Angel investors bring more than capital. The knowledge that you have, your experience, what you've done in your professional life is exceptionally important for helping the next generation of entrepreneurs achieve success. 

High potential entrepreneurs in Canada do not need to exit. They do not need to sell their companies in order for the investors to achieve liquidity, 

Where only a small percentage of angel investors do exceptionally well, a very wide range that don't do well at all. The distribution of returns shows that over half of all investments never return their original capital or fail completely. In contrast, 10% of exits produce 90% of total returns.

Since only 1 in 10 investments will tend to account for almost all returns, successful angels must use a portfolio diversification approach. Investing in only a couple of deals over several years is a weak investment strategy. This need for a portfolio to reduce risk is the same as the reasoning behind mutual funds or index funds. 

This speaks to the importance of diversifying your angel asset portfolio through investments in angel funds and participating in angel groups so that you can engage in a thorough due diligence process. Having the appropriate depth of education and training will help to be able to decipher between the riskier bets with a low probability of success from those rare investments that have a higher probability of success. 

High potential entrepreneurs in Canada do not need to exit. They do not need to sell their companies in order for the investors to achieve liquidity. Liquidity mechanisms are in development that provide angel investors with a return on their capital. This includes secondary market funds, venture capital and growth funds that provide liquidity to angel investors, and other mechanisms in development. 

NACO is engaged in initiatives to increase the level of integration across the funding spectrum, so that the funding continuum is smoother between angel to venture capital. Creating greater connection between angel investors and venture capital investors, allows for venture-grade companies to graduate out of the angel investment portfolio into the venture capital portfolio, and continue on to growth.

More on this topic in future episodes. 

We are here with Senator Doug Black, Chair of the Senate Banking, Finance, and Trade Committee. 

The innovation ecosystem in Alberta has a tremendous potential. We see an opportunity to transition the risk capital, that has historically been in more traditional industries, to the high growth industries that can contribute so much to the economy. From your perspective, what can we do as a national organization and what can angel investors do to contribute to Alberta's renaissance? 

We need to find bridges. Build those bridges and make sure folks cross them. Specifically, in respect of Alberta. I spent a fair bit of time as an elected Alberta Senator moving through the province, understanding what I would call "Alberta 2.0" needs to look like. We have historically relied upon the oil and gas industry, and this is a very powerful, important industry. But, we recognize that we need to focus on a transition.

Alberta 2.0 will take time. A large part of that is going to be technology. Whether it's specifically in the oil and gas industry, the renewables industry, the banking industry, or the agriculture industry. There are huge opportunities throughout the Alberta economy.

What will you do with the next 20+ years of your life? For most angels, the answer is:

"I want to contribute to the good of my community"
"I want to continue to do what I love."
"I want to be involved in strategy, important deals and major decisions."
"I want to lend my expertise."

The value of angel groups is that they essentially help mitigate your risk. Angel groups help you attract the highest quality deals and help you go through a due diligence process that vets out the deals that have a disproportionately high chance of failure, or a very low probability of success.

Angel groups provide discipline, additional due diligence, and deal flow resources that will mitigate your risk and increase the probability of return. 

More on this topic in future episodes.

This podcast is for informational purposes only and is based on the book "A Practical Guide to Angel Investing, 2nd Edition" authored by Steven Gedeon PhD and published by the National Angel Capital Organization. Content discussed is for general guidance on matters of interest and should not be taken as professional, legal, business or investment advice.

Most angels have enjoyed a successful business career and want to share their expertise and experience with younger entrepreneurs. Of course. They want and expect to gain above market rates of return on their investments. That's what makes this form of investing sustainable, but often they also want to pay it forward to help others and give back to their communities.

Angels are often retired executives or other professionals, or in many cases, they are former entrepreneurs who ran and sold their own companies. Business angels invest because of their love for entrepreneurs and the entrepreneurial journey. Angels invest for many reasons, including the excitement of being involved in an interesting company or industry. The desire to mentor the next generation of entrepreneurs, the desire to pay it forward by sharing their expertise with those who need it, contributing to the economic growth of their region, community, or country.

This podcast will help distill the wisdom of hundreds of angel investors who came before you.

Built by Angels is a new podcast series that will guide you on the road to venture capital scale and growth. Interested in funding the next big thing? Are you an entrepreneur searching for capital, to fund and scale your company? Are you on the sidelines, wondering how to jump in, while everyone else is building, backing, and supporting the next generation of entrepreneurial companies?

Stay tuned, subscribe and join us on this exciting journey, as we transform ordinary listeners into extraordinary investors.