As the tech and startup industry becomes more lucrative in Canada, it means more individuals have the disposable income to fund ideas they find exciting. Those gains are starting to pay dividends for both new and established founders looking to scale.
Angel investing groups made 505 investments worth a total of $162.6 million into Canadian startups in 2017 according to the National Angel Capital Organization’s (NACO) eighth Report on Canadian Angel Investing Activity. The report surveyed 43 different Angel groups across the country and was developed in partnership with the Government of Canada, BDC Capital, RBC, BDO, and Ryerson Incubate and Innovate Network Canada.
“This latest report is very encouraging, as the data supports the developments we have been observing over the past several years, which shows a trend towards greater collaboration between Angels and other partners in the funding continuum including Venture Capital, IPOs, and commercial banks,” said Yuri Navarro, CEO of NACO.
Angel investors are affluent individuals who offer up their own money to help fund a company’s growth, whether it be in the early seed stages of a company or for larger scaling Series rounds. Often angel investors will form or join groups to make their money go farther when investing in specific companies.
The average deal size was $1.91 million, which represents a larger size than 2016, though this increase is slightly skewed by a small number of very large investments. Still, angel groups received more investment-seeking applications in 2017 than ever before, so despite a few outliers, the ecosystem is growing.
Angel investors tend to invest in extremely close proximity to where they reside. Central Canada has the highest concentration of investors with 72 per cent, while 26 per cent are located in Western Canada and two per cent in Eastern Canada. For the sixth year in a row, the Northern Ontario Angels are the number one group in Canada by the number of investments made.
Overall, there was a 20 per cent increase in 2017 in terms of total angel investments made, with a 3.4 per cent increase in the actual capital invested.
“Growth capital, especially angel investment, is vital to Canada’s innovation ecosystem and our competitiveness on the global stage,” said Navdeep Bains, Minister of Innovation, Science and Economic Development Canada. “The growth NACO is reporting in terms of both deal size and the breadth of support provided by angel investors is an excellent sign that Canada’s high-growth firms are being well-served by both the investment community, and through initiatives such as the Innovation Superclusters Initiative, which brings together companies of all sizes along with academia to advance bold and ambitious innovation strategies.”
In terms of what sectors the investments are being made into, the information-communication technology (ICT) dominates the field with 44 per cent of total deals and 28 per cent of dollars invested. Life sciences is second with 16 per cent of deals and 22 per cent of dollars, meaning investments in the field are typically much larger, mostly due to the set-up and expansion costs associated with life sciences companies versus the ICT sector.
In October 2017, NACO announced their awards and named Sophie Forest as their Canadian Angel of the Year. Forest is a managing partner at Brightspark Ventures.
And not to be outdone, Canadian VCs had an equally historic Q1 of 2018, investing the most in tech startups since the dotcom boom.