For BC tech founders looking to raise seed capital for their early-stage startups, the top five angel investor groups in the tech innovation ecosystem to consider are: VANTEC Angel Network and its member angel funds WUTIF Capital and eFund, Vancouver Angel Forum, and the Keiretsu Forum Vancouver Chapter. These organizations are actively helping high potential ventures in British Columbia to reach and connect with experienced angel funders.
When startups seek capital – beyond sweat equity, money from family & friends, government grants, or crowd sourced investments – angel investors are often the next source of funding for companies with a promising technology. A growing number of wealthy professionals are boosting startups with their expertise, connections and capital because of their interest in i) supporting local entrepreneurs, ii) fostering innovative technology, and iii) making an early bet on an investment that may yield a big return if the company succeeds. In 2019, Canadian angels invested a total of $163.9 million in emerging opportunities. (source: Canadian angel investing set a 10-year record, Investment Executive)
Generally speaking, angels are high net worth individuals who qualify as an Accredited Investor*. They invest privately – on their own or with a group or fund - with their own money in early-stage businesses, typically in exchange for an equity position and with hopes of a lucrative 10x return in 7-9 years (but it often takes longer) through an exit. Exits may be a merger, acquisition or a public offering (IPO).
There are no hard and fast rules about how angels assess companies and conduct due diligence. Saying that, they often enjoy getting to know companies in a space that they are passionate about and they tend to seek out entrepreneurs in their local region or community. Furthermore, they can be seasoned entrepreneurs themselves. Although an angel’s key role is to inject financial support, they also have the potential to provide expertise and/or social capital, that is - their valuable network of connections. Seed funding from angels can vary from 10’s of thousands to hundreds of thousands, or super angels’ investments can be a million or more.
*See National Instrument 45-106 for the definition and requirements of an Accredited Investor in Canada (source: BC Securities Commission)
BC Angel Investor Groups
While entrepreneurs think it is a challenge to find the right investors, private investors also feel it is a challenge to find promising impactful investment opportunities. One of the most efficient ways to discover prospective investors and startups is at local angel investor groups. For fellow angels, the advantage of sharing knowledge, as well as risk, makes these group communities attractive. For emerging businesses, they may benefit from the expert guidance of the group’s investor team during the vetting process.
Not every group functions the same and formats can range from monthly pitch sessions and annual events to closed meetings. Fellow angels can partner on a deal or join an angel team to collaborate in a fund. Despite the pandemic restrictions, these groups are thriving by pivoting to virtual environments.
By reviewing and understanding group formats and dynamics, entrepreneurs can assess how the screening, selection or deal process may work in order to help them seek out the right investors. Entrepreneurs should also get familiar with the types of companies that have already secured angel investments via groups. In British Columbia, the more popular sectors of interest to angels include IT, MedTech, BioTech, FinTech, AgriTech and CleanTech.
When angel-ready founders want to meet potential investors, know that the selection process is highly competitive with success being contingent on how prepared and how well they will do during the angels’ due diligence. From the get-go, founders must be ready to make a positive first and lasting impression. More importantly, know the audience and know how to engage and connect with interested investors - whether it is through a presentation, discussion, follow-on conversation or deep dive meeting.
Most angel preparedness guidelines recommend the following information, at minimum:
- Business plan and exit strategy
- Concise and compelling pitch deck (5 and 10 minutes)
- Unique market opportunity – target audience and size
- Competitive landscape with barriers and risks
- Clear business milestones and key metrics
- Strong founder(s) and management team plus network of advisors
- Thorough customer validation results
- Strategic customer acquisition methodology
- Minimal viable product and early traction
- Revenue - scalable projections
- Financial – current valuation and milestones for next fund raise
- Investment ‘ask’, equity shares, terms and use of capital
BC Angel Groups In Vancouver Leading The Way With Seed Capital
VANTEC Angel Network
VANTEC has been providing investors with a steady flow of pre-vetted, quality investment opportunities since 1999. It is the largest, member-based angel group in British Columbia with 150+ members across BC and the Pacific Northwest. VANTEC is dedicated to helping qualified investors find the right opportunities, as well as tech startups raise funds to accelerate growth. They are considered the first place to pitch to investors. Monthly angel investing meetings are hosted virtually during the pandemic with presentations (90-second previews and 5-minute full) from 8-12 early stage companies that have been screened by an investor panel two weeks prior to the pitch. The investor meetings are typically attended by 80-100 pre-registered investor members, investor guests and VANTEC’s community partners. In general, investors are interested in great early stage tech companies that raise pre-seed, seed 1 or seed 2 money, particularly in IT, Health and Life Sciences, CleanTech and Agrifood Tech sectors. Members of VANTEC are also members of Canada’s National Angel Capital Organization (NACO) and the US based Angel Capital Association (ACA).
VANTEC also counts several active angel funds as its members. WUTIF was founded and managed by Mike Volker who also started VANTEC. eFund was founded and managed by Thealzel Lee who also runs VANTEC’s monthly investor meetings.
WUTIF Capital (VCC) – Western Universities Technology Innovation Fund
WUTIF Capital co-invests with angel investors in promising new technology ventures in British Columbia, such as those being developed in universities and institutions. This includes communications and information technology, health and life sciences technologies, physical sciences, energy and fuel cells. The fund strives towards a broad portfolio. Formed in mid-2003, WUTIF targets early stage (typically <5 years old), ground floor opportunities with a preference for valuations under $3 million. As of Dec 2020, WUTIF has raised $11 million in capital with 110 companies. Companies may apply at any time. WUTIF is a Venture Capital Corp (VCC) and only invests in EBC eligible businesses
eFund (VCC) – Angel Investing Via Teams
Formed in 2011, eFund (VANTEC’s Entrepreneur Fund) is focused on investing via angel teams and in a portfolio format. They invest in early-stage (seed 1 and seed 2), BC-based technology companies that align with eFund’s investment criteria, particularly innovative companies in Life Sciences, CleanTech, AgriTech, and Information & Communications. Promising companies are introduced by members of the eFund investment team, which carry out an active multi-stage validation process. In a team environment, investors benefit from thorough due diligence and a range of expertise or experience within the investor group or more than 150 investors. Investments are made by fund cohorts that are continuously refreshed with new and follow-on investments, resulting in a diversified portfolio across industries, markets, and stages of maturity which deliver a better spread of exits over time. eFund is a Venture Capital Corp (VCC) and only invests in EBC eligible businesses.
Vancouver Angel Forum
The Vancouver Angel Forum started in 1997 and is one of the oldest angel gatherings in Canada. They have a member affiliation with Canada’s National Angel Capital Organization (NACO). Prior to the pandemic, Vancouver Angel Forum organized bi-annual all-day events in rotating locations around British Columbia, with around 100 angels attending presentations from approximately 30 companies. With pandemic restrictions, the Vancouver Angel Forum is offering virtual meet-ups, workshops and educational webinars. Their members are from across BC, Canada and the US, and are interested in all seed stages of companies.
Keiretsu Forum Vancouver Chapter
Keiretsu Forum is a community of international angel investors spanning four continents and was originally founded in San Francisco in 2000. Launched in September 2012, the Keiretsu Forum Northwest Chapter, of which Vancouver is the host city for Western Canada, includes the Boise, Kirkland-Eastside, Portland, Seattle, Spokane-Inland, Tacoma-South Puget Sound chapters. Thus far the Keiretsu Forum Northwest Chapter has collectively funded over 300 companies and has invested a total amount of over $192 million in seed 2 and series A funding rounds.