NACO Academy Podcast leverages the collective wisdom of 4,200 angel investors that have invested $1.12 billion into 1500 companies. Join us on a journey into the depths of the innovation economy and bring you the knowledge you need to build, grow and scale at the intersection of innovation, capital and entrepreneurship. Learn more about the National Angel Capital Organization (NACO) at www.nacocanada.com
National Angel Capital Organization
Benjamin Bergen is Executive Director of the Council of Canadian Innovators, a national business council led by the CEOs of Canada's fastest growing technology firms.It's easy to be a pessimist these days. We have now been slogging through the turmoil, strain and heartache of a global pandemic for more than a year — long enough to grind anybody down. But by their very nature, innovators are optimists. We don't accept the world as it is today. We insist that it can be better, and when we see problems, we work to make it better by building the solutions.Innovators have helped carry us through COVID-19. E-commerce, cloud computing and an array of other technologies have saved countless lives by allowing us to continue working in our socially distanced reality. What's more, innovative, cutting-edge techniques allowed us to develop vaccines at breakneck speed. As we look toward putting COVID-19 behind us, our world will only be more data-driven and technology-infused, and when the post-pandemic recovery comes, we can be sure that it will be led by innovative companies. There's no guarantee, though, that Canada will enjoy the full benefit of this economic boom. If we aren't engaged and proactive, Canada can't expect to claim its share of the global knowledge economy. If we don't put the right policies in place to support homegrown Canadian innovators, there is a very real possibility that Canada will be left buying technologies and services from the countries that get it right, and we will all be poorer for it.A thriving innovation economy is an ecosystem, and everything is interconnected — high-growth scale-ups, emerging startups, established players, research institutions, venture capitalists, angel investors and public policy experts. A growing, prosperous ecosystem creates wealth in terms of equity and intangible assets, which get invested back into the ecosystem, driving the next generation of growth. This growth also creates public wealth in the form of taxes, which help pay for the social services we all value as Canadians.Learn more and subscribe at www.pathways.news.
Season 2 is packed with actionable content and intimate conversations. For pure concentrated knowledge on mobilizing capital and scaling the next massive global success story, we will be interweaving content from a Practical Guide to Angel Investing and you will hear from over 100 prominent thought leaders at the intersection of entrepreneurship, capital and innovation, including: Arlene Dickinson from CBC's Dragon's Den to help you descipher between good and bad angels, We have The Untold Story of SkipTheDishes with co-founder Chris Simair who's also building Harvest Builders and connected to NEO Financial which raised $50 million in financing from prominent angel investors across North AmericaWe have Charles Plant, founder of The Narwhal Project on how $27 billion was created by made in Vancouver success story Slack. Raine Maida, lead singer of Our Lady Peace, will be talking NFTs (non-fungible tokens), the new craze that's eclipsing bitcoin. John Ruffolo, Founder and Managing Partner of Maverix Private Equity shares his insights on raising a $500 million fund; and Raising Canada's Largest Venture Fund for BIPOC Founders is Sheldon James, CEO and managing partner at Bay Mills Investment Group after making headlines and being featured in Forbes on the amazing work underway. And many more, entrepreneurs, innovation leaders, angel investors, and venture capital fund managers
“We crunched data a few weeks ago and the risk that the pandemic poses — in terms of erasing the gains that Canada has made on supporting diverse entrepreneurs — is significant and undeniable. The proportion of women-led business in a ‘do-nothing scenario' will drop from 17% to 12%. Businesses everywhere are struggling and failing. According to our statistics, the diverse ones are going down quicker and more frequently. We all know diversity leads to better results so, in my view, it's absolutely critical to preserve that diversity to the extent that we can in order to have a thriving economy that comes out of this.”— Laura McGee
“You've heard the government say they are not afraid of adjusting the measures that have rolled out. Getting money out there as quickly as possible was important, but there would be adjustments. I think that's what you've seen the government do the last number of weeks — they're not afraid of saying they need to tweak, add more programs, expand eligibility and change program parameters.”— Frances McRae
“To get to the punchline, the government should set up a co-investment fund that matches angel investments dollar for dollar. It should adopt a national tax incentive scheme that already exists in British Columbia, Saskatchewan and Nova Scotia. And it should consider replacing the loans that are being made available through its support packages with convertible notes. The Canadian government should leverage angel investments to ensure that early-stage, high-growth companies are going to survive and thrive despite the pandemic.” — Michael King, Finance Professor at the Gustavson School of Business, University of Victoria
The combined impact of the health pandemic and economic crisis hit hard and fast. This resulted in initial government relief taking what was described as a “people first” approach, with an emphasis on employees at risk of layoffs, and trying to minimize the impact on individuals. –– All of this was focused on helping to flatten the curve. And the curve is flattening. As provinces begin to slowly open up, the longer-term economic realities are starting to take hold. In a recent survey conducted by the Council of Canadian Innovators (CCI), 76% of respondents said that without capital and customers, their companies will continue to be reliant on government relief programs to sustain themselves and their workers. Compounding this issue is the lack of available capital in both the current environment, which was already an issue in emerging ecosystems prior to the crisis.In preparing NACO's Canadian Angel Activity Report, to be released next month, our research indicates that angel investment activity continues to be distributed unevenly across Canada. Central Canada (Ontario and Quebec) account for 86% of investments compared with 13% in Western Canada and 1% in