At MSU we regard Angels and Entrepreneurs as the "twin engines" of start-up as both aide in getting a business of the ground.

It was therefore encouraging for Quebec entrepreneurs to hear about the recent launch of Quebec’ latest angel investor network, Reseau Anges Quebec.

So what do we think defines an Angel Investor?

 "Angels" are a specific type of Venture Capitalist. They are generally individuals in the community who invest in local businesses. They are generally less formal and less public in their approach to investing.

An "Angel" differs from other venture capitalists in the size of investment (usually under $250,000) and the fact that they are directly involved as an advisor. "Angels" typically do not invest in several ventures at the same time. Rather, they dedicate their resources and time to helping one or two companies grow.

An "Angel" generally wants and is able to provide more than money. Usually a successful business person in his/her own right, the "Angel" can offer advice and expertise. 

“Angels” often have contacts in the financial and business community. They will also usually have some experience within the company’s industrial sector, but will invest in a field in which they have not specifically worked if they feel their business experience can supplement the strengths of the management team.

An "Angel" is generally a "doer"( i.e. an entrepreneur who has little time for bureaucracy) and someone who invests in the potential of the company. "Angels" want to be part of a new venture, to be involved in the thrill of helping another business succeed; something they have most likely experienced with their own company at some point in the past.

When someone gets a reputation for being an active angel investor it doesn’t take long for them to start receiving requests for finance. I have been asked to invest in numerous companies and in a number of cases the approach has sounded something like this; " You have some money and I need money quickly and I hear angel investors aren’t as greedy as VC’s, they don’t ask for as much inormation and can move quicker – so will you invest?"

Just in case you don’t see the problems with this approach I suggest that you remember the following when approaching angel investors:

• Angel Investors are …. investors … who still want a good return on their capital. They typically invest before VC’s and as such probably expect at least as high a % return as a VC.
• Angel investors can often move quicker than VC’s … but it does not come across well if you approach an Angels when you are in a hurry. An Angel will still want to due diligence of some sort and will probably want to take some time to get to know you personally. This should never be done with the thought of a clock ticking over your heads.
• Angel investors have more flexible time horizon’s than VC’s. In general, it is more important for a VC to be able to see an exit possibility within 4-7 years than it is for an angel, as angels don’t have a contractually finite period of time by when the need to return capital to their investors.
• If you’re going to take money from an angel investor it’s much better to get it from someone who can really help your business grow – the fact that you see value in their input should always be communicated to the angel investor. If you feel that you’re just kissing someone’s but when you say this – your probably better to find a different angel investor.

If you’re an entrepreneur keep an eye out for what happening with Reseau Anges Quebec over the next few months, as they need YOU in order to be successful.