Canadian angel investors who belong to formal investor groups dramatically increased their funding of Canadian businesses in 2011, reports a survey by the National Angel Capital Organization (NACO).
NACO estimates that the 24 angel groups that responded to its survey (an 89% response rate) invested a total of $82.4 million in 2011—more than double the 2010 total of $35.3 million.
Typical angel investors are entrepreneurs who have sold their companies, seasoned executives who are retired or semi-retired, or owners of profitable businesses who are looking to invest some of these profits. NACO estimates that total angel investment in Canada in high-growth, early-stage companies was almost $1 billion last year.
Individual investors continue to account for the great majority of this total. But the new study shows that investor groups' share is growing very rapidly. And this share is even higher than the figures reported in this study, which excludes groups that didn't respond to the survey or aren't members of NACO.
Key findings of the report include:
- There has been a major jump in follow-on investments (any investment made after the initial investment) as a share of the total. In 2010, an overwhelming $34.2 million of investment by angel groups was for new investments, with just $1.1 million for follow-on. But in 2011 the split looked very different: $60.2 million for new investment and $21.9 million for follow-on
- The size of the average investment leapt from $442,000 in 2010 to $614,000 in 2011
- Three categories received the vast majority of investments in 2011: information communications technologies (51%), clean technology (21%) and life sciences (15%)
- About half (49%) of the businesses in which angel groups invested also received government support from a regional economic development agency
Download the full report Investment Activity by Canadian Angel Groups: 2011