By Leo Valiquette
Last week, a new angel investing network launched in the National Capital Region to support new business initiatives, mentor the next generation of entrepreneurs, and of course, generate great returns for investors.
The Capital Angel Network (CAN) is an informal network sponsored by the National Angel Capital Organization (NACO) where angels can view potential investments and discuss them as a group. The goals are to increase the quantity, quality, and success of angel investments in Ottawa, to create a greater pool of capital for innovative start-up companies and to complement existing angel groups.
Laurie Davis, a long time angel investor in the Ottawa area and a member of CAN’s board of directors, took a few moments to share his thoughts.
What was the impetus behind the creation of this new network?
Davis: I meet with entrepreneurs all the time and they tell me they have a great deal of trouble raising money. It’s always been difficult, but much more so in recent times for various reasons. It takes a lot time and effort to find enough angels to give you the amount of money you need. So if you can gather a number of angels together in a group, it saves the entrepreneur a lot of time and effort.
From the angel’s point of view, I enjoy working with others in a group and hearing their perspectives on things before agreeing to commit money.
What are your key objectives and goals?
Davis: Obviously this is only a useful exercise if companies get funded. In the end, the goal is to have people fund companies they find useful and interesting. We are going to track what happens and see if by the end of the year we have four or five companies that have been funded.
How is CAN different from other angel investor organizations that we have seen in Ottawa over the years, such as Purple Angel, Band of Scoundrels and the Ottawa Angel Alliance (OAA)?
Davis: I am a member of Purple Angel, a founder of OAA and friends with members of Band of Scoundrels. What are we doing different? We got some feedback when OAA wound down that there wasn’t much appetite for a formal organization. With OAA, you had to pay membership dues and commit to a certain level of investment. People didn’t like that level of formality. The bottom line is to try something different until you find something that works. The challenge of course, is to make sure you have real investors, as opposed to the room getting filled up with lawyers, accountants and other service providers looking for business. With the informal model that becomes a little harder, but we’ll be watching it.
Where do you think we have the most significant gap in turning great ideas into competitive commercial products that make it to market?
Davis: In general we have people who know how to go about building a product, but that whole go-to-market strategy, to know how to get a product to customers and to identify real customers – that’s the problem we have.
How will CAN help early stage companies overcome this hurdle?
Davis: We are not going to be tackling it directly. The key thing is, if you have a group of smart people in a room, the expectation is that someone will step up and help. The whole idea of angel investing is not to just provide money, it is to get involved and help where you can. We hope to see a lot of that.
What do you think of Terry Matthews’ recent announcement of his new commercialization fund?
Davis: It all helps. None of us are competing. There is a problem out there that needs to be solved and anything that can be done to solve it is a great benefit to the community.
What is the future of the venture capital model?
Davis: I wish I knew. It certainly is not pretty out there right now. If you look at it from an entrepreneur’s perspective, it is painful. And they are trying to address that by creating companies that need less capital. There are some businesses that you can launch with a few hundred thousand dollars, but others you simply can’t without tens of millions of dollars – and those are the companies no one wants to start right now. This is a huge problem and I don’t know how it’s going to be resolved. There is talk that institutional investors will invest directly in companies, as they once did – that would certainly help, but I haven’t seen this happen so far.
Technorati Tags: angel investor, angels, Purple Angel, National Angel Capital Organization, NACO, Capital Angel Network, Laurie Davis
