Business
Capitalist Seeks Millionaire for Long-Term Relationship
By Ian Bullock published Mar 1, 2010
Early on a blustery November morning, 30 angels descend on SFU Harbour Centre. The angels—angel investors, people who put their time and money into early-stage tech companies—are mostly middle-aged, multiracial men who favour golf shirt/black jacket combos. Successful entrepreneurs, they’ve come to watch up-and-comers pitch the latest in medical devices and consider investing in them.
Mike Volker brings the projector online. He started Vantec—the Vancouver Angel Technology Network—in 1999 with 12 angels, and has grown it to 500. If there’s a larger such forum in Canada, he hasn’t heard of it. Vantec draws 30 to 50 angels each month, depending on the field. Today’s is medical technology. The economy has changed seismically since the network’s inception, yet Volker insists now remains a good time to invest in startups. “Before the recession, company values were well above $2 million at the get-go.” Since then, there’s been a 25 to 50 percent decline in the values of the companies coming out. “Angels used to invest at the quarter-million-dollar mark,” he says, but that has changed, too. “Angels are investing smaller amounts and there are more investors getting into a company.”
This morning’s lineup includes startups developing robotic vaccine-manufacturing systems, an ankle-strengthening device already being tested by the BC Lions, and a Star Trek-esque skin patch that monitors a patient’s vitals. The first presenter, a 20-something fresh out of business school, works through a PowerPoint on an HIV vaccine in the first stages of animal trials. The angels make notes but don’t seem impressed. Even if the trials work out, a lawyer in the third row whispers, the chances of any vaccine reaching production are 5,000 to 1.
Investments are risky. Almost half of all new startups fail and most of the rest survive only on life support. That leaves a mere 15 percent—such as $6 million Creo, which skyrocketed to revenues of $125 million within three years of angel help (and later sold to Kodak for a cool billion in 2005)—to compensate for the failures. The obvious challenge for angels: how to find the winners?
