
Software
Businesses that develop software as a solution (SaaS) and other proprietary software are often scalable and have high growth potential, making these companies popular with investors.
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Updated . What changed?
Angel investors are wealthy people who provide financial support to entrepreneurs with lucrative business ideas or promising startup companies. In exchange, angel investors receive part of the profits and often equity in the business as well. Also known as private investors or seed investors, angel investors are in many cases personally acquainted with the business owners they support. Their investment may be in the form of a single payment or multiple cash infusions over time.
Angel investors know that investing in small companies is very risky but can yield phenomenally high returns when done smartly. Only half of Canada’s small business are likely to survive for 5 years or more, but angel investors can improve the chances of success by providing access to financing, high-level expertise, logistical support and a huge network of buyers.
Among other qualities such as profitability, angel investors look for companies run by owners who are dedicated, passionate and committed to selling their product.
Business in the any of the industries below have a higher chance of attracting angel investors, but it’s not impossible for other businesses to get investment. The key is to promote the growth potential of your business including how appealing your goods or services are and how smoothly you can transition into larger markets.
Businesses that develop software as a solution (SaaS) and other proprietary software are often scalable and have high growth potential, making these companies popular with investors.
Companies that focus on IT, FinTech, biotechnology and networking systems are particularly attractive to investors.
Early-stage financing can be a massive boost for companies with a viable product that have the potential to become a common household item.
Improving on existing versions of specialized equipment can be a relatively safe way for angel investors to get a return on their capital.
Before you go about attracting investors, make sure you’re ready to put your best foot forward. Just like going on a first date, making a bad impression means you probably won’t get a second chance. Before you even start soliciting investors, make sure you’ve done the following:
You will need to convince angels that you can turn their money into even more money. To do this you need to convince them that the product or service offered by your company is able to make it happen. It must not only be profitable, but also in demand.
Can your brand go worldwide, or will it always be focused in Canada? Will your customers keep buying more, or will they only ever buy once? An investor will want to know about this before deciding whether or not to get involved.
The facts and figures are the evidence you need to convince investors to jump aboard. Angel investors are keen on seeing determination and passion, but only if it comes with the right numbers.
When an investor offers you money they’re offering you a deal. Remember that you are under no obligation to accept it, and that not every deal will be right for your company. They will typically want equity in exchange for financing, and/or may include repayable debt schemes or similar.
If your company ticks these 5 boxes, then it’s a good candidate for angel investors. It has…
Jennifer Holland’s 15-month-old baby had a sore throat when she visited her doctor. With a light in one hand and a tongue depressor in the other, the doctor asked Jennifer to restrain her child while they took a look. Holland wondered why they didn’t simply use light-up tongue depressors.
A quick Google search revealed that such a thing didn’t yet exist in a cost-effective package. Throat Scope was born a month lates, becoming the world’s newest manufacturer of cost effective, patented light-up tongue depressors with disposable wooden blades.
Not long after that Holland found herself on the hit TV show, Shark Tank, asking several angel investors to back her product. Throat Scope was a unique product that had global potential and was produced by a well-managed company with a clear vision for growth.
Holland walked out of Shark Tank with a $76,000 investment from an angel investor who got a 30% stake in the company and a 5% royalty deal until the initial investment was repaid. Holland’s investor urged her to hire more people. She did so with her investment money, bringing on a corporate director and a commercialization director, who raised even more capital and helped Throat Scope go global with a number of worldwide distribution deals.
With much-needed financing and professional advice from her backer, Holland’s business grew astronomically. Although she had to give up 30% equity, in the end, everyone was a winner.
Finding an angel investor can be difficult, and competition for their attention can be fierce. There are, however, some ways to get their attention. Angels can be both individuals and groups, but both can be found in similar ways.
If you’re not ready to give up equity in your business or cede any control to an angel investor, you might want to explore other ways of getting financing. Such options could include startup business loans, which are specifically designed to fund newer businesses but require strong personal credit and an equally strong business plan to get approved. The Business Development Bank of Canada (BDC) is a well-known source of startup funding.
The federal government offers financing for small- and medium-sized businesses in the form of a Canada Small Business Financing Program (CSBFP) Loan. The Canada Small Business Financing Program (CSBFP) Loan offers loans of up to $1 million to startups and small businesses that gross $1,000,000 or less per year.
You could also look into getting business loans that don’t require collateral. However, you’ll need to be operating long enough to meet minimum revenue requirements, so this option may be better for business that are growing rather than just starting out.
2M7 provides up to 125% of your average monthly sales in a merchant cash advance that you’ll repay incrementally based on your daily sales transactions.
Read more…Developing a long-term relationship with your local banker can be a great investment for your business.
Read more…Compare lenders for businesses in every stage for owners with a 760 credit score or higher.
Read more…Lenders won’t reject you outright just because you don’t have the best score.
Read more…Compare top lenders for different types of business needs.
Read more…Get the best rates for your business loan when you compare lenders using this innovative online platform.
Read more…Here’s everything we know so far about the Affirm IPO plus how to buy in from Canada when the stock becomes available.
Developing a long-term relationship with your local banker can be a great investment for your business.
For investors interested in a socially conscious investment, solar energy represents a long-term growth opportunity.
From making a business plan to getting funding and insurance coverage – we’ll walk you through what you need to know about starting your own business.
This guide presents everything you need to know about starting a dog-walking business in Canada.
This step-by-step guide reveals what you need to know about launching a gardening business.
We’ll show you how to start a cleaning business – from picking a business structure to creating a business plan and marketing your services.
Find out about passive income investment ideas that can help you make money even while you sleep.
How do you gift stocks to loved ones? Learn the ins and outs of finding the right investments for them.
Several financing structures work like payday loans in business lending. Learn why you might want to avoid them and compare alternatives.