In yet another good sign of growing angel investor interest in backing promising startups, the Network of Angel Organizations – Ontario today announced that its members reported a 41-percent increase in direct investment into 77 Ontario companies over a 12-month period in 2012-2013. This comes on the heels of a report two weeks ago from the National Angel Capital Organization that its members injected $40.5-million into 139 young companies in 2012. Although NAO-Ontario did not reveal how much had been invested over the past 12 months, it said its members have put a total of $91.6-million into 169 Ontario companies since 2007.
Angel investors are high-net-worth individuals who are often the first external source of funding for new ventures. Many invest on their own, but increasingly in Canada we’re seeing angels come together in groups to share the due diligence burden and pool their investments.
Governments at both the federal and provincial levels are encouraging this collective activity, with Ontario’s Angel Network Program and the federal Investing in Business Innovation Outreach program both playing key roles in adding leverage to the angel investments. According to the NAO-Ontario, the provincial ANP was involved in $61.5-million worth of its members’ investments since 2007, while a further $163.3-million went to Ontario companies in the form of co-investments and follow-on investment by other investors. This created or sustained 2,200 jobs in the province, the NAO-Ontario said.
NAO-Ontario executive director Jeffrey Steiner said in a release that the government involvement encourages investors to come forward. “Entrepreneurs still need the private sector for the capital and expertise needed to commercialize,” he said. “By supporting the network, the government provides entrepreneurs an opportunity to attract growth capital from private investors province-wide.”