Atlantic Canada. Central Canada's dominance is even greater in terms of the amount invested, accounting for 94% of the total. Big cities do not have a monopoly on great founders or world-class companies. When entrepreneurs in emerging ecosystems don't have adequate access to local capital, as a nation – we miss the opportunity to produce more world-class companies like Skip the Dishes in Winnipeg, Slack in Vancouver, Solium in Calgary, and Verafin in St. John's. According to Entrevestor, most funding generated by Atlantic Canadian companies comes from outside the region. St. John's based Verafin - supported by local investor Mark Dobbin from Killick Capital and Toronto-based Information Venture Partners - speaks to the importance of national connectivity between regions - and the power of local capital within an integrated national funding continuum. The combined effect of local angel investors in St. John's and venture capital from Southern Ontario, is Verafin – a company that has 300 employees in Canada, over $100 million in annual recurring revenue, and this past September announced the completion of a $515 million equity and debt recapitalization. Verafin is a massive Canadian success story. What does all this have to do with unlocking government funding to survive the crisis?As has been discussed in past roundtables, the current focus of the policy response is emergency relief – with the view that later, weeks or months from now, the role of startups in the “economic recovery” will move into greater focus. However, if high growth companies don't survive the crisis, there will be nothing to recover from. Startups in particular are at risk with a lack of financing options available to them. That said recent announcements to extend relief to pre-revenue companies is promising. And we commend the government on their efforts. But the point still needs to be made ––– Without startups there are no scale-ups. Without angels, there is no funnel of high growth companies for venture capital. In our last roundtable Janet Bannister, Managing Partner at Real Ventures, referred to the narrow focus on scale-ups in recent years, as equivalent to Canada producing a strong cohort of graduate students, and pulling back support for earlier education. In the economic recovery following the crisis, we need an even stronger and more vibrant pipeline of startups than existed in the past, to produce a stronger and more robust wave of scale-ups and high growth companies to lead the economic recovery.The stakes are high and Canada's economic future hangs in the balance.
“Over the past few months, we've been working hand in hand with companies as they retool and rapidly scale up to produce critical equipment such as masks, face shields, ventilators, medical gowns and test kits. This is an excellent opportunity for Canadian innovators. As many of you may have heard, Minister Bains likes to say this often and loudly—our approach to personal protective equipment has been buy, buy, buy, build, build, build.”“We will need Canadian entrepreneurs to lead the way and we'll need angel investors to activate capital to support them. And while the innovation sector is playing a key role in the fight against COVID-19, we know that the economic shutdown has had a significant impact on early-stage companies. During these uncertain times, they are the kind of businesses that are facing supply-chain disruptions, cashflow issues, a collapse in demand and even an inability to maintain staff. What's more, because they are at the start-up stage, they likely do not qualify for other wage subsidies or liquidity measures. That's why we decided to inject $250 million in new funding into the National Research Council's Industrial Research Assistance Program to assist innovative early-stage companies that are unable to access existing COVID-19 business supports.”—Ali Ehsassi
“History is unfolding right before our eyes. I don't think it's hyperbole to say that this pandemic is maybe one of the most important and significant events in human history. We've never had a moment where the entire planet has been crippled by a tiny little virus in the way that COVID-19 has impacted us,” said Dr. Kamran Khan, the founder and CEO of Toronto-based BlueDot, on the National Angel Capital Organization's (NACO) collaborative roundtable on Thursday May 7. “But I think this is a moment for Canada to shine in terms of its ability to innovate—to demonstrate its creativity.” – Dr. Kamran Khan, infectious disease physician, CEO and Founder at BlueDot
“I use the analogy that you can't grow a tree without planting a seed. And similarly, there's no way you can build massive tech companies in Canada without supporting a robust pipeline of young, promising start-ups. Fostering of these early-stage tech companies must be done in Canada by Canadians.”“We need to keep investing in seed and pre-seed ecosystems. I sometimes get concerned when I hear a narrative that says that we should shift our priority from early-stage to later-stage companies. I have heard people said, ‘Hey, we solved that early-stage problem. So now let's focus on scaling companies.' I would consider that as the equivalent of investing a lot in early education, seeing that you're producing great graduates and then saying, ‘I guess we don't need to worry about continuing to educate the next generation of primary school kids.'”“Going forward, it's extremely important that the government continue investing directly into accelerators, seed-stage funds and incentivizing angels via tax incentives. The government can have a huge catalyzing impact and their dollars can have a multiplying impact. But it's not just about putting incentives and dollars in the hands of early-stage investors—the government enables people who have skin in the game in terms of the outcome of those companies to not only pick the winners, but also to add value beyond their dollars.” —Janet Bannister
Innovating at the speed of the crisis is a concept that speaks to the importance of angel investing in early-stage start-ups and scale-ups, as well as the government's decisive response to supporting the ecosystem. “We've already seen our government lead the way innovating at the speed of the crisis with unprecedented collaboration to catalyze and harness the power of the private sector. This level of speed and a willingness to take bold steps to support the economy can and will usher in a new era of inclusive economic prosperity,” said Claudio Rojas, CEO of NACO. “Many successful companies emerged after the 2008/2009 recession—WhatsApp, Slack, Airbnb, Uber and Waymo, for example—and grew to global success. It's critical that angels continue to invest during the crisis. We cannot afford to leave any entrepreneur behind.”
