Angel networks: A saving grace for young entrepreneurs


Help from above

All young Canadian entrepreneurs—can I get a hallelujah!? Don’t despair, sisters and brothers, while soul-searching for financial saviours.

Rejoice! With a rock-solid business pitch, angel investors can help bring your start-up to life.

What exactly is an angel network?

Angel investment is a step before venture capital, working with small deal sizes and higher risk, and when companies are pre-revenue or early-revenue.

Angel groups pool together the capital and resources of high net worth individuals, or angels. Then, the angels’ capital and resources are invested in entrepreneurs for their business start-ups.

The main goal of any angel group: quality deal flow. According to Steve Gedeon, RAN’s faculty supervisor, “The better the companies coming forward for investment, the more excited the angels get, the more money is invested, and the more good companies come forward. It’s a virtuous cycle…stimulated by good PR.”

The RAN is Canada’s first university-based angel group. Created two years ago under the direction of the National Angel Capital Organization’s (NACO) Educational Committee, the Network also works in partnership with Maple Leaf Investors, taking on deals too small for their criteria.

Professor Gedeon, who is also a chairman of the NACO’s educational committee, says the university-based Network contributes “thought leadership and new educational ideas” to NACO, which already had sector and city-based angel groups at the time.

Presenting your heart and soul

RAN has worked with a wide range of sectors, from medical device start-ups from life science students, to tech start-ups involving social networking. Working with younger entrepreneurs—most of them under 30—and companies in their earlier stages, RAN also provides plenty of mentorship and coaching than other angel groups. According to Dan Goldstein, RAN’s VP, “our guys go above and beyond to make [those young entrepreneurs] feel comfortable.”

“It’s a pretty tough thing [for potential entrepreneurs,] coming in front of a group of angel investors and presenting your heart and soul, basically, that you’ve put into this company and try to take the feedback,” says Goldstein.

Even Goldstein, a fourth-year entrepreneurship student, found working with affluent investors intimidating when he first took charge. But after two to three months he felt like part of the family. Since he took over last year, RAN has grown their membership base and has “a lot more deals in the pipe.”

The Elevator Pitch—Moving on up!

More deals for the angels means stiffer competition between fellow entrepreneurs. Here’s one thing you absolutely cannot screw up: The elevator pitch.

Keep it short and to-the-point—it should take around the same amount of time as a quick elevator ride. Most importantly, it has to address the needs of the public and how your product/service solves those needs. Stay cool, confident, and know your product/service inside and out.

Are you a hopeful, young entrepreneur in the Greater Toronto Area (GTA)?

Ryerson students and alumni can begin by checking out StartMeUp Ryerson, which provides resources and funding to turn ideas into reality. Entrepreneurs in the GTA who think their idea can turn a decent profit within the first 3-5 years can go to the Ryerson Angel Network website, click on “Submit a Business Plan,” and complete the questions to generate a “One Pager,” a synopsis of your business.

Entrepreneurs around Canada can check the National Angel Capital Organization’s (NACO) website and click “For Entrepreneurs” to find the closest Angel investor group.

Photo Credit: Toni Blay on Flickr
About the author

David Cadiente is a recent University of Toronto at Scarborough Campus grad and attended Centennial College's Book and Magazine Publishing program. David loves music, reading, shuffling a deck of cards, and playing guitar.