The typical aggregated investment from York Angels is between $75,000 and $300,000 per round in early stage companies. We will also look to syndicate very good opportunities with other angel groups in Ontario, as well as follow on opportunities that they may have. Our members are looking for companies that have an established proof of concept and are poised for growth.We prefer to invest in what we know and understand.
Therefore, York Angel members typically gravitate to companies in sectors that mirror our area of expertise including but not limited to B2B and B2C SaaS, Fintech, CleanTech, IoT, InsureTech, HealthTech, Industrial Automation, CPG, and Marketplace Solutions.
Early stage companies we invest in are most likely to be post-revenue with products that are completed or at least are beyond first implementation development. We prefer companies that have demonstrated that founder/friends/family capital has been extensively deployed to bring the product service to, or very nearly to its first revenue customers. Our typical Portfolio Companies (link to PortfolioCompanies) have pre-money valuations from $2,000,000 to $5,000,000 and raised between $250,000 – $1,000,000. The preferred investment structures for York Angels is either preferred equity or convertible debt.
While we evaluate each potential investment on its merits, we pay particular attention to the following criteria.
The entrepreneur and team’s credibility are essential. We look for entrepreneurs and teams with a
passion and commitment to thier business and the problem they are solving. We are also looking for high-quality entrepreneurs with a track record of leadership and performance – either in the company’s specific industry or in prior entrepreneurial ventures. You need to be open and comfortable with feedback and have the ability to inspire confidence among your future stakeholders: employees, customers, and investors. We also like to see that the founder, key management, and strategic advisors have made capital investments into the business. Not just sweat equity. This shows we are all in it together.
We invest in solutions that solve major problems and meet some or all of the following markets conditions:
- Significantly large addressable target market
- Identifiable market segment
- Strong use case
- Demonstrable and significant demand for your solution
- Projected spend in your product category is growing faster than the general market
Competition and competitive advantage
One of the most critical elements we invest in relates to your competitive advantage. What are your barriers to entry and do you have enough competitive advantage to maintain that position? Have you identified current and potential direct and indirect competitors? Do you have IP, proprietary features, exclusive licensing, distribution rights, unique talent, or trademarks that improve your competitive positioning? Is intellectual property protected?
We know the business model will adapt and change as you strive for product market fit, but you need to have thought through and be building on a model that sustain your business through to successive funding rounds. The model must fit your product, features, market, resources and pricing.
Go to Market Strategy
We are seeking teams that have derived thoughtful, well-designed frameworks for maximum market penetration with efficient use of resources, whether internally or externally sourced. We want to see that you are looking to refine your customer acquisition costs.
A “back of the napkin” financial plan will not do. Logic and rational thought should lead to reasonable revenue and cost projections. You should have modelled out margins, projected cash flow and break-even based on best-and worst-case volume assumptions. We typically like to see income statements, balance sheets and cash flow analysis (sources and use of funds), as well as a clear identification of projected uses of funds to be raised in this round and total capital required to achieve break-even.
Raise, Valuation and Use of Proceeds
Is your raise tied directly to your business model, go-to-market strategy and financials? Do you have a reasonable basis for valuation and a sense of the range of possibilities as to how much of the business you wish to share with new investors? Have you thought about the next raise…and the next raise, and what your valuation should be along that journey? We want to know you are thinking about this, because we are. Are the funds you are raising tied directly to the acceleration of your company’s achievement of key milestones that increase the company’s value? These activities could be continued product and feature product development, building a sales and marketing infrastructure, and hiring of key resources. Funds at this stage should not be used to increase founder compensation.
We are not looking to fund companies for scale, that comes later. What we are look for are companies that can grow quickly and manage the growth necessary to succeed. Your company must demonstrate a plan to generate significant revenue and customer acquisition, that can lead to profits bey ond the initial product idea. Do you have a strategy to achieve multiple sources of revenue?
- Do you plan to sell the company to a strategic buyer, if so, have you identified several established corporations in your industry as potential acquirers?
- Will your exit be through subsequent rounds of financing-venture capital or the public markets?
Our members typically seek returns of 15x-25x their initial investment, depending on the riskiness of the investment. This risk-adjusted level of return on investment is essential due to the high rate of failure among early stage ventures. Thus, a clearly articulated exit strategy-how angel investors will realize such returns-is essential. We are interested in both the strategy you select as well as specific steps you might take operationally to achieve your exit.
York Angels’ members are all accredited investors with significant executive experience in a variety of industries and functions. One of the benefits of working with York Angels is the active coaching and contact network that we can provide. That is one of the reasons are preferen
ce is to look for companies with a main office or base of operations located within 500kms of Toronto/York Region. Ultimately though, we look for a great fit between our accredited investor members and you, your company, your idea and your team.
You can follow our Angel Investment Readiness Checklist (link to Entrepreneur Resources Page) to help you prepare a comprehensive business plan that will help you get investment ready.