Angel investors of a feather band together: Used to fly solo: Groups
With names like Prairie Angels, Band of Scoundrels, Purple Angel
Mon 30 Jun 2003
Section: Financial Post: Canada
Byline: Mark Evans
Source: Financial Post
One of the more intriguing trends within the Canadian angel community is the creation of formal
Armed with eye-catching names such as the Prairie Angels, Band of
Scoundrels and Purple Angel, these groups pool their money, experience and expertise. They
aim to mitigate risk by filtering potential deals more effectively and doing more in-depth
investment reviews. They can also make larger investments because financing can be spread
among many investors.
"It's a sign of maturity but it's a sign that [angel investing] is not
easy to do," said Rob Safrata, who has been involved in angel financing since 1989.
A big part of these groups, he added, is the social component. "They
want to talk to each other about it, not with lawyers or accountants. They have fun,they enjoy it. It
is very different from a VC's meeting."
In a sense, these groups have transformed angel investors into mini-VCs. Their formal structures
and processes contrast with the traditional angel who often invested in a company if it captured
their imagination. This more disciplined approach and higher benchmarks can make it more
challenging for start-ups to get angels onboard.
A torchbearer for angel groups is Ottawa's Purple Angel, which consists
of seasoned high-tech entrepreneurs who used to work at Bell Northern
Research. Purple Angel has two investment strategies: It puts around $150,000 into early-stage
companies that do not need a lot of money to break even but can't attract VCs; and it co-invests
with VCs in larger seed rounds of $750,000 to $1-million.
Irving Ebert, one of Purple Angels' eight partners, said one of the
group's strengths is its ability to bring decades of industry experience to portfolio companies.
This, he said, makes Purple Angel a valuable