There's been a lot of talk about the need
for an Angel investor network in the Lower Mainland. Now we have one.
A
key factor in the development of new technology ventures is the access
to early stage smart money, i.e. seed or startup funding accompanied by
some management support and mentoring. Individuals who have successfully
run and profited from building their own tech ventures are ideal Angel
investors.
In
BC, the number of such entrepreneurs is growing. And many of them have
reinvested some of their gains and time in new startups. However, they
generally don't have a web site or hang up their shingle on Howe Street.
They often find their opportunities through referrals or by seeking them
out. Many of these business angels cut their own deals with good
candidates, often on their own.
In
many technology centers, notably Silicon Valley and now BC, networks of
angel investors have formed to foster this process. This offers angels
the benefits of each other's camaraderie, syndication opportunities,
better and more qualified deal flow, and access to even earlier stage
companies.
The
Vancouver Enterprise Forum (http://www.vef.org)
has recently facilitated the formation of a business angel network in
the Vancouver area. The first meeting, which was held in April, started
with a bang and heard three local entrepreneurs make their cases. Of the
more than thirty angel participants at this meeting, virtually all
embraced the concept with much enthusiasm.
The first event focussed on information technology
(hardware and software) since most of the angels' backgrounds were in
this field. However, as interest increases, networks focussing on other
areas, such as biotechnology, could be formed.
To join the angel network, one would have to demonstrate
some hands-on experience and be in a position to make a personal
investment in the five-figure range. Agents, assistants, brokers or
traditional venture capitalists or bankers who manage other people's
money are, in general, excluded from participating.
To be invited to make a presentation, company founders can
either be referred by a participating angel, or submit a brief summary
of their project via the website. In the latter case, a few volunteer
participants will screen the applications in order to select those for
the next agenda. These, as well as those which are not selected, may
still be of interest to some angels and may be approached individually.
Those applicants who are not contacted by any of the angels within a few
weeks' time can assume that they were unable to muster up any interest.
There is no onus on members to provide a response. Angels like anonymity
and don't want to get bogged down in administrative processes.
Regular monthly breakfast get-togethers will be held in
order to entertain new business cases. Presenters will be allowed ten
minutes to give their "elevator pitch", followed by 10 minutes of
questions and answers. After they leave, the network members will spend
a few minutes comparing notes and exchanging ideas in order to see who
among the group has any further interest in that particular deal. If
none are interested, this should signal the would-be entrepreneur to go
back to the drawing board.
The way I see it, of the two key issues
facing the development of BC high tech enterprise - people and
investment - this new Angel network could have a profound impact on
mobilizing early stage financing. I can't help but imagine how much more
impact this initiative could have if we had less punitive capital gains
taxes or investment tax credits!
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