One of Canada's leading angel investors wants federal legislation changed so that any Canadian with adequate capital can make angel-type investments.
Canadians must be accredited to make angel investments in private startups in Canada,
That requires angels to have $1 million in liquid assets or a $200,000 salary or a $300,000 combined salary between them and their spouse.
According to Mike Volker, who runs two angel funds in B.C., angel investors are in the top 1% to 2% of the population when it comes to wealth.
"But what about the next 10% people that are very well off, but not classified as accredited investors they may like to take a gamble on a startup, but they can't?" said Volker, who was named 2009 angel investor of the year by the National Angel Capital Organization.
Many angel investors are wealthy as a result of previous entrepreneurial successes, so they provide their investees with advice and guidance in addition to financial support.
Volker said there are ways around regulation to make unaccredited angel investments.
For example, a startup can issue an offering memorandum, but doing so can be time consuming and expensive.
"If a company is only raising say $300,000, it doesn't make sense to spend $50,000 on legal," he said.
Angel investors, venture capitalists and other members of the investment community were pleased when last January the federal government eliminated Section 116, a provision that stymied U.S. investment into Canada.
But the investment community isn't letting up: it wants what it sees as the remaining hurdles to investment in Canada removed.
These include the accreditation required for angel investing and the complex tax structure that regulates stock options.
The battle by Volker and the wider investment community to have the latter removed is featured in this week's edition of BIV (issue 1071; May 4-10).
by Curt Cherewayko