The New Asset Class: Angel Investing

June 2013. Toronto, ON. – According to the Center for Venture Research, Silicon Valley commands close to 40% of all of the angel investing in North America but its origins can be traced to the East Coast – New York City, to be specific. It all started when Broadway producers in the 1970’s were able to attract an affluent new class of individual investors who were essentially their only source of capital in such highrisk endeavors. These individuals were the ‘angels’ of Broadway but it was William Wetzel, a professor from University of New Hampshire who formally coined the term ‘angel investor’ in his 1978 study seed stage investing in the US.

From Broadway productions to technology, angel investors today capitalize a wide array of entrepreneurs on a truly global scale. As data from the angel investment sector become more readily available, a new asset class has emerged. The typical ‘angel’ is no longer exclusive to ultra-high-net worth individuals but is now available to general accredited individuals. In fact, according to a report by PWC, the entire venture capital sector invested US$20.1 billion into 1,012 companies during 2010. The angel community invested US$23.26 billion into 61,900 companies during the same year.

The sector has also become increasingly sophisticated in terms of the due diligence, valuation and management that it applies to investments. Founded in the Bay Area in 2000, Keiretsu Forum can be considered as one of the pioneers in the ‘angel network’ eco-system and has contributed to the internationalization of angel investing through its 27 chapters across three continents. The close-knit international community of investors is allowing more sophisticated and scalable companies to reach  out to a wider audience while reducing investment risk. The sector has reached a point where new ‘angel funds’ are attracting the attention of traditional investment banks and institutional investors alike.

“The trend toward further sophistication and globalization of the angel investment sector seems  inevitable.” said Ozan Isinak, President of Keiretsu Forum Toronto. “The new asset class is here to stay and policy makers, investors and entrepreneurs alike must be prepared to face increased global  competition as well as the tremendous opportunities it will bring”.