Angel Activity in Canada: Breaking Down the Startup Data


By Megan Maltby

Like many other angel groups across the country, First Angel Network is proud to be a member of the National Angel Capital Organization (NACO), a not-for-profit organization that seeks to promote and support angel investing in Canada. Along with offering professional development opportunities, NACO hosts an annual Angel Summit in order to foster communication among angel groups in Canada. This year’s Summit will be held in Banff from November 20-22. In addition, NACO is responsible for conducting research on the status of angel investment. For the past three years, this research has been published in the form of an annual “Angel Activity Report”.

After taking a look through the 2012 Report with Atlantic Canada in mind, there are many interesting observations to note. While some of the facts are discouraging on the surface, I believe many hint at the progress that has been made in the region over the past year or two. Sometimes it is necessary to look beyond just the data and take both quantitative and qualitative information into account. I have attempted to do just that and provide a helpful analysis of the Angel Activity Report key findings in relation to the activity happening here in Atlantic Canada.

Angel Activity

NACO found that angel groups based in Central Canada completed the highest level of reported     investment activity. These groups were responsible for $33.4M of financing, comprising 82% of total nationwide investments. This is not surprising when one considers the vast number of angel networks in this region (12 registered with the Network of Angel Organizations in Ontario alone). In contrast, Eastern Canada accounted for only 2% of total investment activity.

Interestingly, there are some positive details that emerge after a bit of consideration. Average round size in Eastern Canada increased from $202K to $286K from 2010-2011, which is promising. Although average round size has since decreased in 2012, it remains higher than 2010 levels. In addition, this decrease is not necessarily cause for concern as it most likely indicates the trend in which angels take a portfolio approach to private equity in an effort to better mitigate risk.

While Atlantic Canada is still far behind other regions with regard to formal angel opportunities, there has been an increase in angel group activity over the past year or two. East Valley Ventures has emerged recently as a key player. Founded in 2011, the organization provides mentorship and learning opportunities, as well as entrepreneurial financing for tech startups in Atlantic Canada. It will be interesting to see how East Valley impacts the investment landscape in the region into the future.

Industry Analysis:

The Angel Activity Report shows that in 2012 angel investment activity occurred largely in three industry sectors: Information and Communications Technology, Life Sciences, and Clean Technology. There have also been an increasing number of investments made in the Communications and New Media sectors. These trends hold true in Atlantic Canada. Over the past few years, the IT space has developed in the region, partially fueled by the successful exits of companies such as Radian6, GoInstant, and Q1 Labs.  

The vast amount of resources and incubation opportunities available in the region has also contributed to the popularity of startups in these key sectors. Many financing organizations, such as Innovacorp, NSBI Venture Capital, and NBIF focus their investment in several strategic industries. In addition to financial capital, mentorship, competitions, and workshop opportunities are often hosted with a focus on issues facing entrepreneurs specifically in the IT, Life Sciences, and Clean Tech sectors. Prominent examples include the Innovacorp I-3 Technology Startup Competition, HPX Digital, and the Launch36 accelerator.

Syndicated deals:

As noted in the 2012 Report, syndicated deals are quite common in the angel investment world, with 55% of all recorded investments involving a co-investor. This data emphasizes something that is at the root of the startup ecosystem here in Atlantic Canada; a network of individuals and organizations that collaborate with one another will achieve greater success than an ecosystem involving numerous independent parties.

Many startups seeking funding in the region raise money from a number of different sources, and it is not unusual to see companies utilize various financing sources as leverage for additional rounds. Many startup companies access research grants from bodies such as NRC-IRAP, turn to private angel investors and organizations for seed stage financing, and even receive partial financing from government bodies like the Atlantic Canada Opportunities Agency. ACOA will even match funding raised from angels or other organizations, if certain criteria are met. Finally, the many accelerators and incubators popping up in the region contribute to various stages of the entrepreneurial value chain. It is clear that many startup investment achievements are the result of a very integrated system.


A notable addition to the Report this year is a section on startup accelerators. While the Report notes that almost all accelerators are young, the introduction of accelerator data indicates that co-working startup spaces are on the rise and are becoming more notable in the entrepreneurial community. NACO interviewed representatives from six accelerator programs in Ontario, Quebec, and British Columbia and found that the majority of accepted cohort companies were in the ICT (59%), New Media (19%) and Clean Technology (10%) sectors.

These findings seem to be mirrored here in Atlantic Canada, with co-working spaces opening up in rapid form. As the pioneer program in the region, PropelICT has been helping high tech startups in Atlantic Canada for many years. The most recent initiative to come out of PropelICT is the ambitious Launch36 accelerator program, which aims to launch 36 new technology companies in Eastern Canada over 36 months.

The Planet Hatch Centre has joined the ranks of Launch36 in the last few weeks. The Centre will be home to the new ACcelR8 incubation program, focused on providing co-working space and mentorship opportunities to companies in Fredericton. The first cohort will feature startups from various sectors, including IT, biotech, and advanced manufacturing.

In addition to formal accelerators, which typically accept companies in cohort groups and move them out of the space after a specified period of time, there are a number of incubator/co-working spaces that have recently opened in Atlantic Canada. Volta is a new organization designed to provide a co-working hub for technology startups in Nova Scotia. Located in Halifax, Volta emphasizes external mentorship and peer-to-peer learning opportunities, but insists that startups can stay for as long as they feel necessary. Common Ground has also been established in St. John’s as a shared office space for entrepreneurs and freelancers. Like Volta, the non-profit organization opened its doors in early May. It will host a permanent group of companies, but will also provide space for drop-in work and meetings.

While reports such as NACO’s Angel Activity Report provide excellent numerical data on the state of angel investing in Canada, there are usually areas of relevance that are missed. Atlantic Canada is often underrepresented, but our regions’ entrepreneurial picture becomes clearer with additional qualitative research. Many exciting initiatives are being undertaken in the Atlantic Canadian startup space, some of which are sure to garner national attention in the near future.