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Angels Defined

Simply put, an angel investor is a person who invests in a business venture in its seed- or early-stages, providing much-needed capital for start-up or expansion. Given the high risk of this early stage investment, angel investors look for ventures that can deliver a higher rate of return than would be given by more traditional or “blue chip” investments (typically 25 percent or more). While there is no definite list of angel characteristics, there are some general and widely accepted traits that are common among North American angel investors.

Angel Investors

  • "fill the gap" between the financing provided by family and friends and venture capital.
  • individually and via formalized Angel groups, they invest approximately $3 billion annually in seed and early-stage companies (compared to the 2008 Dow Jones estimates of $1.6 billion of Venture Capital investment in Canadian firms).
  • invest cash of between $50,000 and $100,00 per placement in exchange for equity.
  • are, most often, serial entrepreneurs that are seasoned businesspeople, having experienced more success than failures, providing more than growth capital: the best angels are those offering capital and mentorship in the form of invaluable management support, industry-specific advice and contacts.
  • possess vital first-hand experience building high-growth companies and can advise other entrepreneurs accordingly.
  • are commonly found in small groups or networks, operating as part of an angel syndicate (a group of angel investors), which raises their potential investment level accordingly and similarly, through shared due diligence, reduces risk.
  • must meet the “accredited investor” criteria in the Saskatchewan Securities Act, National Instrument 45-106 and its Companion Policy, as detailed in the SAINT Angel Investor Application for Membership.

Accredited Investors

Angel investors typically qualify as an “accredited investor” as defined under the Securities Act, National Instrument 45-106 as follows:

  • an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;
  • an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
  • an individual who, either alone or with a spouse, has net assets of at least $5,000,000;
  • a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements.