The Innovation and Collaboration Blog Jam

An interesting report that surfaced yesterday:

Angel Capital Activity on the Rise: More Investments to More Companies

TORONTO, July 18, 2012 /CNW/ - The National Angel Capital Organization (NACO) is pleased to announce the release of the Investment Activity by Canadian Angel Groups: 2011 Report. This report, the second of its kind, examines 2011 activity levels and highlights trends such as a significant increase in levels of Angel activity. The report also presents an initial analysis of the mode of exit and the returns generated by Angel-backed companies.

Significant findings of this report include:

~12% increase in the number of business plans funded as a proportion of those selected for detailed review.

2% increase in the number of business plans funded as a proportion of those received.

134 investments in 2011 (103 new and 31 follow-on) totalling $82.4 million ($60.5 million new and $21.9 follow-on), 90 investments (80 new and 10 follow-on) were made in 2010 totalling $35.3 million ($34.2 new and $1.1 follow-on).

$172K increase in average investment, from $442K in 2010 to $614K in 2011.

ICT (51%), clean technology (21%), and life sciences (17%) received the largest proportion of investments.

ICT ($33.3M), life sciences ($26.6M), and clean technology ($17.5M) received the most investment.

70% of recorded investments involved a co-investor, with 74% of these being either independent Angel investors or investors associated with an Angel Group.

49% of investments indicated government support in the form of a regional economic development agency program.

72% of investment exits were from a 'sale to/merger with another company'.

4 years or more was the length of time investments took to mature before an exit took place.

"The impact, importance and growth of the Angel community in Canada is clear, with more Angels investing more capital in more companies across the country in 2011," said Bryan Watson, Executive Director of NACO. "To continue to support this trend of investment into Canada's emerging companies, the Government of Canada must develop national programs that reduce the substantial risk Angel investors face and leverage additional capital into the market through co-investment programs, tax credits and direct support to the Angel community."

"Angel investor groups invested significantly more capital in 2011 than in 2010," said Michelle Scarborough, Chair of NACO. "For 2011, NACO estimates that Angel investors in Canada invested just under $1 billion into high-growth, early-stage companies across all industries and geographies. As such, Angels continue to fill an important financing gap at the early and growth stage of company development, putting our own capital to work along with our expertise, helping to mentor entrepreneurs during critical stages of company development and helping accelerate company growth."

This study was funded by Industry Canada and BDC Venture Capital.

BDC VC is working with a number of angel groups across the country, including NACO, to help them thrive. "Angels are playing a considerable part in starting to fill the financing gap that Canadian startups continue to face in their early stage," said Michael Mahon, Director, Strategic Initiatives and Investments at BDC VC. "Canada needs strong angel networks capable of providing not only early-stage funding, but also mentorship to entrepreneurs. It is important to get a better understanding of the Canadian angel capital market so that we can more effectively support it."