In 2021, Canadian angel investment and the demand for it rose, according to the National Angel Capital Organization’s (NACO) latest annual report.
The increase in demand came as angel investment surpassed 2019 levels, reaching a record $262 million in 2021, according to the report, the full version of which was released today.
In 2021, Canada saw its “highest recorded participation from women angel investors to date.”
This figure is more than double the $103 million in angel investment Canada saw in 2020, as the early-stage investment segment rebounded from a pandemic low fuelled by market uncertainty.
Meanwhile, angel organizations reporting deal flow information received 7,753 approaches from companies for investment last year—an 18 percent increase since 2020, and more than every other year since 2015, excluding 2017.
NACO also found that in 2021, angel organizations reported facing a number of problems, from lacking administrative capacity, to difficulty finding members willing to take on the lead investor role, and a lack of exits, which are necessary to maintain investor enthusiasm and provide capital to support new investments.
According to angel organizations surveyed by NACO, the shift to online events during the pandemic made it more difficult for some organizations to raise sponsorship dollars and recruit new members.
To help address these issues, NACO is calling on governments to do three things: step in and help support the operational costs of angel organizations; create more co-investment funds that invest alongside angel organizations; and offer “carefully designed” tax incentives to encourage more angel investment.
NACO has previously received federal funding as it looks to expand its presence across Canada, including in Atlantic Canada, Alberta, and the Yukon.
Founded in 2002, NACO is Canada’s professional association for angel investors, comprising 4,200 angel investors, 50 incubators and accelerators, and 45 angel groups across the country. During the last 12 years—the period that NACO has been tracking angel investing across the Canadian innovation ecosystem—$1.38 billion has been invested across the country into 2,000 companies.
NACO previously shared highlights from its 2022 report in June, noting that the number of angel investments in the country in 2021 increased 53 percent year-over-year, as angel organizations facilitated 635 investments, up from 416 in 2020.
Notably, the gender balance of Canada’s angel investing landscape shifted last year, as women now comprise 27 percent of the members of Canadian angel organizations. That marks a 13 percent increase compared to 2020, and 60 percent rise relative to 2019 and 2018.
NACO found that in 2021, Canada saw its “highest recorded participation from women angel investors to date,” noting that it also saw a rise in new organizations focused on women investors and other under-served groups.
Overall, NACO saw a sharp increase in investment activity from Q1 to Q2, followed by a slight drop in Q3 and a slight rise in deal activity during Q4. From a sector standpoint, information and communication technology (ICT) companies garnered the largest individual share of investments, followed by firms in the life sciences space.
According to NACO, the most active angel organizations last year were based in Ontario and Québec. Smaller groups made fewer investments than larger ones.
Geographically speaking, Ontario and Québec received 67 percent of 2021 investments, while Atlantic Canada saw five percent, Western Canada drove 27 percent, and the Yukon led one percent.
The NACO report found that investment size and valuations dropped in 2021. Median investment size last year was $84,000, down from $100,000 in 2020. The median valuation was $5 million, a bit lower than the $6 million it was in 2020, but the same as in 2019.
Meanwhile, follow-on investments only accounted for a fifth of the total amount invested, illustrating a shift away from concentrating on existing portfolio companies during COVID-19 uncertainty back towards new investments. The report also found the use of preferred shares and simple agreements for future equity (SAFEs) continued to increase in 2021, comprising 35 and 15 percent of deals, respectively.
NACO’s latest report is based on information provided by 31 angel organizations, supplemented with publicly available data on the investments of 10 organizations that did not respond to a request to provide this information.
As angel investors are often independent, individual investors who make “below the radar” investments, and thus difficult to identify, NACO’s analysis of angel investment activity is restricted to investments made in “the visible market” by angel investors who are members of structured angel organizations. NACO considers as angel organizations as angel groups, family offices, special purpose vehicles, and early-stage funds.
While angel investing activity has bounced back since the pandemic’s early days, amid worsening economic conditions driven by rising inflation, interest rates, and geopolitical tension, the sector could face further challenges in 2022.
Venture capital investment in the country has already fallen in recent months. While the effect this will have on angel investment “remains unclear,” states the report, NACO deems it “inevitable” that this trend will have some impact on angel investing activity.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
