se répercute sur tout l’écosystème, contraignant l’émer-
programmes permettant de soute- nir tant les sociétés innovantes que les petites entreprises. De l'autre côté, la pandémie a fait ressortir la fragilité potentielle de l’écosystème de démarrage. Une proportion im- portante de regroupements d’ang- es investisseurs n’ont réalisé aucun investissement durant l’année. De plus, nous notons une diminution soutenue de la taille moyenne des transactions et une réduction de la somme totale des fonds inves- tis, alors même qu’un nombre plus élevé de startups avaient besoin de capitaux.
Ce rapport annuel portant sur les investissements providentiels au Canada fait état d’une réflexion approfondie, guidée par des don- nées. Il nous permet d'évaluer l’ef- fet de la pandémie sur les activités d’investissement en démarrage et d’en extraire un portrait aux multi- ples facettes. D'un côté, nous avons témoigné de la résilience des entre- preneurs qui se sont rapidement adaptés pour trouver de nouvelles opportunités face à des difficultés incroyables; d’investisseurs qui ont relevé le défi en contribuant men- torat et capitaux devenus essenti- els dans un climat incertain; et de gouvernements qui ont réagi rap- idement en mettant en place des
Lors de l’année 2020, NACO a mar- qué une étape importante dans
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Lors de ces rencontres, nous avons reçu des encouragements formida- bles qui ont propulsé notre tran- sition vers ce que nous appelons maintenant NACO 2.0. Après plus de 20 ans, notre organisation était au point où elle devait repenser à sa raison d’être, ce que nous avons fait à la lumière de vos commentaires. Nous savons que les entrepreneurs de toutes les régions et de tous les horizons ont besoin d'un accès équitable à des ressources qui sont difficilement disponibles locale- ment. En misant sur des solutions numériques bien exécutées nous savons que nous pouvons améliorer les liens à l’échelle nationale et don- ner aux entrepreneurs un accès aux
d’alimenter et soutenir l'élabora- tion de politiques et de programmes économiques. Cette table ronde a réuni plus de 6000 membres de la communauté canadienne de l'innovation et nous y avons notamment discuté de l’im- portance de la préservation de no- tre écosystème d'innovation. Le message le plus fort à en ressortir s’avère l’importance d’innover à la vitesse de la crise. Ainsi, la mise en place rapide de mesures audacieus- es garantirait que tous les entrepre- neurs aient accès au capital et au soutien de la communauté dont ils ont besoin afin de prospérer face à l'incertitude.
gence d’entreprises à forte crois- sance au moment où nos économies régionales en ont le plus besoin. Lorsque la COVID-19 a bousculé le monde en mars 2020, NACO s’est rapidement adapté et nous avons amorcé une série de discussions à l’échelle nationale en réponse à la pandémie et de son effet sur les entrepreneurs à travers le Canada. Ces événements collaboratifs ont réuni des entrepreneurs, des anges financiers, des sociétés de capital de risque, des décideurs, d'éminents responsables gouvernementaux, des universitaires et des leaders du secteur de l'innovation. Ensemble, nous avons réuni nos forces afin
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Créer des voies vers le capital Ce rapport annuel démontre une fois de plus un déséquilibre géo- graphique dans l'activité d'inves- tissement providentiel organisée. Les regroupements d’anges inves- tisseurs prennent diverses formes et offrent aux entrepreneurs un accès à des investisseurs providentiels qui fournissent du mentorat, des capi- taux et des réseaux essentiels pour aider les entreprises à se dévelop- per et grandir. L'accès à un ange investisseur était autrefois presque entièrement tributaire des connais- sances et de l'accès à un certain type de réseau de contacts. Encad-
d’accéder équitablement aux op- portunités de réseautage, de crois- sance et d’accès au capital qui sont disponible à l’échelle nationale. Alors que la reprise économique se dessine, NACO s'efforce de faire le pont entre les entrepreneurs inno- vants, le capital et la communauté dont ils ont besoin pour bâtir l'ave- nir du Canada. En travaillant aux côtés de nos partenaires provenant de diverses communautés locales et des gouvernements, nous nous engageons à créer de nouvelles av- enues vers une prospérité inclusive.
