April 4, 2013
TechVibes.com Posted by Rob Lewis
A few things have happened in the world of Western Canadian angels this past week. First, nine year veteran group VentureAlberta Forum unveiled their new brand – VA Angels, in anticipation of two new chapter launches, which will take place later this fall.
The new brand was developed to remove the geographic distinction of the forum, as the two new chapters will take the group to locations outside of Alberta.
In addition to the launch of their new brand, VA Angels also released a white paper based on their participation in a Harvard Business School study.
The organization was approached by Josh Lerner and Harvard Business School in the spring of 2012 to participate in a global study of angel groups to learn more about their activities, members, investment deals and overall process. VA Angels were one of only two angel groups from Canada selected to participate.
The key findings that came out of the study of the group were very interesting.
For investors, here’s what they identified:
- The 55 members of VA Angels have done 57 deals for $28.3 million in the last nine years.
- VA Angels provides investors access to a wide variety of quality deals. 254 companies across 13 industries from 58 cities have pitched to VA Angels since the group was founded—this allows investors to reduce their risk through diversification.
- Over the past nine years, 16% of VA Angels funded companies have had a liquidity event.
- VA Angels believes the non-geographically-restricted face-to-face investment model is the strongest option for making good investment decisions.
“Traditionally, angels followed a 100-mile rule which dictated they only invest within their local area to ensure they could keep in close communication with their investments. Today’s communication technologies have rendered this model obsolete; angels no longer need to restrict their investment choices based on where they live. Online angel groups are maturing and starting to make-up a portion of the new angel investment ecosystem. However, face-to-face pitching and negotiation of deals still provides many advantages over online communication.”
And for Entrepreneurs, here’s what they’ve identified:
- Presenting entrepreneurs have a 1 in 4 chance of raising capital.
- Of the 254 companies which have pitched to VA Angels over the past nine years, an impressive 62% are still operating today. Compare this to recent studies that show only 35% of start-ups survive until age 10 and only 37% of Information technology start-ups survive past four years.
- VA Angels geographically agnostic mandate provides a great platform for any entrepreneurs doing an angel roadshow.
“Having ‘skin the game’ encourages angels to help out in ways an institution simply cannot, and can make the crucial difference between success and failure for an early stage company. With an angel not only do you end up with an investor who is comfortable with your risk, you get an investor who is going to help drive you to revenue as quickly as possible.”
To read the full paper click here.