Northern Ontario Angels surpassed $50 million in investments this past summer with 139 deals since 2005.
Northern Ontario entrepreneurs with great ideas for innovative mining products but insufficient capital to bring them to market have a homegrown alternative to their neighbourhood bank.
“Our investors are different,” said Mary Long-Irwin, executive director of the Northern Ontario Angels (NOA), a not-for-profit organization that connects entrepreneurs from all business and industry sectors in the region with accredited angel investors. “In the Toronto area, it’s a little more Bay Street-type investors – they do their investments from an office. Ours do investments on the ground.”
For one thing, NOA investors are often from the region themselves, and have been successful growing their own companies here. Becoming an angel investor is a way to support those entrepreneurs coming up behind them. The net result is that these investments are taking place in smaller, close-knit communities where everyone knows everyone else – or at least someone in their family.
“Say your son had this amazing invention for mining, and now you need an investment,” Long-Irwin said. “I could phone somebody, and they might say, ‘Yes, you know what – I know his dad. I know he comes from hard-working stock. I’ll do it.’ That’s what we get here. It doesn’t happen that way on Bay Street.”
It’s an investment model that’s working. NOA announced this past summer that it surpassed the $50 million mark for angel investments with 139 deals since its inception in 2005. That is more than any other similar network in Canada.
Deals run the gamut of industries and markets in Northern Ontario, including mining, health care and First Nations ventures.
There are many reasons why it works so well. Investors can keep closer tabs on their investments and can usually get more involved with the company through mentoring and even sharing resources. For example, Long-Irwin said the investor might loan out the company’s CFO for a day per week to keep track of the business side of the venture while the entrepreneur focuses on innovation. It’s a win-win for both.
The legitimizing influence of working with government and other funding agencies in Northern Ontario bolsters investor confidence as well.
“We have FedNor, the Northern Ontario Heritage Fund Corporation and universities that all provide support. So, if you as an investor were going to put in a couple of hundred thousand, and you knew that it was going to be matched… all of a sudden your investment is doubled. That’s a big plus.”
Long-Irwin pre-screens applications and only circulates plans she knows investors may be interested in. The program has grown to the point that it has chapters in North Bay, Sault Ste. Marie, Sudbury, Timmins and Thunder Bay with staff familiar with the community to help facilitate deals. NOA also helps entrepreneurs become “investor ready,” making their potential business ideas more attractive.
“I wouldn’t send (our angel investors) anything I wouldn’t do myself,” Long-Irwin said. Only about eight to 10 applications out of every 100 meet her criteria. “I don’t invest myself, but I did 10 years of small business lending. So, if I wouldn’t give it a second look… I wouldn’t waste your time.”
NOA-facilitated investments also tend to have a higher success rate, Long-Irwin said.
Right now, there are about 300 accredited investors in the program – and there is always room for more. Most are from within the region, but there are groups from places such as Boston who are looking for targeted investments.
For example, Long-Irwin said that there is one mining-related innovation being developed right now with the help of angel investors that will improve safety.
“So, if someone (invests in this technology) and they own a mining supply company, they have a better chance of getting inventory before anyone else does. Better pricing, everything,” she said.
Yuleys slip-on boot covers are one success story. Invented and launched in Thunder Bay, the company eventually sold to HexArmor to tap into its much larger distribution channels. It’s a homegrown product that may not have seen the light of day at all without NOA. Click here to watch the video.
NOA isn’t looking for the next Google or the the next Hyundai plant. “Our expectations are a little bit more grounded to the reality of our communities, and that’s growing one job at a time,” said Long-Irwin.