“About 51 percent of our population are women, and we get four percent of venture-capital funding. Quite frankly, that's an awful lot of capital to leave, and a lot of people out of the competitive ecosystem underutilized.”“We really need also to remember that when you think about women as a whole, there's significant underrepresentation of women of color, Aboriginal women, LGBTQ women.These are sisters who I want to include in our fund because by teaching and training and deploying their capital, what we're going to see are stronger female founders supported. We're also going to see men thinking about investing in female-led companies.”–Cathy Bennett“We are 51 percent of the population. So there's an opportunity to unlock our capital, our innovation and our spending power. It's going to be a huge economic force and economic engine inside of Canada to really help drive that transformation and that diversification. And if we think about women today, there's a wealth transfer going on. So over the next 10 years, women will amass much more wealth and capital that needs to be deployed.”–Shelley Kuipers
Sandi Gilbert, CEO at InterGen and Board Chair at NACO moderated a discussion with Abdullah Snobar, Executive Director at The DMZ and Nicole Verkindt, Founder at The OMX on their leadership journeys and insights on sustaining a business in crisis mode.Originally Recorded on April 30, 2020. Click here to join future roundtables.
Rachel Bendayan, Parliamentary Secretary to the Minister of Small Business, Export Promotion and International Trade, in a conversation with leading entrepreneurs, Bobbie Racette, Founder & CEO at Virtual Gurus; Dr Franziska Broell, CEO at Motryx; Stephany Lapierre, CEO at tealbook; and Jennifer Wagner, President at CarbonCure Technologies."I think we're going to get through this, and we'll get through it by government and the private sector working together and doing whatever it takes in order to get our Canadian economy back on track. I hope that you feel the support of the government and that you know that we're behind you 100 percent in this. Let me just say that I'm here, I'm listening, and we know that the work is not over.""If there's one thing that I think has been a theme it's the importance of adapting and changing your business model in a crisis situation. And we've seen a lot of very small businesses and startups do that very successfully."–Rachel BendayanOriginally Recorded on April 30, 2020. Click here to join future roundtables.
I would argue that over the past couple of decades, there has been an overemphasis in the startup world on growth for the sake of growth. Employees hired, companies acquired. There have been startups that I've interviewed that can barely explain what they do, and leaders who have been praised for a lack of a moral compass. Today, I believe that we are looking in the rearview mirror at these realities. The old ways of doing business are fading away.” “While many businesses, mine included, are relying on a framework to survive and thrive over the next few months, there is something bigger than just business that is happening today. We are all accepting that we're vulnerable and, through this recognition, I do believe that we're finding the courage to do things that we're meant to be doing and the realization that it is okay to ask for help.”“If we dig deeper than simply building and scaling companies and focus on building and scaling companies right now that the world needs, I think we can all agree that the return on investment is greater for everyone.”–Amber MacOriginally Recorded on April 30, 2020. Click here to join future roundtables.
NACO's fifth weekly collaborative roundtable on Thursday April 30th focused on activating capital for the next wave of great founders. In partnership with The51 and Atlantic Women's Venture Fund, NACO welcomed an impressive panel of industry insiders and experts well-versed in the intense need to support enterprises led by women and to remove barriers standing in their way. In the wake of COVID-19, there's an urgent need for high-potential entrepreneurs — both male and female, from urban cities and rural communities — to gain rapid access to the resources they need to grow and scale. “If the pipeline of startups shrinks dramatically, there will be a massive ripple effect across the entire Canadian economy. As a nation, we need to harness the power of all entrepreneurs as we invest our way out of the crisis”“The measures that our government has taken — and the speed of those policy responses — are extraordinary and they deserve to be commended. That said, gaps remain, and we need to fill them quickly or we risk seeing Canadian entrepreneurs and the organizations that support them fall behind or, worse, close their doors”Originally Recorded on April 30, 2020. Click here to join future roundtables.
This untapped segment of the population signifies incredible opportunity for investors and innovators. Increasing access to capital remains a persistent impediment to growing world-class companies. “This generation of women is going to inherit or have earned the most amount of wealth that women in Canada have ever had before,” says Cathy Bennett, entrepreneur and cofounder at Atlantic Women's Venture Fund. “And we need to ensure that that's deployed in the communities, not only in creating female founders, inventors, scientists and entrepreneurs, but also female investors, who are willing to participate and play in the ecosystem to help grow businesses and grow the economy.”
Prior to the COVID-19 crisis, we had the opportunity to speak with three founders of the Atlantic Women's Venture Fund at the NACO Summit in Halifax. Their words still ring true in the current environment. More so, perhaps.Originally Recorded in September 2019. Sign-up to our newsletter for an invitation to future events.
“A lot of people understand diversity is important, but they actually don't know how to translate that into action and really don't understand how to bring more diverse perspectives, whether it's female board members or female executives or female staff,” said Nicole Leblanc, the Toronto-based Director of Investments at Sidewalk Labs.Originally Recorded in September 2019. Sign-up to our newsletter for an invitation to future events.
“Everyone knows that post-COVID-19 — the next two years — are not going to look like a month ago. It's not a switch you can just turn back on. We have glimmers of what that's going to look like for anyone who's been to Loblaws or any grocery store, and the question is healthcare providers need help from startups to think about what does the ‘X' service look like in the post-COVID-19 world? What does the Loblaws for endoscopy look like? Or medical imaging, or the operation room, or the emergency department, palliative care, etc. They're all going to look very different.” —Physician and Co-Founder at HaloHealthOriginally Recorded on April 23, 2020. Click here to join future roundtables.
“The horse is out of the barn on virtual care. Once the horse is out of the barn it can never really be corralled, and I think this is going to become part of our permanent care-delivery landscape.” “The world changed almost overnight when we consider how COVID-19 took on our practices. We were looking at near zero virtual care use in primary care and moved to virtually widespread adoption in this space in less than two weeks. It's almost like doctors were waiting for the right moment to introduce these products in their practices, and the right moment was when their practices were required to scale down and non-essential services were rolled back.” –Dr. Darren Larsen, Chief Medical Officer at OntarioMDOriginally Recorded on April 23, 2020. Click here to join future roundtables.
