You’ve made it, and you’ve got the financials to prove it. But now you’re looking for other challenges, both intellectual and monetary, to keep you in the game. Well, if those thoughts sound familiar, “angel investor” has a nice ring to it.
Angel investing can be energizing, challenging, and potentially very profitable. What’s more, Vancouver punches way above its weight in tech workers and startups developing the forward-facing technologies our planet will need if we’re to enjoy a stable, sustainable future. While many software and web-based ventures need little investment capital to get going, there are so many startups that the opportunities for investors are almost limitless.
Many startups can be bootstrapped with small investments from friends and family, but many more require more significant funding necessary to bring a founder’s vision to market. Enter the angel investors. They bring the next layer of capital to help technology companies scale, and do it without many of the strings that come with private equity and venture capital.
There is a new breed of tech startups that are highly capital efficient and can generate out-sized returns for founders and angels: “Virtual” or “fully remote” startups typically make more money for early investors because they have lower costs, higher profits, and grow faster. Virtual startups need less financing, which results in less dilution for their founders and angel investors. They are more agile with access to worldwide talent. And without a traditional “head office”, they can register their company in more attractive tax jurisdictions.
But before you reach for your cheque book, beware! Although some startups become large and successful, many more, about 80-90%, don’t make it for any number of reasons.
So you need to do your homework. Where do you look for angel opportunities? Local tech associations will regularly hold forums specifically to allow angels and founders of startups to meet and learn about. Usually these angel forums will give several aspiring founders the opportunity to introduce the company, people, technology and strategy. The presentation include a Q&A session that will give you a good initial feel for the company’s leadership and strategic direction. These forums allow angels to quickly find companies and founders that interest them. From there, they can ask all kinds of questions before deciding to invest. Check out Vantec, Keiretsu Forum, Angel Forum, and TiE.
The local media is also a good source for leads. Techcouver’s own 10 Homegrown B.C. Startups to Watch in 2021 is just the tip of the iceberg for this publication’s insights into the region’s innovative tech landscape. T-net publishes a weekly newsletter with broad coverage of the Vancouver tech eco-system. These publications will help you develop an appetite for information, and a nose for early stage investment opportunities.
Many tech-centric Canadian and American universities have established startup incubators as their students, graduate students and professors find market opportunities in their academic pursuits. The University of British Columbia’s incubator/accelerator program, entrepreneurship@UBC, has created a number of programs that foster emerging technologies. These opportunities are literally right out of the lab so as an angel investor you can get in on the ground floor.
But most important in your initial search is finding a category you have an innate interest in, one your curiosity is drawn to explore in depth. And while patience is definitely a virtue, virtual startups may well offer the shortest path to profit for early stage investors. We co-authored a case study: “eXp Realty and the Virbela Platform”, Harvard Business School case#: N-621-068 illustrating the many advantages of a fully-remote company. The case allows a comparison of the financial performance of eXp Realty, a virtual real estate brokerage, to its bricks and mortar competitors.
There is lots of opportunity to learn about angel investing. In the end, you need to decide whether investing in new companies, with their potential big wins and many losses, are right for you. The investments you make will be based on your understanding of how a startup’s vision will transform their technology or industry category. There are lots of choices. Make sure the ones you pick capture your excitement about the future.