For the second year in a row, Angel investors are becoming the primary source of funding for emerging, start-up companies in Canada. Angels invest their own money whereas Venture Capital firms manage other people’s money that is then pooled together.
Venture capitalist funds are at a 16 year low in Canada. A recent study in Canada reported that 53% respondents who raised money last year received their funding from angels, compared to 8% who received funding from venture capitalists.
Other findings from the report include:
Over 60% of CEOs expect revenues to increase at least 25% in 2011
73% expect their companies will be acquired in the next 5 years
84% are using cloud computing in some form
More than 80% are taking a more aggressive approach to business planning.
When all this is said, is this good news for businesses in Atlantic Canada? Yes, this is – it becomes a win/win for both investors and businesses. The markets are still volatile and have many investors unsure of what to invest in. This sends many investors to angel investing. For the investor this means taking smaller amounts of money and investing in numerous businesses and this helps to spread their money around. For an investor, spreading their money around lessens risk and improves their chances for returns. For entrepreneurs this means there will be more angels to seek funding from thus increasing their chances of success.