An angel investor, (also known as a business angel), is an individual or group of individuals who provide investment capital to new or growing businesses and expect a percentage of ownership equity in return.
Angel investing is a common business practice throughout North America and Europe. Most angels invest their own capital, although there are some angel groups (or angel networks) where several investors combine their capital so they can invest in more opportunities.
Angels typically seek investment opportunities in high growth, small-medium enterprises that are too young to qualify for bank loans or other traditional means of financing.
Angel investments in Northern Ontario provide a greater pool of capital and access to equity for innovative start-up and/or growing companies.
Northern Ontario Angels
The Northern Ontario Angels is Northern Ontario’s premiere organization for entrepreneurs (looking for growth capital) and angel investors (looking for investments). The creative concept and foundation of this network was developed to take Northern Ontario businesses to the next level. NOA is continually growing, developing and updating it’s Angel Investment Groups throughout the north. Presently, NOA supports Angel Investment Groups in Sudbury, North Bay, Thunder Bay and Sault Ste. Marie.
Answers for Entrepreneurs
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Originally, the term “angel” was coined to refer to the people who financed Broadway plays when all else failed. Today this term has become common among the investment community to refer to a high net-worth individual that invests their own personal funds in various businesses. In Canada, it is estimated that there are well over 200,000 potential angel investors that annually invest approximately $3 billion in Canadian businesses and currently own over $12 billion in existing equity. This represents roughly 7% of what the banks are investing. As well, statistics show that this figure trumps that of venture capital lending. The Canadian labor market and productivity centre estimates that angel investments have financed approximately twice as many firms as any other form of external equity investment, including institutional venture capital.
Angel investors are individuals who invest their own capital in expanding businesses, both in the technology and non- technology areas. These individuals typically have started up and built their own businesses and have significant net worth and income. Angel investors tend to be college-educated, and are extremely discerning in the projects that they will invest in. Angel investors typically invest in a business after the entrepreneur’s personal capital (capital from relatives and friends) has been exhausted, but before the business has reached a stage at which it will be eligible for venture capital investment. Angel investments typically range from about $25,000 to $250,000, although investments may range upwards of $500,000. Historically, most angel investors seek to invest close to home-within a “two-hour drive rule” of where they live.
Visit the should I apply for angel financing checklist as a guide. If you feel you have a suitable opportunity for consideration, simply enter the “Entrepreneur” log-in area, register, sign in, complete the application and submit. If you are unsure, please do not hesitate to contact us.
Your application will be sent directly to our professional NOA staff who will contact you as soon as possible. Since the organization cannot sign Non-disclosure/Confidentiality Agreement, entrepreneurs must be judicious regarding the extent of proprietary information revealed.
When dealing with an angel investor, at the very least your proposal should address the following:
Elevator pitch. A maximum two minute compelling description that succinctly, simply and clearly describes your product, the need in the market for your product, how you product solves that need so that it will make you and your investors lots of money.
- How much money do you need?
- Why do you need it?
- When do you need it?
- What will you do with it?
- What are you willing to give up to get it?
- When and how will the investor receive payback?
Investors need your answers to these questions before they will even consider helping you. They are not looking for “pipe dreams” or unprofessional sounding proposals. They expect a reasonably sounding business plan as well as an understanding from entrepreneurs that an investor is not going to just blindly hand over significant sums of money with no strings attached whatsoever. Given the risks involved, angel investors choose the companies they deal with very carefully.
An entrepreneurial company goes through several stages of development which are sometimes described as follows:
- Seed or Concept – A concept exists if there is no management team, no prototype or business plan.
- Start-up – A prototype has been or is developed, and the initial business plan and marketing plan are being refined. There may be some early sales.
- First Stage – The company is now a going concern and is selling a product or service. A management team is in place and there may be some setbacks or “growing pains”.
- Second Stage – Significant sales, assets and liabilities are developing and cashflow management becomes critical.
- Third Stage (also Mezzanine Stage) – The potential for a major success is beginning to become evident. Mezzanine or bridge financing may be necessary to bring the company to “harvest”.
- Stage Four – The company is determining its options for “harvest” such as going public, being acquired, or merging.
A company which is in the seed or concept stage typically obtains its financing from personal savings, friends and family money. Grants from government sources are also important. An angel investor usually funds a company when it is in the start-up or first stage of development, but may invest in later stage companies.
- A product/service with large market potential; that can scale and penetrate beyond local markets into North American, international and global markets.
- Rapid revenue growth potential.
- A strong management team.
- A product/service that solves a large market need.
On the whole, financing from angel investors precedes any financing from venture capitalists and a good angel can often pave the way to a subsequent infusion of venture capital or other financing.
NOA is the only organization that provides these unique services in Northern Ontario.
