Angel Investors VS Venture Capitalists For Newbies

Finding Where To Fit In

Last month I attended my first Women Powering Technology Pub Night at The Huether Hotel.  It was one of the first times I had ventured out beyond work and groceries after feeling so ill for so many weeks.  I really enjoyed myself and although I do not work in the tech industry I talked about how I loved being online even though I have no idea how it works, and mentioned that I would be going home to Google most of the terms that were used in the True Stories. The always wonderful Julia Rosien spoke up and put me on the spot about organizing the the first 140 Characters Conference in Canada, and suddenly I was in a rapid fire of questions. Truthfully I prefer Q&A over public speaking at an audience any day!  I didn't find an opportunity to fully express how immediately accepted I felt by this great group, but I was taken aback by the amount of women who approached me to say they were in the same boat I was.  One of these great ladies was Roshan Grossman who did a wonderful job of recapping the event over at quillandcurio.com .

This month I was again walking in as newbie.  The topic was Angel Investors.  I knew the term, I knew what the general idea was behind it, but I really didn't know much else about it.  Being the curious sponge I am, I wanted to soak in all the info I could.  Why? I'm really not sure.

That was one of the first questions Golden Triangle Angelnet (GTAN) Chairperson Randall Howard asked.

• Who was in a startup looking for an investment?
• Who was looking to see how to become an investor?
• If you didn't put up your hand, what made you come to this session?

I didn't have an answer other than I loving this community and wanting to connect with all the great people who do so much for it. I really enjoyed the session and although I am not a big note taker here are a few of my takeaways from the event.

Angel Investors VS Venture Capitalists - What Is The Difference?

The big difference is the investment structures. Venture Capitalists (think Dragon's Den and Shark Tank) were once the first round of funding for new companies, but with less and less VC companies in the Canadian market (due to VC regulations and the dot com downfall) it was becoming harder and harder for small startup companies to find funders. This is where Angel Investors step in.  Angel Investors are sought out for their seed funds and knowledge of the business industry. These Angel groups are in for the long haul.  They know companies need time to grow and they are there to mentor them on their journey.  Some companies start with a small investment from the Angel Investor group and after experiencing some business growth they are able to apply for a second much larger round of funding.

Another way that Angel Investors differ from Venture Capitalists is the motives behind their investments.  Venture Capitalists are generally there as profit seekers looking for the next big thing.  Angel investors know that in order to keep their communities in good standing, companies in the area need to be profitable to keep residents working. Angel Investor groups want to see their communities thrive.

The last way to compare Venture Capitalists and Angel Investors is how startups and growing companies apply for investments.  Most VC companies in Canada are based on Bay St. in Toronto. Their meetings as usually setup through a banker or lawyer and done in very structured way.  Angel Investors take a different approach.  They screen applicants through different sources.  Here locally GTAN connects with Communitech's HYPERDRIVE and University of Waterloo's VeloCity.



The applicants that make it through the preliminary screenings are able to present to Angel Investors group and matched up with investors that are interested in pursing the investment opportunity.  In both cases due diligence investigations are performed before any money is invested.

To find out more about Angel Investors, make sure to visit the GTAN website and read the articles under each heading.  To see what is next for WPT be sure to visit the Women Powering Technolgy Facebook Page and click on the events tab. 

Did I Cover The Basics of Venture Capitalists VS Angel Investors?

I hope these takeaways give a you a good idea of how Angel Investors and Venture Capitalists work in Canada. Obviously attending one event about this topic still makes me a newbie. Do have some great information about Venture Capitalists and Angel Investors? Make sure to leave it in the comments below or send me a tweet!