ressources qui leur permettront de croître dans leurs régions tout en se développant à l'échelle globale. Afin de donner une plus grande visibilité nationale à l'Ouest canadien et au Canada atlantique, nous avons or- ganisé deux sommets virtuels avec plus de 2000 délégués, réunissant des investisseurs et leaders prov- enant de près de 40 pays. Mainte- nant que les rencontres et événe- ments en personne sont à nouveau possibles, NACO poursuit sa mis- sion d’outiller les entrepreneurs qui oeuvrent en région, ou au sein d’industries ayant moins facilement accès aux investissements, en leur donnant un outil leur permettant
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tions providentielles dans les com- munautés à travers le Canada. Le changement est à notre portée. En plus des déséquilibres géo- graphiques, nous continuons de constater un manque de connais- sance de l’investissement provi- dentiel chez les entrepreneurs. La compréhension de ce qui rend une entreprise attrayante pour les in- vestisseurs et la façon d’attirer des investissements n'est pas intuitive. Pour relever ce défi, NACO a mis sur pied un nouveau programme de préparation à l’investissement providentiel, offrant des ateliers et des ressources en direct et à la demande aux entrepreneurs ainsi
Yukon: An action plan to support entrepreneurs in Canada's Emerg- ing Ecosystems. Ce rapport four- nit un plan directeur pour encad- rer le développement des activités d’investissements providentielles dans les communautés à travers le Canada et guider les agences de développement économique, les accélérateurs, les incubateurs et les chefs d'entreprise qui cherchent à combler les lacunes dans leurs éco- systèmes d'innovation locaux. En consultation avec NACO, de nou- velles organisations d’anges inves- tisseurs émergent dans des endroits comme Winnipeg et Grande Prairie et des projets sont en cours pour la formation de nouvelles organisa-
rer les activités d'investissement providentiel permet d’éliminer ces obstacles, facilitant un rapproche- ment immédiat entre les entrepre- neurs et les anges investisseurs ayant une expertise dans divers sec- teurs. Sans activité providentielle organisée, de nombreux entrepre- neurs, en particulier ceux issus de communautés sous-représentées, font face à des obstacles dans l’ob- tention de financement et de con- seils dont ils ont besoin pour dével- opper leur entreprise. En 2020, NACO a également publié un nouveau rapport en partenari- at avec le gouvernement du Yukon intitulé Mobilizing Angel Activity in
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pour les entrepreneurs, mais créent également de nouvelles voies d'in- vestissement en facilitant l’arrivée de nouveaux investisseurs et en éliminant les obstacles structurels. De nouveaux mécanismes poli- tiques travaillent dans ce sens en assouplissant certaines restric- tions relatives aux investissements dans des entreprises privées et en démarrage. À la suite de consulta- tions avec NACO et d'autres inter- venants clés, les autorités cana- diennes en valeurs mobilières des provinces de l’Alberta et de la Sas- katchewan (respectivement Alberta Securities Commission et Financial and Consumer Affairs Authority de
points d'entrée accessibles, de mé- canismes politiques complémen- taires, d'initiatives d'éducation et de sensibilisation. Plusieurs de ces projets sont bien avancés. Nous avons constaté une augmen- tation du nombre de femmes anges investisseurs grâce en partie au tra- vail des membres de la NACO, The51 et du Women's Equity Lab, ainsi que le démarrage de nouveaux groupes visant à répondre aux besoins des fondateurs sous-représentés, tels que Backbone Angels. Dans plu- sieurs communautés à travers le Canada, les organisations provi- dentielles créent non seulement de nouvelles voies d'accès au capital
qu'un mentorat individuel avec des anges investisseurs. En 2021, nous poursuivrons l’élaboration de cette programmation avec l’ajout de nou- veaux ateliers et ressources. Créer des voies d'inves- tissement L'investissement providentiel est essentiel afin de garantir un solide pipeline d'entreprises en croissance et le besoin d'attirer de nouveaux investisseurs dans l'écosystème est plus important que jamais. Pour mettre en place une nouvelle com- munauté d'investisseurs providen- tiels, nous aurons besoin d'une approche à plusieurs volets com- prenant notamment la création de
