Rob Woodbridge

Preliminary results from the first Ottawa Angel survey since 2000, to be released at this week's Ottawa Venture Fair, paint a picture that echoes the general consensus of the Ottawa investment community – a combination of conservative optimism and tempered reality.

Angel investing makes a significant contribution to the Ottawa economy by helping smaller, earlier stage companies stabilize and focus on building great companies. Angels invest time, energy and money into these firms and their impact is significant. In North America, more than 40,000 small companies are assisted by 350,000 angels who invest about $30 billion annually.

The survey asked a number of questions about angel investment preferences in 2003 and solicited thoughts on what is to come in the next few years. Investment preferences in 2003 focused on smaller, less capital-intensive industries, where the companies are closer to market and thus revenue (such as software). Looking ahead, there is heavy interest in the wireless and software industries, while telecommunications and photonics have fallen out of favour. The overarching theme of the survey results shows a strong interest in banding together to leverage the knowledge and expertise of the Ottawa angel community through syndication.

The preferential investment size for angel investors was less than $50,000, while more than 60 per cent of angels invested between $25,000 and $100,000 in an average of one to three deals. This echoes the 2000 survey, where 41 per cent preferred to invest less than $50,000 and the average deal size was close to $90,000. Ninety per cent of respondents indicated a strong interest for syndicating deals with other angels, where the preferred deal size would be between $100,000 and $1,000,000 (both of these numbers are significantly higher than in the previous survey), offering a glimpse of the benefits of an organized angel group in Ottawa.

There are no surprises when it comes to the drivers for angel investment: a strong management team with executives who have executed in prior initiatives; a higher rate of return that mitigates the risks inherent with angel investing; and a solid business model that will see returns in a three- to seven-year timeframe.

An issue with today's Ottawa angel investor falls squarely on the entrepreneurial community's ability to succeed in a tough market. To attract investment, according to the survey, entrepreneurs need to have a strong grasp on their market size and its potential for growth, a realistic approach to bringing their product to market and strong leadership.

The key trend shown by the two surveys is the continuing maturation of the Ottawa angel community and the contribution angels make by providing their expertise and energy to the entrepreneurial community, which is building the next great global businesses in Ottawa.

To pick up on some of these themes, the Ottawa Venture Fair has included an angel stream at this year's event featuring Barry Moltz, a Chicago-based angel investor, principal for Chicago's Prairie Angel organization and contributing founder of the Angel Capital Association in the United States.

- by Rob Woodbridge, executive director of the Ottawa Capital Network

To contribute to the angel survey, visit www.ottawacapitalnetwork.com/angelsurvey.cfm