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Four Canadian angels have teamed up to create a resource for those interested in angel investing and forming angel groups. The self-published book, "Age of the Angel: Best Practices for Angel Groups an Investors," is free for download and $7.69 for a paperback copy.

One of the book's authors, W. Daniel Mothersill, gave me a crash course on the importance of angel investing in Canada. Angels there invested $3.5 billion in 2005, more than double the $1.6 billion venture firms put into Canadian startups, according to Industry Canada stats. That still pales next to the $25.6 billion U.S. angels invested in 2006 (on par with venture firms). But that sum highlights the important role angels play in the capital markets and in nourishing startups in Canada.

In Canada, angel investors are often sought out rather than stereotyped as golf-playing dilettantes. Mothersill, president of  the eight-year-old National Angel Organization, says angels generally spend more time mentoring their portfolio companies than do venture capitalists.
 
"Angels put in their own money, and it's in their own best interest to help plug holes and mentor the company. VCs manage money -- they tend not to mentor companies," Mothersill says. "There are notable expectations, but generally [VCs] are not in the business of actually building companies, so it makes good sense to align themselves with angels because [angels] bring more than cash."

To that end, the government of Ontario in September gave the NAO $2.5 million to help form angel groups around the province as part of an effort to increase commercialization and innovation. The seed funding provides money to pay a full-time or part-time manager for newly created angel networks. As Mothersill points out, "The groups with facilitators are more successful and have longevity. They're not a social club."

However, Mothersill says the demand for new angel groups far outstrips the supply of funding. He's exploring ways to build an angel network with a dedicated manager without using government funding. Since about half of the angel groups in the U.S. have a professional manager and few have government funding, perhaps they can offer some ideas to Mothersill and other hopeful Canadian angels. - Stacey Higginbotham

See Nov. 13 post from Tech Confidential
See Nov. 14 post from Tech Confidential

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