Entrepreneur of the year offers some sage advice.

Application deadline looms for top support

Are you running a company with high potential growth? Think you’re ready to raise equity capital from angel investors? If so, it’s time to take wing.

AngelList, a San Franciscobased company that connects startups with angel investors and talent, has launched a new program to better connect Canadian entrepreneurs with experienced investors. It’s truly heaven-sent: a direct line to providers of patient capital who understand the risks you’re facing, and may be able to help your business overcome its toughest challenges.

Help from angels on high comes at a price — a slice of your hard-earned equity. But if your other option is to slog it out for years leveraging a line of credit, then tapping the wallets and minds of experienced early-stage investors is definitely worth a shot.

AngelList Canada, run by Toronto entrepreneur Alex Norman since opening its doors last March, has just introduced Intros for Canada, essentially a vetting process to link qualifying growth entrepreneurs to a select group of nine angels — such as Hootsuite founder Ryan Holmes, or Daniel Debow, co- founder of Rypple and Workbrain. Participating U.S. angels include Tikhon Bernstam, co- founder of Parse and Scribd; BetterCompany founder and CEO Tom Williams; and serial entrepreneur Naval Ravikant, an AngelList co-founder.

Alex Norman talked all these entrepreneur/investors into agreeing to take a direct look at Canadian applicants for early-stage funding. Why would they do it? Like all investors, they love being first to scrutinize great deals. And, Norman promised to do the heavy lifting, by recruiting another group of investors to screen the applications for quality and growth potential.

Norman is laying out the welcome mat to all entrepreneurs with big ideas, and will forward as many as he can to his all-star investor team. “Startups can’t normally get to people of this calibre,” he says. “But AngelList came here because we believe there are a lot of great Canadian companies that can become world-beaters.”

Angel investors are usually former or serial entrepreneurs, investing for the fun and adventure as much as for profit. Angels help promising startups get to the stage where they have a working business model and qualify for formal venture capital. They don’t shy away from risk, but they are very choosy. Whether they invest $ 50,000 or $ 1 million in a business, they’ll be expecting at least a 10-times return on their investment. ( They need that kind of return, because angels know that even with their best effort, 90 per cent of new companies will either flail or fail.)

Angels bring other ad- vantages besides cash. Some may offer business advice on a regular basis. Some might open doors for you, or help you close deals. And having a prominent angel in your corner won’t hurt when you go shopping for venture capital. “These are value-add investors,” says Norman. “If Jonathan Swanson writes you a cheque, VCs will take you seriously.”

But to take advantage of Intros for Canada, you have to move fast. The application deadline is Aug. 30. The program will likely reopen later this fall, with some changes. Like any startup entrepreneur, Norman likes to iterate on the fly. What kinds of companies are Norman’s Angels seeking? They want scalable companies addressing large markets; you should be able to describe a path to $ 100 million in annual revenue. They’re also looking for founding teams with a history of achievement, and you get bonus points for having already built a product or achieved market traction.

Norman doesn’t say he wants only technology companies, but that’s the sector that usually supports high growth. Personally, I think business- to- business companies with great industry contacts can also be high- growth drivers, as can franchise networks or solid value- building brands. So if you qualify in any of those categories, give it a try.

Eva Lau, who runs Two Small Fish with her husband, Allen, the founder of Toronto-based content giant Wattpad, is the third Canuck angel in Intros for Canada. She says joining the program was a no-brainer. “Allen and I want to give back as much as we can to the tech community, and on a larger scale, to Canada,” she says. “Angel investing is one way to do that.”

With a degree in industrial engineering and an MBA, Lau oversaw product development for startups incubated by Toronto- based Bri g ht s park Labs, a nd headed up content and community at Wattpad. So she knows how to help startups structure offers and build networks. As a result, she invests in companies that create their own communities of users and fans. “A pure technology play is not very defensible,” says Lau. “But when you have an engaged network, it’s hard for competitors to replicate.”

Lau’s nine investments so far include Hubba, which builds niche business communities composed of vendors, customers and influences, and SkiptheDishes, a Winnipeg- based restaurantdelivery service that connects consumers and restaurants in 20 cities. Illustrating the power of networks, SkiptheDishes was acquired by a U.K. rival, Just Eat, last December for a price that could end up close to $200 million.

Lau aims to grow her portfolio to 12 to 15 companies, in part through the Intros program. How can aspiring entrepreneurs catch her eye? “Dream bigger,” she says. Too many Canadian entrepreneurs bite off just a small part of a market, curbing their ambition and cutting them off from the financial and mentoring help that angels and VCs can provide. Says Lau: “I think a lot of companies could be bigger if only they could be more bold.”