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davantage la visibilité des activi- tés d’investissement en phase de démarrage. Selon les données de 2021, le Canada (11 010) se classe au cinquième rang de la population mondiale ayant une valeur nette élevée, définie comme les personnes ayant une valeur nette supérieure à 30 millions de dollars américains, derrière les États-Unis (101 240), la Chine (29 815), le Japon (21 300) et l'Allemagne (15 435). Au Canada, si ces personnes n'investissaient que 1,2 % de leur actif total cumulat- if de 1,2 billion de dollars dans des startups locales, nous mobiliserions près de 14 milliards de dollars en investissements disponibles pour soutenir les entrepreneurs de notre
des compétences concrètes afin de prospérer dans l’environnement compétitif du secteur de l'investisse- ment. Avec l'arrivée de nouveaux investisseurs dans l'écosystème, l'accès à l'éducation est essentiel pour assurer une prise de décision éclairée et une activité d'investisse- ment durable à long terme. NACO s'engage à mettre des ressources éducatives à la disposition des in- vestisseurs actifs et aspirants, et tout particulièrement à l'extérieur des grands centres urbains. Afin de poursuivre sur cette lancée, nous devons faciliter la rencontre entre les entrepreneurs et les in- vestisseurs potentiels et rehausser
Saskatchewan) ont mis en place un projet pilote afin d’élargir la défi- nition d'investisseur accrédité. De nouvelles exemptions liées au fi- nancement participatif en actions ont également été annoncées réce- mment, permettant de nouveaux points d'entrée pour les individus faisant leurs premiers investisse- ments dans les startups. Les nouveaux investisseurs, ainsi que les plus chevronnés, continuent de se tourner vers le programme re- connu de la NACO Academy. Celui- ci tire parti de la sagesse collective de plus de 4 000 anges investis- seurs, permettant à ses participants d’acquérir des connaissances et
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Créer des voies vers le Canada En tant que fier partenaire du gou- vernement du Canada, NACO ad- ministre le programme de visa de démarrage et nous y voyons un potentiel incroyable pour multipli- er l'impact de cette importante ini- tiative. La pandémie aura changé le monde, et en regardant vers l’avant, nous devons nous assurer que la reprise économique nous permette d’accélérer notre croissance en tant que leader de l'économie d’innova- tion. La pandémie nous a appris que nous pouvons rivaliser à l'échelle mondiale à partir du Canada et il est clair que l'immigration fera partie de notre avantage concurrentiel.
Nous avons besoin d’encore plus d’entreprises à succès comme Ap- plyBoard, une société du domaine EdTech de 4 milliards de dollars fondée par les frères Martin, Mas- si et Meti Basiri d'Iran. ApplyBoard, établie au Canada dans le cadre du programme Start-up Visa, offre une plateforme qui permet de jumeler des étudiants avec les établisse- ments d’enseignement en les aidant à chaque étape du processus. Les étudiants peuvent postuler à plu- sieurs écoles à la fois via l'applica- tion standardisée d'ApplyBoard. Ap- plyBoard a créé plus de 900 emplois et a aidé plus de 150 000 étudiants à postuler dans des établissements du monde entier. Avec de nouveaux
pays. En plus de leur apport en cap- ital, ces personnes pourraient offrir du mentorat, mettre à contribution leurs relations et faciliter l'accès à des réseaux de croissance. Parmi de nombreux outils que nous avons développés afin de faire la promo- tion de l'investissement de démar- rage auprès d’une nouvelle com- munauté d'investisseurs potentiels, nous sommes particulièrement em- ballés par la sortie prochaine du magazine Pathways de NACO - la seule publication imprimée au Can- ada à l'intersection de l'innovation, du capital et de l'entrepreneuriat.