“What's changed significantly is how I practice medicine — the delivery of virtual care to patients has increased dramatically. It's taught me it is possible to do phone and video visits with patients you know quite well. We now need to increase the level of virtual care we provide that we were forced into by this pandemic. I think there will be strong demand for the kind of technologies that will help enhance the virtual visit going forward.” “When I look at how this pandemic has treated society and certainly our healthcare field, we can see that there have been dramatic changes in how healthcare in particular has developed, dramatic changes in society and many people have done some very, very unique things, partly because they've been forced into things like physical distancing, and partly because of a strong desire to help other people.” — Dr. Sohail GandhiOriginally Recorded on April 23, 2020. Click here to join future roundtables.
“We have billions of dollars across Canada right now earmarked for technology, so doesn't it make sense that the government becomes the biggest customer as we face this economic slowdown for our tech scale-ups and SMEs?“I believe tech procurement is the biggest lever that the government has as an economic stimulus. They definitely need to take some mission critical actions to help our technologies sector and our SMEs, using crisis as a catalyst for change. This crisis is a window of opportunity to change the old ways of procurement and create a true marketplace between business and government and that would mean modernizing procurement to align with technology. The procurement process itself needs to be modernized and, more importantly, we need to buy from startups, scale-ups and commercially ready products from SMEs.” The government needs to define problems, not prescribe solutions. That means changing that old way of procurement to empower the problem-solving capacity of our tech sector and our innovators.” Originally Recorded on April 23, 2020. Click here to join future roundtables.
"This week's respected roster of speakers spoke about how we can all do our part — the way we can lean in, support the emergence of new med-tech initiatives and help these small and medium-sized enterprises get their innovations and technologies to market sooner. “It is in precisely these times, as we navigate unchartered waters, that new solutions are needed, that people look to innovation and we all have a role to play". “There's an opportunity for innovators and for investors and in this new world of ours, where an apple farmer can spin off a technology to become an industry leader in mask sanitization, there are so many stories that are taking place. These innovations illustrate the vital importance of early-stage support that is needed from angel investors to bring these emerging technologies to the market, and they also demonstrate the potential for success and significant positive outcomes.”Claudia Krywiak, the president and CEO at Ontario Centres of Excellence.Originally Recorded on April 23, 2020. Click here to join future roundtables.
“We have really bright minds working on how to solve various aspects of this pandemic… we want to make sure these folks are able to bring their solutions to market sooner rather than later. We're changing the way we work. We're deploying funds in a matter of weeks rather than months.” — Benton Leong, General Partner at ArchAngel Network of FundsOriginally Recorded on April 23, 2020. Click here to join future roundtables.
“Cultivating that strong grassroots ecosystem from the ground up is so important right now… there are a lot of opportunities here to make a stronger ecosystem and it will take us all working together.” — Victoria Lennox, Founder of Startup CanadaOriginally Recorded on April 23, 2020. Click here to join future roundtables.
“The main takeaways… are the difficulties people are having in projecting a way out of this and building a plan, and the difficulties in taking care of teams right now, as we are locked in self-isolation in trying circumstances.” — Douglas Soltys, Editor-in-Chief at BetaKit Originally Recorded on April 23, 2020. Click here to join future roundtables.
We all know the idiom credited to philosopher Plato: “Necessity is the mother of invention.” It means, of course, that new ways of doing things are often created or discovered when there's a real, intense need for them. And as we navigate this COVID-19 pandemic together, it's fair to say this adage rings true louder today than in recent history — especially when it comes to the rising number of brilliant innovations materializing and flourishing in the health-tech sector.The National Angel Capital Organization (NACO), in partnership with HaloHealth (Canada's first physician-led angel network) was proud to host a collaborative roundtable on Thursday April 23 that featured an esteemed group of industry insiders who shared insights about the state of the med-tech ecosystem in light of COVID-19. This session — the fourth in the popular weekly series delivered by NACO — brought together experts in early-stage startups, angel investors and physicians on the frontlines to discuss the incredible need for innovative solutions to help the country's 89,000 doctors (and thousands more healthcare providers) better serve Canadians.We know that your collective strength can help us find solutions and shape policies that have impact. We have entrepreneurs, angel investors, angel groups, incubators, accelerators — champions of Canada's innovation economy from around the country listening in and contributing to these discussions. Originally Recorded on April 23, 2020. Click here to join future roundtables.
