Thank you, Mr. Chairman and committee members.
I'm Rob Douglas. I'm a director of the National Angel Capital Organization, otherwise known as NACO, and also president and co-founder of an angel investor network in southwestern Ontario. I come to you this afternoon to deliver good news, both about NACO angel investors across Canada and about early-stage companies.
Since NACO's founding in 2002, a committed group of volunteers and a small staff have shaped this not-for-profit organization into the champion of Canada's angel investing. It is Canada's only national association representing angel investors.
NACO boasts over 2,000 members who receive intelligence, tools, and resources to facilitate investment into innovative early-stage companies. NACO's work supports the growth and development of a robust early-stage investor ecosystem in Canada, accelerating innovation, economic growth, competitiveness, and of course jobs.
Who are these angel investors? Typically, they are hard-working Canadians who have been successful in business and who have both the financial resources to invest in enterprises and an interest in seeing the next generation of entrepreneurs succeed. More often than not, angel investors are driven to give back to the ecosystem in which they thrive, placing greater value on coaching and mentoring a new generation of entrepreneurs than on the financial gain they may get from these investments.
Angel investors are becoming an ever-increasing force in the world of capital formation in Canada. Confronting what is referred to as the capital availability gap, angels provide private growth capital to early-stage companies before venture or institutional investors will get involved. Since 2010, available statistics indicate that over $180 million has been invested by angels in nearly 500 companies. Without this investment, many promising ventures would have failed or sought investment or relocated outside Canada.
What is NACO's challenge?
Traditionally, angel capital has come from individuals who invest solo, or as lone wolves, sourcing deals privately and making investment decisions on their own, but over the last five years, we've noticed a significant shift in this profile as more and more angels join groups to leverage the knowledge and experience of their peers. As a founder and president of the Golden Triangle Angel Network, known as GTAN, in southwestern Ontario, I have observed first-hand the tremendous power of angel investor groups. From a standing start in 2009, our organization has grown to over 100 active angel investors.
These members have invested over $20 million of their own personal capital without a single request for special treatment such as tax incentives. These members have invested in over 40 companies, coached and mentored countless entrepreneurs, and created or retained 750 identifiable jobs in our community, making GTAN one of the top five angel groups in Canada, according to a recent Industry Canada study.
There are currently more than 30 formal angel groups across Canada, most of them NACO members. Regrettably, these visible angel groups represent less than 10% of the total angel investors in Canada. NACO's challenge today is how to organize the community of angel groups and investors to maximize the economic impact of supporting innovative early-stage companies.
This involves professionalizing angel activity, education, best practices, and standards. NACO is seeking $5 million in financial support over the three-year period of 2015 to 2018 to undertake a campaign to mobilize those many private investors who have not yet embraced the power of angel investing, either as individuals or as part of angel groups, and who would benefit significantly from having access to other like-minded individuals through more formal investment structures.
In addition, NACO strongly supports the creation of investment vehicles that incent angels to invest and accelerate the growth of the investee companies. One such program, FedDev's investing in business innovation program, or IBI, has been very successful in southern Ontario. As I'm sure you're aware, IBI provides repayable loans to companies that have received angel investment. Of particular note is that the loans are to the investee companies, not to the angel investor.
This program serves as a model that could be replicated across the country, with positive outcomes both for productivity and for jobs. NACO likes this model and looks forward to continuing its dialogue with Citizenship and Immigration Canada, Industry Canada, and other government departments to help shape forward-looking programs that will drive economic growth and create jobs and prosperity in communities across Canada.
Thank you very much for hearing me today. I look forward to answering questions.