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 (see website at http://www.vef.org for details) 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!