Earlier this week, an article that appeared in the Toronto Star stated that “The Canada Emergency Wage Subsidy program should be broadened to include high growth firms, software-as-a-service firms, firms whose revenues are seasonal or project-based and pre-revenue firms that are heavily invested in research and development.”With economic confidence low, investment capital is drying up. Many of Canada's highest-potential companies will run out of it in coming months. Without quick, strong government action, they will fail,” the article states.We are now going to move into the next portion of our program where we hope to explore these ideas in further conversation. Participants included:Angel InvestorsSerge Beauchemin, CEO at Anges Québec Capital (Montréal)Judy Fairburn, Co-founder of The51 (Calgary)Sam Elfassy, Physician and Founder at HaloHealth (Toronto)EntrepreneursAlexandra T. Greenhill, Co-Founder and Chief Medical Officer at Careteam (Vancouver)Naheed Kurji, Co-Founder, President and CEO of Cyclica (Toronto)Julie Angus, Founder and CEO at Open Ocean Robotics (Vancouver)Innovation LeadersYung Wu, CEO at MaRS Discovery District (Toronto)Michelle Simms, President and CEO at Genesis (St. John's, NL)Jeff White, CEO at New Brunswick Innovation Foundation (St. John, NB)QuotesBig-picture government response: The Honourable Mélanie Joly “The first priority is to keep Canadians healthy, as we are all flattening the curve. We need to make sure people are able to follow the strict rules and strict recommendations of our public health officials. I would say this is our biggest economic measure—the more we're able to flatten the curve on the health risks, the more we're able to flatten the curve on the economic risks.” “Our second priority is having a people-first approach. What we did was massively expand the definition of EI and we created a new benefit—the Canada Emergency Response Benefit. We wanted to expand the social safety net in order for people not to fall through the cracks and to make sure we wouldn't be increasing inequities at the end of this crisis.” Melanie “We also came up with the CEBA (Canada Emergency Business Account) program, which is for businesses that had wages between $20,000 and $1.5 million. I've never seen policies developed as fast as we're doing right now. We know we have to be fast and nimble.” Proposed solutions for government from industry leaders: Yung Wu“I commend the government for acting quickly to mobilize a massive response to this crisis—leadership has been truly impressive. But I'd like to be really candid here because we don't have time to be polite right now: Operationally, that response has fallen short and, in particular, it's fallen short in the tech sector. Most of our most promising companies are not yet backed by banks—they're not yet backed by later-stage venture capital firms. They're pre-revenue and backed by angels or are growing their companies by acquiring new customers or markets. I recommend that the government immediately grant blanket acceptance into the wage subsidy program for founders and employees who are part of a recognized accelerator or incubator, or who are backed by angels from a recognized angel organization.” Final remarks: The Honourable Mélanie Joly “To thrive in the business world, you have to be extremely optimistic. My message to you is to continue to keep that optimistic approach and know that things will get better and we will be helping you cross the bridge to get on the other shore. The future will be brighter.” Originally Recorded on April 16, 2020. Click here to join future roundtables.
Welcome everyone to our Roundtable on Sustaining the Innovation Ecosystem. Today's agenda includes Opening Comments by David Skok, CEO & Editor-in-Chief at The Logic, Special Remarks by Anthony Lacavera, Founder and Chairman of Globalive. And an important conversation with The Honourable Mélanie Joly, Minister of Economic Development and Official Languages –– with angel investors, innovation leaders and most importantly entrepreneurs.The National Angel Capital Organization (NACO) was honoured to host a collaborative roundtable on Thursday April 16 that featured an impressive selection of industry insiders who shared insights about the current state of the innovation ecosystem in light of COVID-19. The discussion also revolved around specific, tangible ways the Canadian government can better assist early-stage entrepreneurs and angel investors weather the current economic storm. This session—the third in a now-popular series delivered by NACO every Thursday—included experts “united in attacking the economic effects that are impacting all sectors and level of society,” said Claudio Rojas, CEO of NACO. “If we focus on helping each other, cognizant of the effects we're experiencing as individuals and organizations, we can better find new ways to collaborate and help the ecosystem.” The 90-minute roundtable was virtually attended by people in each province and territory across the country and presented a solid focus: building solutions to help entrepreneurs during this unprecedented time. “We hear you. We know your collective strength can help us find new solutions and shape policies that can drive the innovation ecosystem forward,” Rojas said. Attendees were also privileged to listen to remarks by the Honourable Mélanie Joly, Canada's Minister of Economic Development and Official Languages, Innovation, Science and Economic Development Canada, who explained the federal government's ongoing economic response to the pandemic. The respected roster of speakers—angel investors, entrepreneurs and innovation leaders—shared candid tales of their current state, and offered Minister Joly well-informed suggestions of concrete ways Canada's government can help the ecosystem's most vulnerable entrepreneurs and startups. “If we move too slowly in supporting startups or focus too narrowly on scale-ups, the innovation ecosystem itself and its interconnectedness will unravel and Canada will, once again, lag behind,” Rojas said. “Or we can take bold action, make bold moves and emerge in the aftermath as a country the whole world looks to for leadership.” 1) State of the union: David Skok“This isn't really a time for fiscal restraint—this is a time for spending. This is the biggest collapse of the economic order since the Great Depression and if spending doesn't happen soon, there is a chance we could experience a lost decade” “There has never been a more necessary time for entrepreneurs and angels to work together to build a foundation of a new economy.” 2) Proposed solutions for government from industry leaders“What the government can do in a straight-forward way is to support the construction of a world-class angel investor ecosystem in Canada that will drive our overall innovation ecosystem.” –Anthony Lacavera“I would like to see income tax deductibility for qualifying angel investments in the pre-seed stage that have been accepted into a recognized incubator or accelerator. Any company that's in one of recognized incubators or accelerators that's doing a seed or pre-seed financing and has angel investor participation—those angels should qualify for straight-forward income tax deductibility for those investments.” –Anthony Lacavera Originally Recorded on April 16, 2020. Cli
Replay of Part 3 of the NACO Roundtable on Incubators, Accelerators, and Entrepreneurial Activity"The good part about the BDC program for matching funds is that it might help to speed up the process knowing that the BDC will be able to match some of those funds. But a challenge in the early stage in Canada is to find leads" Emilie Boutros, General Partner at TandemLaunch"Many of these companies that we're supporting, they're just not going to be eligible for venture capital. And so we really need to start thinking about... how can we start using our existing angel networks to unlock capital" Jordan Dutchak, Executive Director at co.labs"We don't want to lose the momentum that accelerators and the tech ecosystem has built, been built out across the country... we need to ensure that we are not turning our back on startups... And I really feel that if we don't continue to be these advocates, I'm fearful for what this lasting impact will have on our economy." Brea Lake, CEO at Accelerate OkanaganOriginally Recorded on April 9, 2020. Click here to join future roundtables.