- We are strictly a Northern Ontario based facilitation service connecting northern entrepreneurs with northern angel investors.
- Although NOA does review your investment summaries, the angels determine for themselves what they would like to invest in. Many other services “pre-screen” deals. What is not right for one is not necessarily not right for another.
There are no costs for any of the services NOA offers to entrepreneurs. Our operations are funded through the Government of Canada.
As an entrepreneur, you are already aware of the challenges of financing rapid business growth. In particular, it can be difficult to access high risk capital to cross the so called “equity gap”. And, It is virtually impossible to obtain traditional financing without having secured assets and providing personal guarantees, etc.
Angel investors are the logical source to provide equity financing to get your business to the next level. With $ 3 billion invested annually in Canada and growing all the time, the main obstacle is locating and presenting your idea to this large group of investors. The Northern Ontario Enterprise Gateway allows an entrepreneur to:
- Find a reliable source of capital.
- Find an experienced investor that can provide guidance and support.
- Make it all come together in a fast and efficient way.
The site was developed using proprietary database management tools and a secure server is used to assure that no one sees your business or personal information. Your information is not offered to any third party for any purposes. The information you enter into the website is kept confidential and private. Since the organization cannot sign Non-disclosure/Confidentiality Agreement, entrepreneurs must be judicious regarding the extent of proprietary information revealed.
Entrepreneurs send in an investment application. There is no charge to submit the application. Once the information is received, NOA reviews the application and discusses it with the applicant to determine if the opportunity is appropriate for angel capital investment. If not, NOA staff will direct you to the resources in your community that will best suit your needs.
Assuming suitability, the next step is to determine if the applicant is investor-ready. If not, NOA will provide coaching and guidance to help get your business investor-ready. Once investor-ready, NOA sends an investment summary to the Angel Investment Group in your community, and potentially to investors across the north, to determine interest in receiving a presentation. Assuming a positive response, NOA works with you to provide information and coaching on how to present to angel investors so that you have the best opportunity for success in obtaining the angel capital you seek. When ready to present, NOA makes the presentation arrangements.
Once the presentation has been made, the Angel Investment Group will determine amongst themselves if any of the group wish to proceed further. If so, NOA will contact you and negotiations with the interested angel investor(s) will begin. At this point, both parties will work directly together to negotiate an investment deal. NOA does not charge any fees for this service and is strictly facilitation and coaching service bringing together qualified angel investors and serious entrepreneurs.
Generally, angel investors do not invest in deals over $1 million, whereas venture capital firms typically do not look at deals under this amount. Recent trends have resulted in some shifting of the investment landscape, as venture capital firms move towards later stage and larger deals, resulting in angel groups “syndicating” deals, thus providing ability to do larger investments. Angels make their own decisions as opposed to a board or group of people making a decision for investors that have pooled money together. Angels tend to be more involved in the businesses that they invest in and provide assistance in ways that venture capital firms do not. Angels typically do not own as large a stake in the company as a venture capital firm would.
Among other things, an angel investor can help you:
- Refine your business plan
- Determine the needs for a top management team and help find management personnel
- Obtain key contacts for strategic partnerships
- Develop financing strategies and locate sources of financing
- Configure the company for an public offering, sale of the company or merger
- Make key acquisitions to drive company growth and much more.
NOA is a completely independent not-for-profit organization. Our Board of Directors are a volunteer group of business leaders from across Northern Ontario. NOA does not have a financial interest in any investment deal between entrepreneurs and investors. The entrepreneur is not charged any presentation or application fees. We fervently believe in the objectives of this service and are focused on ensuring credibility and commitment to our customers at all times.
Answers for Investors
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- First complete the angel investor contact form and upon receipt we will contact you directly. All members are required to be: (1) accredited investors, (2) sophisticated investors, and (3) recognized by the Northern Ontario business community as having reputable business ethics.
- Membership in NOA’s Angel Investment Groups is for accredited investors only.
- All individual members are accredited investors who have business and/or investment experience. NOA supports Angel Investment Groups in the following cities and surrounding areas: Sudbury, Thunder Bay, Kenora, North Bay, Sault Ste. Marie and Timmins.
- There is no cost to become an NOA member. NOA does not have a financial interest in any investment deal between entrepreneurs and investors. The Angel Investment Groups determine membership approval.
- All members are required to be “accredited investors” as defined by the Ontario Securities Commission (over $1M net worth or over $200k annual income for the prior 2 years). Angel investing, however, is inherently very risky. Most companies require a minimum investment of $25k. To lower risk and increase the chances of investing in a successful company, a diversified portfolio of 10+ angel investments is recommended. Because many investors allocate less than 1-15% of their investment assets toward alternative investments (like angel or venture capital investments), individuals applying for membership should have well above the accredited investor minimums as defined.