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L'écosystème de capital de démar- rage fournit plus que de simples investissements. Ces investis- seurs fournissent du capital à long terme, du mentorat et un accès à un réseau aux entreprises en crois- sance, et ce, dans leurs collectivités à travers le Canada. En améliorant la diversité de notre communauté d'investisseurs, nous pouvons créer des environnements plus équitables et accessibles pour les entrepreneurs canadiens. Les bénéfices de la diversité sont concluants - d'innombrables études ont montré qu'une augmentation de la diversité est en corrélation avec
que nous pensons que mieux recon- struire signifie construire différem- ment. En 2020, nous avons célébré le lancement d'initiatives et la crois- sance d'organisations dévoués à soutenir une nouvelle communauté d'investisseurs. Nous avons créé de nouveaux réseaux de capitaux dédiés à soutenir les entrepreneurs qui étaient auparavant mal desservis et sous-représentés. L'une de ces initiatives est le Black Presidents Club, un groupe de chefs d'entre- prise chargés d'investir auprès de jeunes entrepreneurs Noirs, de les guider et de les soutenir. Il y a beau- coup à célébrer et tellement plus à faire.
programmes ciblés pour mieux sou- tenir notre réseau d'organisations providentielles, d'incubateurs et d'accélérateurs, le Canada sera bien placé pour attirer plus de nouveaux arrivants entrepreneurs afin de bâtir leurs entreprises à forte crois- sance et créatrices d'emplois ici au Canada. Vers l’avenir Nous avons intitulé le rapport de cette année The Changing Land- scape of Early-Stage Capital non seulement parce que nous voulons célébrer la diversité croissante au sein de la communauté des inves- tisseurs en démarrage, mais parce
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les outils dont ils ont besoin pour donner vie à leurs idées. L'entre- preneuriat peut soutenir et faire grandir des communautés entières en générant de la richesse, en créant des emplois et en favorisant la création de nouvelles innovations pouvant améliorer la qualité de vie de nos concitoyens. Ensemble, nous pouvons bâtir un écosystème d'innovation qui élève tous les Canadiens.
que tous nos partenaires commu- nautaires, corporatifs et gouver- nementaux qui se sont joints à nous afin d'accomplir ce travail import- ant et ambitieux. Afin de favoriser un changement dans notre écosys- tème d’investissements en début de croissance, nous devons travailler de pair avec les dirigeants commu- nautaires, les décideurs politiques, les éducateurs, les entrepreneurs et les investisseurs vers l’atteinte d'un écosystème de startups équitable. Construire différemment signifie identifier et amplifier de nouvelles voix tout en créant de nouveaux systèmes et un encadrement qui fourniront à tous les entrepreneurs
une augmentation de la productivité et des revenus. Le temps est venu de se concentrer à reconstruire no- tre économie et positionner notre pays afin d’en assurer la prospérité, et il est dans notre intérêt de se pencher sur la façon dont nous pou- vons créer un écosystème d'innova- tion équitable au profit de tous les Canadiens. Nous avons la chance d'avoir des partenaires qui se sont engagés à travailler aux côtés de NACO et de nos membres afin d’améliorer le niveau de diversité et de capitaux disponibles aux collectivités partout au Canada. Nous souhaitons d'ail- leurs remercier nos membres ainsi
MA RY LONG - I RW I N Présidente du Conseil National Angel Capital Organization
C L AUD I O ROJ AS PDG National Angel Capital Organization
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
Spotlighton
The following designated organizations support eligible immigrant entrepreneurs on their journey to permanent residency to establish their businesses in Canada.
NACO administers the business incubator and accelerator stream and angel investor stream of the Immigration, Refugees and Citizenship Canada (IRCC) Start-up Visa Program by des- ignating leading angel groups and incubators/ accelerators from across the country.
Southeastern Ontario Angel Network Spark Commercialization and Inno- vation Centre Spring Activator TenX Angel Investors Inc. The DMZ at Ryerson University Toronto Business Development Centre Techstars Canada University of Toronto Entrepreneur- ship Hatchery VANTEC Angel Network Inc. VIATEC Waterloo Accelerator Centre York Angel Investors Inc. York Entrepreneurship Development Institute
Innovation Factory Interactive Niagara Invest Ottawa Keiretsu Forum Canada Planet Hatch LatAm Startups Launch Academy - Vancouver LaunchPad PEI Inc. Millworks Centre for Entrepreneur- ship NEXT Canada North Forge East Ltd. North Forge Technology Exchange Oak Mason Investments Inc. Pacific Technology Ventures Ltd Platform Calgary Pycap Venture Partners FounderFuel Ryerson Futures Inc.