Replay of Part 3 of the NACO Roundtable on Incubators, Accelerators, and Entrepreneurial Activity"The bigger concern we're really seeing is founders that are pre-revenue or at that very early stage of development. They're the ones that are, are at this point, falling through the gap" John MacRitchie, Assistant Vice-President, Zone Learning and Strategic Initiatives at Ryerson University"Let's move at the speed of trust. Let's move things and audit later if we have to... when we're talking to our institutional partners in government, that's the sentiment that we should all be echoing" Terry Rock, CEO at Platform Calgary"These are very fragile startups and whatever we do, we need to not make this journey even more fragile for them. Because we definitely will lose some along the way" Sherry Colbourne, CEO at Spark CentreOriginally Recorded on April 9, 2020. Click here to join future roundtables.
Replay of Part 2 of the NACO Roundtable on Incubators, Accelerators, and Entrepreneurial Activity"The biggest issue companies are facing is liquidity and cashflow. And that cashflow can come in the form of a bridge and then deal with our burn to get to that raise."Iain Klugman, President & CEO at Communitech"Everyone is saying we need to find a way to help these companies bridge. And I think the only thing that's getting in our way is that speed wins in times of crisis. We need to make sure we're moving fast to get there." Siri Agrell, Executive Director at OneEleven Originally Recorded on April 9, 2020. Click here to join future roundtables.
Replay of Part 1 of the NACO Roundtable on Incubators, Accelerators, and Entrepreneurial Activity"The Council of Canadian Innovators has determined that the wage subsidy is probably going to help maybe about 25% of their businesses... but the businesses that are being left out right now are all pre-revenue companies" John Ruffolo, Vice Chair at Council of Canadian InnovatorsToday is the second instalment in a series of conversations on stimulating angel activity, supporting the innovation ecosystem and ensuring that entrepreneurs have sufficient access to capital to survive the economic effects brought on by the COVID-19 crisis.Incubators and accelerators play a key role in enabling and supporting entrepreneurial activity. For many small businesses, this early guidance is how entrepreneurs learn the basics of running a company, making vital connections, attracting customers, and scaling up their operations.Originally Recorded on April 9, 2020. Click here to join future roundtables.
Replay of Part 4 the NACO Roundtable on Canadian Angel ActivityIn relation to how do we keep investment moving and in Atlantic Canada… the most crucial things we need to be looking at are… matching funds from government… and investor tax credit –Stefanie Corbett, Director of Operations at Island Capital PartnersWe have had successful applications from companies who have retooled their manufacturing to produce face masks, hospital gowns, hand sanitizers, etc. Four of these deals closed just last week –Mary Long-Irwin, Executive Director at Northern Ontario AngelsThe angel ecosystem may be the glue that connects the policy and government with those startups on the front line that are the future of Canada. We've got to keep them shining bright –Randall Howard, Prominent Angel Investor and Board Member at GTAN.To the entrepreneurs on this call, the angel community is here to support you. We are in constant contact and communication with all those stakeholders that are ready and willing to support your companies. We are moving as quickly as we can to collaborate with policymakers to keep funds flowing into your companies, so that you can keep your employees employed, and so that you can keep building your great companies.When we look at past economic crises, new global companies emerged. And in the aftermath, and we are committed to helping that next wave of global companies emerge from Canada.Originally Recorded on April 2, 2020. Click here to join future roundtables.
Replay of the NACO Roundtable on Canadian Angel ActivityWe have the privilege of bringing international insights from Jacopo Losso, Director Secretariat at the European Business Angels Network (EBAN), and Pat Gouhin, CEO at the U.S. Angel Capital Association.Both Jacopo and Pat lead the equivalent organizations of NACO in their respective jurisdictions (Europe and the U.S.). We also have Colin Mason, Professor of Entrepreneurship at the University of Glasgow. Colin is the author of NACO's Annual Angel Activity Report and brings unique perspectives on how angel activity varies over time, along with insights on what we can expect in the current environment. And perspectives on how we can help mobilize more angel capital, which is badly needed by the entrepreneurs that are struggling to keep their companies afloat... France, announced a € 4 billion plan, Germany is getting ready to announce € 2 billion to help startups. And there's a mix of solutions here…. covering salaries.. loans at very low rates or even zero rates… and finally, matching equity investments - Jacopo Losso, Director Secretariat at European Business Angels NetworkThere's a lot of talk about predatory behavior by large companies and hedge funds seeking to buy up individual companies under financial pressure –Colin Mason, Professor of Entrepreneurship at University of GlasgowEarly indicators at that angel groups are pulling back. They're focusing first on the portfolio companies that they have –Pat Ghouin, CEO at U.S. Angel Capital AssociationOriginally Recorded on April 2, 2020. Click here to join future roundtables.
Replay of the NACO Roundtable on Canadian Angel ActivityWe have Ginette Mailhot, Chair at Anges Québec, a prominent angel group and member of NACO that does extraordinary work in unlocking capital in the Province of Québec.Also, joining is Derrick Hunter, President and CEO at Bluesky Equities based in Calgary, Alberta. Derrick was recognized this past year as the BDC Angel Investor of the Year at the NACO World Angel Investment Summit and is a member of Valhalla Angels. We also have Lynn Davis, Chair at SWO Angels based in Southwestern Ontario and part of the angel cluster called Equation Angels.Derrick, as an active angel investor, what are you seeing on the ground in Alberta? And let me set the stage here. The innovation ecosystem in Alberta was emerging in a significant way after years of work, including NACO being quite active in the region. But, there were also challenges in the broader environment.Are we at risk of the startup and scaleup ecosystem losing the momentum that we built up over these past years? It would be great if you could also situate us around the policy environment and what you're seeing within your portfolio. [Derrick Hunter] I will talk about the policy environment and then about some data from within our portfolio.Last October in the provincial budget, Alberta slashed the provincial component of Scientific Research and Experimental Development (SR&ED) and also its Investor Tax Credit (ITC), which made Alberta the only province without SR&ED. And to my knowledge, the only jurisdiction in the developed world that doesn't support entrepreneurs through the tax system specifically. As a result, they took a lot of heat from a lot of people. In December, they created what they called the Innovation Capital Working Group...Originally Recorded on April 2, 2020. Click here to join future roundtables.
