T HE S YNERGY B ETWEEN A NGEL N ETWORKS A ND C ORPORATE V ENTURING by Bryan Pilsworth C HAPTER 6
S U M M A R Y The growth of a seed company is frequently dependent on the availability of risk capital, often provided by angel investors. Angels fill a necessary gap between “love money” and the professional financing provided by venture capitalists. Unfortunately, the tough economic climate and the challenge of achieving the exceptional investment returns of the recent past have affected the ability of angels to fulfill this role. Angels have been adversely affected by declining valuations, fewer exit opportunities and higher market risk. In response, angels have formed local and national networks to pool capital, enhance due diligence and diversify investments. While angel networks are achieving new levels of scale, negative market pressures may ultimately force these networks to co-partner with corporate venture capitalists (CVCs) in order to reduce investment risk. Working with corporate venturing arms enables angel networks to: • Obtain insight into growth markets and corporate spending. • Acquire valuable feedback to improve due diligence and help the startup. improve its product in the post-investment period. • Provide additional capital and a path to subsequent financing. • Improve a start-up’s credibility through a corporate association. • Leverage corporate sales channels to generate revenue more quickly. Despite these benefits, angel networks can still expect to face difficulties in finding common ground with a limited number of corporate venture capitalists in Canada. In particular, angels may find it challenging to find venture arms that focus on seed-stage investments. Among the few CVCs known to the writer that do explore opportunities with seed-stage companies are Bell Mobility's Accelerator Fund, Hydro-Québec CapiTech, BDC Venture Capital and Noram’s Technology Incubator.
43
Powered by FlippingBook