All your Questions answered in one place

What type of returns should I expect?

Perhaps a better starting point is to ask what is my motivation to invest? Is it purely economic ROI or is it assisting and mentoring the start up or is it enjoying the excitement of new products and services evolving and coming to market or a combination of all 3?

From this answer you can set your expectations on returns and involvement (if any), typically there are higher ROI expectation when investing purely for ROI versus the excitement and enjoyment of your involvement with the project. (NACO’s - National Angel Capital Organization - A Practical Guide to Angel Investing: How to Achieve Good Returns, 2016 pg 20, 21)

A study by the Kauffman Foundation (slide deck here: https://www.angelcapitalassociation.org/data/Documents/Resources/AngelGroupResarch/1d%20-%20Resources%20-%20Research/ACEF%20Angel%20Performance%20Project%2004.28.09.pdf) shows that the best estimate for angel investor returns is 2.6 times their investment which is competitive with the venture capital returns. Similarly Techcrunch (link in next paragraph) shows it at 2.5X.

About 10% of the exists represent the biggest winners (home runs) producing 90% of the returns which is the same results that venture capital corporations realize. The next level of returns (hitting singles, doubles or triples) is the 1X to 5X group. (https://techcrunch.com/2012/10/13/angel-investors-make-2-5x-returns-overall/)

The portfolio approach is a common approach for angel investing; with this in mind it is best to think of each investment as your only one such that you don’t invest in other opportunities just to quickly build a portfolio believing that this will automatically diversify your risk. Doing your due diligence is one key to success (which is commonly shared with other interested Angels – one of the benefits of an Angels club).

Angel investors should look to position themselves as investors in at least 10-12 startups in order to diversify the risk (there are lots of resources on the web if your do a quick search that dive into this in more detail). The general rule of thumb on expected results are, when investing in 10 startups; 1-3 to fail completely, 3-6 to be moderately successful and provide a return over several years, sometimes requiring additional investment along the way, and 1-2 to provide a 10 times return or even more.

Most angels are looking for that home-run, that Unicorn like Facebook, Google, Air BnB, SnapChat or recently Ethereum. However, carefully selecting your picks and knowing the management team of the startups you are partnering (investing in) is very important. This brings us back to due diligence; a process to be taken very seriously before making any type of decisions. Still, many successful angels, even after doing the due diligence will make a gut decision on investing.

One common theme with almost all startups is they all have an unproven business model and plan. Determining the hunger and commitment by the management team to succeed will help you gauge their drive to overcome the inevitable hurdle that will appear.

One thing is certain about angel investing, it is not for the faint of heart. Every angel investor can report losing all their investment in at least one company so it is very important to invest only funds that you could afford to lose.

Here is a chart from the NACO Academy’s “A Practical Guide to Angel Investing” showing the relative returns and risk chart, page 8.

CHART HERE

How do I measure a successful angel investment?

That depends on why you are becoming an angel investor. If it’s solely based on keeping score with the returns or increasing value of the company then that is very simple to measure.

As an equity investor over time you should be looking for 20+% annual returns in your startup portfolio, either in direct dividends, redemptions etc or through an exit down the road.

Many angels look for other kinds of rewards from your investment of money, time, experience, and support to the startups’ management team. As an angel you may additionally measure your success in terms of the gratitude expressed by the entrepreneurs you are impacting, their employees, the contribution to the local economy or the fun and joy of bringing an impactful product or new service to the market, which brings us to the startups mission which could very well included a social impact measurement and reason for being.

Some startups focus on providing a social impact that may readily align with angel investors’ objectives and being successful in dual roles of creating wealth for the shareholders and meeting social goals. If you only measure by monetary gain, you may miss some of the best benefits of being an angel investor.

Why would I choose angel investing over more traditional forms of investing?

Angel investing offers the prospect of very high returns, an opportunity to be actively involved in the companies you invest in, and the probability of positively impacting entrepreneurs directly.

Entrepreneurship is the lifeblood of private enterprise and all western economies. Virtually 100% of all new jobs in the last 10 years have come from new company startups. This is true of developed countries and the US job data holds true for this. (Kauffman Foundation: Business Dynamics Briefing : Jobs Created from Business Startups in the United States.)

The importance of Angels in our economy (Canadian economy) is growing, investing 27 times more in startups than VC investors (NACO Academy Module 101).

Angel investing provides a variety of benefits that simply don’t exist through traditional investing. It does involve a higher level of risk that comes along with the potential of very high monetary returns and psychological returns. It is exciting!

How much do I need to invest each year to become part of an angel group?

Most formal groups do not have a minimum annual investment requirement. Your decision to invest in any deal and the amount you invest is totally up to you. Some valued members of angel groups might invest as little as $25,000 in only one deal per year. Others may do $500,000 or $1 million in multiple deals (a.k.a. Super Angel). Some may invest a lot one year, and nothing the next year. Everyone around the table adds value.

Most angel groups do require that you have liquid capital available and that you will make at least a minimum investment in one or two deals over a three year period. If you never invest, there is no reason to be in an angel group. The presenting companies expect that the people in the room are legitimate prospects to invest.

What can I expect if I become a part of an Angel Group? How do they work?

Each group is different, so review their website information and membership package, attend as a guest to one or two meetings and engage in these meeting asking lots of questions of the presenters and the members. They meet monthly, quarterly or semi-annually and look for flexibility in providing capital (some groups pool capital and invest together) and performing due diligence (can you easily find out what other angels are interested in which startup and compare notes and share the due diligence?).

Most angel groups are essentially a “matching service” between investors and companies looking for investors. All have either a paid or unpaid chairman, president, or general manager who will meet with prospective members and explain everything. Feel free to contact them and hold a conversation or grab a coffee with them.

Who are the Valhalla Angels members?

With over 100+ members spread across Kelowna, Calgary, Edmonton, Winnipeg, and Medicine Hat our membership consists of individuals with varying backgrounds:

investors

100+
investors

invested

58+
million invested

deals

207+
deals

*As of September 30, 2018

  • Accredited, high-net-worth investors.
  • Venture capitalists.
  • Entrepreneurs with experience growing early-stage companies.
  • Corporate/institutional partners.
  • Private equity investors.
  • Resource partners and sponsors.
Member Profiles

Our members are dedicated to building Western Canadian industry through early stage angel investing. Valhalla Angels members are respected leaders of industry, whether from building their own companies or by participating in numerous community initiatives.

What are the benefits of becoming a member?

Commitment to our members is our highest priority at Valhalla Angels. Outlined below is our commitment to you:

  • Quality deal flow: Most investment groups often carry out the early­stage investing process with very little attention to important formalities. In contrast, Valhalla Angels has formed a diligent process that screens companies before they present to our membership. This ensures you see only the best deals at our forum.
  • Invest together: Options to directly make investments and/or participate in holding companies that share due diligence and pool resources.
  • Networking opportunities: Valhalla Angels is a community of Canada’s top angel investors. We will provide you with networking opportunities amongst our membership and amongst other like­minded, high­-net-­worth angel investors across North America.
  • Support: Our members understand the risks and rewards associated with early­stage funding and, when brought together during the monthly forums in the chapter cities and social activities, are able to strengthen ties of mutual interest, fellowship, and support.
  • Direct access: Members can pitch their own deals or investee companies to the Valhalla Angels selection process.
  • Exclusive access: Members see 30-­45 high-quality, well­-screened investment opportunities each year.

We are committed to providing you with a valuable experience in an honest, transparent, respectful, and mutually beneficial environment.

Become A Member