Canada’s technology scene is so hot that investors are going to startup boot camp to learn how to get a piece of it.
About 150 wannabe angel investors last month attended a three-day conference in Niagara-on-the-Lake, Ontario, learning about crowd funding, exit strategies and term sheets. The National Angel Capital Organization put together the event across the Niagara River from Lewiston, New York, for Canadians eager to get in on the burgeoning industry while supporting the next generation of entrepreneurs.
The angels’ interest has been piqued by success stories such as Shopify Inc., whose shares soared after its May initial public offering amid a sea of red in a Canadian equity market battered by the commodity meltdown. The challenge is that many entrepreneurs are leery of taking money from those not steeped in technology.
“They’re, candidly, people who have made money, been successful and then they’re bored,” Daniel Debow, a serial entrepreneur who sold one of his startups for $227 million, and presented at the conference. “I’ve seen it multiple times with people who have good intentions but bad experience.”
U.S. Investors
Angel investments more than doubled to C$91 million ($70 million) from 2012 to 2014, almost all of which has gone to technology and life-sciences companies, according to NACO. The increase mirrors a doubling to $2.4 billion in venture capital investments in the country over the last five years, including from U.S. investors such as Sequoia Capital and Andreessen Horowitz.
Beneficiaries have been companies such as LightSpeed POS, VarageSale Inc. and 500px as investors seek the next unicorn, closely held startups valued at more than $1 billion. The interest comes as Shopify’s shares have jumped 65 percent in the U.S. this year, making it the best performing tech IPO in North America while the resource-heavy Standard & Poor’s/TSX Composite equity index declined 8.4 percent.
Angel training courses have popped up in Silicon Valley to help prepare the dozens of employees who turn into millionaires when a major technology company like Facebook Inc. or Twitter Inc. goes public and want to make investments of their own. In Canada, the startup boom is attracting investors who might not have any tech experience and who would otherwise have backed oil and mineral exploration, said Yuri Navarro, NACO’s executive director.
Angel Textbook
Navarro’s organization is putting together a 22-module course, the first of its kind in Canada, to teach angels the dos and don’ts of early-stage tech investing.