Replay of the NACO Roundtable on Canadian Angel ActivityGood morning everyone. Welcome to today's Roundtable on Canadian Angel Activity. I'm Claudio Rojas, CEO of NACO and I will be your host for today's discussion. Thank you all for making the time to join us. Entrepreneurs are under severe pressure. COVID-19 has unleashed a combined health pandemic and economic crisis. The necessary shutdown to stop the spread of the virus has impacted company operations, dried up revenue, and the need for access to capital has never been greater. Today is the first in a series of conversations, Roundtables on stimulating angel activity, supporting the innovation ecosystem, and ensuring that entrepreneurs have sufficient access to capital to survive the economic effects of the crisis.Entrepreneurs, many of whom have put everything on the line, are struggling to stay solvent, cutting expenses, and laying off workers. The future has never. Then more uncertain. Government officials are working tirelessly to keep the economy functioning while instituting necessary measures to protect Canadians.Today's Roundtable includes global, national, and regional leaders from across the early stage capital ecosystem. We have over 350 listeners. We're going to move rapidly, taking stock of the current state of angel activity and gathering insights on policy responses to sustain the future of Canada's innovation economy.Bringing a policy perspective to this discussion are Senator Colin Deacon and Professor Thomas Hellmann. Colin Deacon, Senator in the Parliament of Canada from Halifax, Nova Scotia is an innovative thinker who spent his career turning ideas into products and services prior to joining the Canadian Senate. Dr. Thomas Hellmann is the DP World Professor of Entrepreneurship and Innovation at Saïd Business School at the University of Oxford. He has been an advisor consultant to the World Economic Forum, Barclays Bank, the Government of British Columbia, and numerous startup companies. His case studies on entrepreneurial companies and venture financing bring a unique perspective on policy issues and potential response. Originally Recorded on April 2, 2020. Click here to join future roundtables.
What is the role of angel investing in the economy? If there is no capital, there is no company. It's as simple as that. Without investment capital, there would be no new companies and no new jobs. Our economy would be in zero growth mode. This is based on a quote from Carl Furtado from the Golden Triangle Angel Network. Small to medium size enterprises, referred to as SMEs, are defined as companies with fewer than 500 employees and they represent over 98% of companies in North America and Europe, employing over two-thirds of all workers.A small fraction, around 4% of these SMEs, are high growth companies – called Gazelles, that create virtually all new jobs. What is the connection between job creation and the entrepreneurial economy?Virtually 100% of all new jobs in the last 30 years have come from new company creation. This is true of all developed countries. U.S. job data shows this particularly well. Angels play a critical role in the economy, investing in 27x more startups than venture capital investors.The Golden Triangle Nework (GTAN) has an infographic that shows their group's investments alone have created over one thousand jobs since its inception in 2009.Two major forces are affecting the angel asset class.First, entrepreneurs need less capital than ever to prove their business models. Using agile lean techniques, they can achieve significant growth. Next, the ability for angels to co-invest in syndicated deals has increased. Successful angels often syndicate deals and co-invest with everyone across the investment ecosystem, including internationally with venture capitalists, angel funds, founders and government partners.Some of the most attractive angel investment opportunities use technology-based barriers of entry to achieve competitive differentiation and high valuations. While Canada invests heavily in scientific research and development, it is difficult to commercialize these techniques and bring them to market with solid business models.Angels provide a vital bridge across the commercialization funding gap, filling the gap in the funding continuum between initial seed capital from friends and family– and the larger scale investments made by venture capital.If funding is not available through this often lengthy interim development phase, many startups would fall into the Valley of Death, reducing the pipeline of businesses for later stage growth and development. As summarized by Bryan Watson, former Executive Director of NACO, it was not that long ago that the majority of policy and support programs were designed primarily for supporting venture capital-backed companies. Angels, a collective of individuals, are a difficult entity to develop policy for. The economic crisis of 2008, and crowding out of angel investors in the Canadian market coupled with increased sophistication of angel groups, allowed angels to communicate with all levels of government. This led to programs that angel-backed companies could leverage to cross the funding-gap, while also helping to offset the risk faced by angels. This is based on research from Cumming and Macintosh (2006). The innovation funding gap continuum shows that angels fund companies to scale-up. The Valley of Death is in that chasm between seed and maturity. This is where individual angels, angel groups, angel syndicates, and funds, help smoothen the journey across the funding continuum for Canadian entrepreneurs.Some provinces also give angel investors direct tax credits to incentivize investment into entrepreneurial companies, and help reduce the risk of the asset class to a level that incentivizes investment.
Lessons learned from Patrick Lor, Co-Founder of iStockphoto and Managing Partner at Panache Ventures based in Calgary, Alberta. "I don't know if there's anything secret about this. But, we grew iStockphoto off the side of our desks and eventually iStock became such a success that we sold it for $50 million U.S. A few years later, they were doing about $300 million worth of revenues. The company would have been worth a few billion dollars. We didn't have that billionaire mindset."Part 2 of this interview coming soon. Stay tuned. Recorded on location at the Western Angel Investment Summit 2020 in Victoria, B.C.
