Universities – Most universities have incubators, accelerators, business plan competitions, entrepreneurship degrees or courses, technology transfer offices, great labs, and injections of government money. Add to this the educated young people seeking jobs and you have a recipe for large numbers of new startup companies. A difficulty is that universities can be labyrinth-like, without a central point of focus or contact. Each department or faculty may offer its own programs, facilities, competitions and advisors. For example, at Ryerson University in Toronto, we generate over 400 new startups a year through almost a dozen different incubators and accelerators (ranging from digital media and urban energy to fashion, law, design and social ventures), many different competitions and awards, several seed capital sources, and our own venture capital fund (Ryerson Futures) that offers up to $80,000 in financing. Each of these programs has its own group of advisors, mentors, funding and educational programs. Regional innovation centres – These not-for-profit organizations tend to be funded by the government, but are not part of the government. Almost every major city in Canada has one, and relatively large cities might have over a dozen, funded by different constellations of municipal, regional, provincial, federal, charitable and sponsor organizations. They often contain incubators and provide entrepreneurs with such services as mentorship, education, access to Entrepreneurs-In-Residence, consulting, and networking opportunities. For-profit incubators, accelerators and co-working spaces – These often provide startups with an intensive three- or four-month growth acceleration and around $10,000–25,000 in funding, office space and facilities – along with mentorship, services and introductions to customers – in exchange for around 8% of their equity. These organizations are always seeking follow-on investors when their hatchlings graduate. Other accelerators provide much larger amounts of funding: FounderFuel in Montreal invests $50,000–100,000 of capital and over $400,000 in perks and services. “Trust is key when building a strong referral network,” says Bryan Watson, “In 2015 alone, the portfolio of companies at INcubes (a Toronto-based for-profit incubator) secured just under $5 million in follow-on funding, primarily from Angel investors. When asked, these follow-on investors noted that they liked our portfolio company referrals because INcubes only sent them high-quality opportunities. They knew that, as a private accelerator that was solely Angel-backed, our incentives and motivations were aligned with those of other investors – to invest in the best companies possible.” Service providers – Accountants, lawyers, consultants and bankers tend to be well-connected sources of deal flow, especially if they are active in the early-stage investment ecosystem. Online searches – There are many online portals and marketplaces where Angels can find and co-invest or syndicate deals, including AngelList (www.angel.co/canada), Gust (www.gust.com), EquityNet (www.equitynet.com), and CanadianInvestmentNetwork (www.canadainvestmentnetwork.ca). According to some, these online marketplaces result in around 30% of all Angel deals in the US.
34 A Practical Guide to Angel Investing: How to Achieve Good Returns
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