Angel Investing – New Series

I’d like to welcome Craig Hayashi, of Maple Leaf Angels, to StartupNorth. The following post is the first article of a new StartupNorth series on angel financing Craig will be writing. We’re excited to have Craig on board and look forward to learning from his experiences as a Canadian angel investor. — Jonas

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Angel financing is an important part of a startup’s lifecycle, I’d like to help as much as I can to demystify the process. I am one of the founders of the Maple Leaf Angels one of the main organized angel groups in the Toronto area. As such, most of my articles will be written from the viewpoint of securing funding through an angel group.

So what is an angel group? Basically it is an organization that has angel investors as members and provides the infrastructure to intake companies looking for funding, screen them, and provide them a forum to pitch to the members of the group. The benefit to companies looking for funding is that it provides a defined place & process by which to submit a funding application that can reach many angel investors. The benefit to angel investors is that it provides a forum to see quality deals and pool together investor’s capital for deals. From a funding standpoint, the important thing to remember is that the group only exists to support the investment. At the end of the day, each individual angel investor is deciding if they want to invest and they individually write a cheque for how much they want to invest.

To help frame the overview with some actual figures, here are some statistics from the Angel Capital Association. The Angel Capital Association is an alliance of angel groups in North America and periodically surveys the groups to understand investment trends.

Average # of members in an angel group: 44

Average # of investments per year: 7

Average size of each investment: $241,000 USD

Average investment size per angel: $30,000 USD

The statistics above are fairly representative of the angel groups I have been involved with in Toronto. Which basically means that for a given financing deal, you can expect to be able to raise a few hundred thousand dollars spread across a dozen or so investors.

In future articles, I plan to cover various aspects of the angel financing process such as what makes a good investor presentation, what angel investors look for in making a financing decision, term sheets, valuation, etc. I welcome suggestions of topics you would like to hear about and if you have any questions in general about angel financing, feel free to contact me: craig <at> mapleleafangels.com