A network of “superangel” investors in the Toronto-Waterloo innovation corridor has completed an oversubscribed first closing of CDN$10 million, the group announced today.
Archangel Network of Funds plans to invest in early-stage, high-growth Canadian technology companies across a number of sectors. It also aims to support a more diverse range of startup founders from a variety of backgrounds.
“The current structure of the innovation ecosystem does not reflect the diversity of our country and many entrepreneurs face systemic barriers to gaining access to capital,” said Claudio Rojas, CEO of National Angel Capital Organization, an industry association that represents angel investor groups, accelerators and incubators. “Archangel Network of Funds reflects an emerging trend of new angel collectives that are opening up new pathways to capital.”
By funding entrepreneurs from a wider variety of backgrounds, the Archangel Network hopes to increase the number of angel investors while increasing the amount of angel capital available to early-stage companies, said Amber French, an Archangel founder and Managing Partner at Catalyst Capital who also serves as Director of Strategic Capital at Communitech.
“A lot of women and other marginalized founders get paltry amounts of capital, and I think a big reason for that is just because of the voices who are at the early stage funding table – it's predominantly men,” French said. “By making angel investing more accessible through mechanisms like this fund, it makes it a lot less scary to take the plunge and start angel investing.
“We're hoping that it's going to attract a lot more women, a lot more either racialized- or marginalized-identifying groups to become angel investors,” she said. “It's just going to help change the dynamic of the kinds of companies that get invested in at the early stage.”
Archangel’s general partners include seven veteran leaders in the angel investment community along the Toronto-Waterloo innovation corridor: Benton Leong, Randall Howard, Jacky Chen, Ellen Fang, David Rich, Ehsan Mirdamadi and Peyvend Melati.
Organizational and resource support is provided by French along with lawyer Todd Bissett, a tech specialist and partner at Gowling WLG's Waterloo Region office; Danielle Graham, a venture capitalist who helped launch Communitech’s Fierce Founders program; and Aislinn Shoveller, an administrative associate and co-founder of Overture Donor Forum, which helps non-for-profit organizations engage donors. The general partners have been considering the idea of an angel network for some years, said French. The idea was accelerated more than a year ago to help fund a number of Canadian companies that pivoted to help address the COVID-19 pandemic.
The structure of the Archangel Network of Funds helps investors share administrative costs.
“It basically acts as an overarching organization that's a shared back-office for multiple angel funds,” said French. “It’s expensive to run (a fund), so by sharing one back-office it makes it economically viable to have smaller funds, which ends up unlocking more capital within different angel communities.”
The Archangel Network Fund is made up of three individual funds – Adrenaline, Axion and StarForge. The network says these funds often collaborate on various deals depending on fund focus.
“The purpose of working as a network with different funds is it allows us greater scale and reach to support the entire ecosystem,” said Benton Leong, a General Partner with Archangel. “We are able to tap into our various resources and create these unique connections and opportunities for investment.”
In a news release, Archangel Networks said that “pre-seed and seed investment for the Canadian startup ecosystem is a major hurdle and often leads to promising startups seeking non-Canadian capital options or not being internationally competitive. Archangel will help to close the funding gap by providing early risk capital and active guidance to Canadian founders.”
The network also said that it’s trying to increase the number of accredited angel investors in the ecosystem with a funding model that “lowers the barriers to entry for other investors that don’t necessarily realize that they can be angel investors.”
In addition to supporting startup founders with capital, the team at Archangel provides resources and expertise that are often hard to fund and hard for individual angels to provide at the early stages of a company.