Angel Investors Deserve a Tax Break
Comment by Tony Humble
Financial Post – September 2005
For almost eight years through the 1990s, I wrote about mortgages for the Financial
Post. That was quite a time for the Baby Boom generation. Many Boomers, enjoying
peak earning years, paid off their mortgages, and then set about investing their
increased cash flow in technology startups and highly touted tech growth stocks (OK, I
won’t remind you any more).
Personally, having left a major Canadian bank at 40, and co-founded Northwood
Mortgage in 1990, I joined the Internet boom by investing in my own mortgage tech
startup in 1995. Online Mortgage Explorer, which I had co-founded with tech strategy
with Jason Smith, became Basis 100 Inc. and went public in 1999 largely on the strength
of the panting giant’s last gasp.
And that’s how I became an angel investor.
For those of you haven’t heard that term before, angel investing is early-stage investing
in startup companies. It usually happens between the time the entrepreneur and his
family and friends get a company off the ground and venture capitalists get interested.
In other works, it is the “funding gap” between the sweat equity and love money, and the
venture capital that takes it into the big leagues.
After my first success in building a company, I set out on my next path, amassing a
portfolio of six angel investments – all of them into six figures and one into the millions –
in companies where I could have a great deal of say, but would not be the day-to-day
I thought of it as “spreading the wealth” to promising companies whose goals and values
were similar to my own – the essence of what is now the practice of angel investing.
However, the lack of discipline in my approach, coupled with the rapidly retreating capital
markets, plucked more than a few “feathers” from my wings. In retrospect, I could
certainly have used the collective wisdom now getting together regularly in every major
city in Canada, for example