How do you value a company? How many companies do you need in your portfolio? The general suggestion among Canadian angels is 20 companies. Dr. Wade Brooks estimates that you need 40 companies to have a 95% chance of getting the average internal rate of return of 27%. A portfolio of 20 companies would give you a 60 to 70% chance of hitting the average. This is based on NACO data from the National Angel Summit in 2015. However, these numbers can be misleading. Angel investment practices across Canada vary tremendously and we will explore this diversity in more detail as we go through the six chapters of the book. A practical guide to angel investing. Of course, success takes more than just luck and a large portfolio.Angel experience, length of due diligence and post-investment participation in accompany coaching and governance also all play a significant role in increasing the rate of return and increasing the chances of success. This speaks to the critical importance of being associated with and participating in an angel group in your local community. NACO has 40+ angel groups throughout the country in virtually every region.These angel groups provide a network of experience, and it is through the angel groups. In addition to NACO's innovation and entrepreneurial hubs around the country that we deliver NACO Academy sessions ensure that you have the training necessary to increase your probability of success. You can purchase the book, A Practical Guide to Angel Investing, 2nd Edition, on Amazon.ca by clicking here.
Angel investors bring more than capital. The knowledge that you have, your experience, what you've done in your professional life is exceptionally important for helping the next generation of entrepreneurs achieve success. High potential entrepreneurs in Canada do not need to exit. They do not need to sell their companies in order for the investors to achieve liquidity, Where only a small percentage of angel investors do exceptionally well, a very wide range that don't do well at all. The distribution of returns shows that over half of all investments never return their original capital or fail completely. In contrast, 10% of exits produce 90% of total returns.Since only 1 in 10 investments will tend to account for almost all returns, successful angels must use a portfolio diversification approach. Investing in only a couple of deals over several years is a weak investment strategy. This need for a portfolio to reduce risk is the same as the reasoning behind mutual funds or index funds. This speaks to the importance of diversifying your angel asset portfolio through investments in angel funds and participating in angel groups so that you can engage in a thorough due diligence process. Having the appropriate depth of education and training will help to be able to decipher between the riskier bets with a low probability of success from those rare investments that have a higher probability of success. High potential entrepreneurs in Canada do not need to exit. They do not need to sell their companies in order for the investors to achieve liquidity. Liquidity mechanisms are in development that provide angel investors with a return on their capital. This includes secondary market funds, venture capital and growth funds that provide liquidity to angel investors, and other mechanisms in development. NACO is engaged in initiatives to increase the level of integration across the funding spectrum, so that the funding continuum is smoother between angel to venture capital. Creating greater connection between angel investors and venture capital investors, allows for venture-grade companies to graduate out of the angel investment portfolio into the venture capital portfolio, and continue on to growth.More on this topic in future episodes.
We are here with Senator Doug Black, Chair of the Senate Banking, Finance, and Trade Committee. The innovation ecosystem in Alberta has a tremendous potential. We see an opportunity to transition the risk capital, that has historically been in more traditional industries, to the high growth industries that can contribute so much to the economy. From your perspective, what can we do as a national organization and what can angel investors do to contribute to Alberta's renaissance? We need to find bridges. Build those bridges and make sure folks cross them. Specifically, in respect of Alberta. I spent a fair bit of time as an elected Alberta Senator moving through the province, understanding what I would call "Alberta 2.0" needs to look like. We have historically relied upon the oil and gas industry, and this is a very powerful, important industry. But, we recognize that we need to focus on a transition.Alberta 2.0 will take time. A large part of that is going to be technology. Whether it's specifically in the oil and gas industry, the renewables industry, the banking industry, or the agriculture industry. There are huge opportunities throughout the Alberta economy.
What will you do with the next 20+ years of your life? For most angels, the answer is: "I want to contribute to the good of my community""I want to continue to do what I love.""I want to be involved in strategy, important deals and major decisions.""I want to lend my expertise."The value of angel groups is that they essentially help mitigate your risk. Angel groups help you attract the highest quality deals and help you go through a due diligence process that vets out the deals that have a disproportionately high chance of failure, or a very low probability of success.Angel groups provide discipline, additional due diligence, and deal flow resources that will mitigate your risk and increase the probability of return. More on this topic in future episodes.
This podcast is for informational purposes only and is based on the book "A Practical Guide to Angel Investing, 2nd Edition" authored by Steven Gedeon PhD and published by the National Angel Capital Organization. Content discussed is for general guidance on matters of interest and should not be taken as professional, legal, business or investment advice.Most angels have enjoyed a successful business career and want to share their expertise and experience with younger entrepreneurs. Of course. They want and expect to gain above market rates of return on their investments. That's what makes this form of investing sustainable, but often they also want to pay it forward to help others and give back to their communities.Angels are often retired executives or other professionals, or in many cases, they are former entrepreneurs who ran and sold their own companies. Business angels invest because of their love for entrepreneurs and the entrepreneurial journey. Angels invest for many reasons, including the excitement of being involved in an interesting company or industry. The desire to mentor the next generation of entrepreneurs, the desire to pay it forward by sharing their expertise with those who need it, contributing to the economic growth of their region, community, or country.This podcast will help distill the wisdom of hundreds of angel investors who came before you.
Built by Angels is a new podcast series that will guide you on the road to venture capital scale and growth. Interested in funding the next big thing? Are you an entrepreneur searching for capital, to fund and scale your company? Are you on the sidelines, wondering how to jump in, while everyone else is building, backing, and supporting the next generation of entrepreneurial companies?Stay tuned, subscribe and join us on this exciting journey, as we transform ordinary listeners into extraordinary investors.
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