Angel investing goes beyond providing funds to start-up businesses. It is an opportunity to give back to the community and shape the future economy. Unlike venture capitalists, Angels are involved in the start-up businesses that they invest in. This difference is what makes Angel investing more rewarding.
Angel investors are typically well-educated, high-net-worth persons, who invest personal funds at arm’s length in businesses owned and operated by unrelated individuals. The personal funds are invested on a long-term basis in exchange for repayable or convertible debt or equity in the company.
Profile of a typical Angel investor in Ontario
- Has a high-net-worth
- Former entrepreneur or business professional who can provide new firms with financing, contacts and business experience
- Recognized by the Ontario Securities Commission as an “accredited investor” as defined by the Ontario Securities Commission’s Rule 45-802, such as:
- an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1 000 000
- an individual whose net income before taxes exceeded $200 000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300 000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year,
- an individual who, either alone or with a spouse, has net assets of at least $5 000 000,
- a person, other than an individual or investment fund, that has net assets of at least $5 000 000 as shown on its most recently prepared financial statements,
For the complete list of definition and other relevant information, please refer to the Ontario Securities Commission’s Rule 45-802 (National Instrument 45-106). There is also an unofficial consolidation of National Instrument 45-106 incorporating changes through January 31, 2012.
The merit of Angel investing