The face of Anges-Québec in the Montreal startup ecosystem, Caroline Pelletier gives us today essential tips and insights how angel investing works. Read them if you are looking for funding and support for your tech startup.
Caroline Pelletier says she would love to see more Montréalers “thinking big and being at the forefront of new innovations”; which we totally love!
NewTech : Can you tell us a little bit of yourself, what you are doing currently and what is Anges Québec?
I am responsible for business development, marketing and investor training at Anges Québec. Anges Québec is a 150+ member angel investor network. Our members are experienced and successful entrepreneurs with the desire to bring an added value to the companies they’ve invested in. We have made 50 investments up to date. We invest in innovative companies across all industries and most of all, in promising entrepreneurs.
NewTech : If both give funding to startups, what’s the difference between an angel investor and a VC?
VCs generally manage funds for other investors whereas each individual angel investor manages his or her own portfolio of investments. Anges Québec is not a fund but an organization that seeks out the best opportunities for its members who then make their own investment decisions.
Typically, angel investors invest earlier than VCs in a startup’s lifecycle. Angels invest smaller amounts earlier, and VCs invest larger amounts as the company’s capital requirements grow. Angel investors take greater risks, but the potential reward is also larger.
Angels are also typically more hands-on and will spend time, when needed, getting involved with the companies they’ve invested in. They bring their solid business experience and impressive business networks to the table.
NewTech : What’s the best way to interest an angel investor in a startup? Is it about the entrepreneurs, the business potential, the technology or other?
Explain what pain or problem you are aiming to solve, and why your solution is the best way to go about doing it. Angels are looking for high ROI and to achieve that goal, they invest in companies that are seeking high-growth.
Why do you have the best team to accomplish that goal? Your team is crucial to the deal; otherwise perfect deals can and do fall through because the angel(s) aren’t confident in the team.
The deal itself is important, but if the angel strongly believes in you and your business model, you’ll usually find the angel is more flexible on deal parameters.
NewTech : When’s the best moment to go meet an angel investor? Is it at the idea stage, or later when you already have something going on?
The best time to approach an organization like Anges Québec is when your business is starting to gain some early traction. Other angels may invest at the idea stage, but that is not what we’re looking for at Anges Québec.
NewTech : Let’s say there’s interest from both parties. Can you give us an overview on the process, how long it lasts on average, what kind of documents are needed, what can the entrepreneur can do to facilitate the process? Do you expect the entrepreneur to continue working on the growth of the business, or you would rather prefer him to focus on the funding?
At Anges Québec, the process lasts anywhere from 3 to 5 months. It’s important that the entrepreneur continue to run his or her business, though we understand that raising money can take some attention away from day-to-day operations.
We receive applications through our website (documents to submit: business plan and/or pitch deck and financial projections). We then invite the most promising companies to come pitch our investors at one of our monthly meetings, and then, if there’s interest, we will typically present a term sheet sometime in the following month. Due diligence can take more or less time depending on each case. Sometimes there are skeletons in the closet and other times the process is more straightforward. You can simplify the process by ensuring your company and documentation are well-structured and up to date, from your company minutes to your accounting books to your cap table. Small things like making sure your employees and contractors sign contracts giving the company ownership of the intellectual property will save some headaches when fundraising.
NewTech : How do you become an angel investor? Is it an official title given by a professional association or anyone can become an angel investor?
There is no professional designation or title. Angel investors are accredited investors, a notion that defines the minimal financial means the investor must have to be legally allowed to invest in private companies. In Québec this means having at least $1M in financial assets (cash and securities) or a gross salary of at least $200K. All of our members meet this definition.
Thanks Caroline! For entrepreneurs and startups, you can contact caroline.pelletier _at_ angesquebec.com or you can meet Caroline in tech entrepreneurial events such as the monthly MTL NewTech, Startup Weekend, and many other initiatives such as AngesQuébec free pitching events.