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This article was published 14/7/2016 (703 days ago), so information in it may no longer be current.
This may not be the epicentre of activity, but angel investing is alive and well in Manitoba.
Last year, Manitoba companies raised about $30 million from at least three groups of angel investors.
According to a report released this week by the National Angel Capital Organization, nationally there was almost a 50 per cent increase in the amount invested by the angel investor groups the group is getting data from.
The report, called 2015 Report on Angel Investing Activity in Canada: Scaling Up Angel Capital to Drive Canadian Innovation, says 1,650 active angels from 32 angel groups made 283 investments amounting to $133.6 million.
That compares with 237 investments amounting to $90.5 million from 30 groups in 2014.
The average deal size has gone from $150,000 six years ago to $1.2 million in 2015.
The group has been working hard at collecting data to share best-practices ideas, deal flow, access to information if members want to syndicate deals or raise larger pools of capital, but its CEO, Yuri Navarro, knows they’re still only scratching the surface.
"Angel investing in Canada has come a long way in four years, but it’s still quite nascent," Navarro said. "It’s still early days, but we are trying to accelerate the process through the development of a network."
In Manitoba, there are at least three active groups: the Manitoba Knights which is very closely associated with the Manitoba Technology Accelerator (and which does not report its activities to the national organization); Mean Eyed Cat, which is an aggregation of a number of angel investors from outside Winnipeg; and the Winnipeg chapter of Alberta-based VA Angels.
It’s not clear how much investing VA Angels did in Manitoba last year, but Rob Warren, who co-ordinates activities for Mean Eyed Cats’ 52 investors, said the group placed about $15.5 million in 2015, about 90 per cent of which went to Manitoba companies.
Warren said, "The group invests in everything from metal-bashing manufacturing companies to fintech companies."
One of its biggest deals in 2015 was $1.5 million in a Winnipeg company called SiteDocs, a company that has developed digital tools for companies to successfully maintain, manage and build their workplace safety programs.
"We like this one because management has done this before, and they know how to use this type of money," Warren said.
Mean Eyed Cats was only formed at the beginning of 2015, so comparable rates of investment are really not available for that group.
But Manitoba Knights has been around for about five years, and its investment activity has gone up dramatically.
The group was formed by Marshall Ring, the CEO of the Manitoba Technology Accelerator.
"The Knights invest through MTA clients," he said. "They have the same investment criteria that the clients at MTA have, which is J-curve potential technology companies with globally competitive advantages."
Last year, about 10 Manitoba Technology Accelerator companies raised a total of $12.6 million compared with $4.1 million the year before and about $3 million the year before that.
Ring said not all those funds came from the Manitoba Knights, but a good portion of it did.
In fact, the Knights’ presence as investors helped leverage additional funds, which is part of the dynamic that the National Angel Capital Organization is trying to foster.
Navarro said organization was really only able to capture the data from 25 groups that accounted for the $133.6 million in deals last year. But he said data suggest there are about 500,000 accredited investors in Canada, which is the minimum requirement to legally invest in startups. He said if you assume about 10 per cent of them "have the stomach and the experience to do angel investing," that means there are 50,000 potential angel investors in the country.
"We only represent about 3,000 of them, so only five to 10 per cent of the total, and we figure just in our membership alone there is probably close to $400 million to $500 million in deals done outside the angel system," Navarro said. "So in total we would be comfortable with a conservative estimate of between $500 million to $1 billion in angel investment each year in Canada, and I would say that is still low."
The national group is looking to professionalize angel investing activity while many angels still prefer to keep a very low profile. By trying to bridge that gap between the lone wolf investor and the startup looking for funding, the national group’s efforts are certainly worthwhile.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.