Alacrity Foundation Alberta Agriculture and Forestry - Agrivalue Processing Business Incubator - Food Processing Devel- opment Centre Manitoba Technology Accelerator Brilliant Catalyst Canadian International Angel Investors Creative Destruction Lab Ekagrata Inc. Empowered Startups Ltd. Extreme Innovations Genesis Centre Golden Triangle Angel Network Highline BETA Inc. Innovacorp Innovation Cluster - Peterborough and the Kawarthas
To learn more about the Startup Visa Program please visit builtbyangels.com/startupvisa
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
Executive Summary
2 0 2 1 ANNUA L R E P ORT ON ANG E L I N V E S T I NG I N CANADA The Chang i ng Landscape
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Investment Context Executive Summary
T his is the 11th annual Report on Angel Investing in Canada. It reports on the investment activity of an- gel organizations in 2020 – the year of the COVID-19 pandemic. The Canadian economy suffered a dramatic contraction in economic activity from March as govern- ments at all levels introduced restrictions on individuals and businesses in an attempt to control the coronavi- rus. There was a partial economic recovery in the mid-
dle of the year but further economic contraction later in the year as the second wave of the pandemic took hold. There was concern in the early months of the pandem- ic that it would result in a significant decline in angel investing, which would adversely impact the innovation ecosystem on account of the critical role of angel in- vestors in investing at the start of the entrepreneurial pipeline in new and emerging businesses.
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
E X ECU T I V E S UMMA RY I nves tment Ac t i v i t y Ove r v i ew
2010-2021 Cumulative Investment
TOTAL $1,119,926,461
2020: $102.9 million.
Québec 2020: $22,291,256
Atlantic Canada 2020: $1,086,623
$208,140,631
$168,527,901
$8,962,258
$156,380,000
Western Canada 2020: $21,913,808
Northern Ontario 2020: $22,970,000
Southern Ontario 2020: $35,313,400
$577,915,671
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
E X ECU T I V E S UMMA RY
Fueling the Entrepreneurial Pipeline
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Investment Activity Overview Executive Summary
T his report is based on responses from 29 active an- gel organizations, representing a diverse cross-sec- tion of Canada’s angel community. Of the 29 organiza- tions surveyed, 24 had made investments in 2020. This is similar to the number of organizations reporting on their investment activity in previous years. These angel organizations made 416 investments totalling $102.9 million. This is a 39% increase in the number of invest- ments compared with 2019 but was a lower figure than in 2018. In contrast, the total amount invested by re-
sponding angel organizations – $102.9 million – was lower than in both 2019 and 2018. There was also a decline in the size of investments. The average (mean) amount invested per company in 2020 was $289,792, which was significantly lower than in 2019, although similarly reflects the average per company early-stage round size seen in 2018. The median size of investment in 2020 – $100,000 – was also significantly lower than in both 2019 and 2018.
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
E X ECU T I V E S UMMA RY I nves tment Ac t i v i t y Ove r v i ew
41
of deals increasing by 67% over Q3 and the amount invested up 32% over Q3.
amount invested actually increased by 26%.) Deal activity bounced back in Q4 as the economy partially re- covered and angels began to adjust to online investing, with the number
Investment activity fell slightly from Q1 to Q2 of 2020 (-10% in deals and -12% in the amount invested). Deal activity dropped sharply in Q3 (20% fewer deals than in Q2, although the
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Angel Organization Characteristics Executive Summary
T he majority (66%) of angel organizations are or- ganized in not-for-profit structures, while 31% are for-profit entities. Most angel organizations (76%) charge investors for membership, with fees ranging from $250 to over $1,000 per year. The proportion of angel organizations that charge investors a membership fee
has risen year on year. Just over half of the angel organi- zations (57%) extend membership to corporate entities (typically professional service firms). Fees for corpora- tions are typically higher than those for individuals (83% are above $1,000).
202 1 ANNUAL REPORT ON ANGEL I NVEST I NG I N CANADA The Chang i ng Landscape
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