This past weekend I sat down with an entrepreneur friend and his partner. They're looking for about $300K to develop a new idea. With out revealing details its a technology play aimed for the Oil/Gas market. But since it's not an investment that our group would be interested in I could only offer advice on who from or how to raise the needed round. They figured friends and family could offer only $100K of their needs. So to raise the needed $200K I told them they should look to the local angels. "The angels aren't interested in startups any more," my friend said, "they say they've been screwed by the VC's so they're just not willing to invest anymore." Admittedly, I've not been involved in an angel round in 3 years but that says more to my professional roles changing rather than the difficulty. But its not the VC's that screwed them and its not that the Angels are dead. Typically, the stereotypical angels you read about are ex-entrepreneurs or senior people from the local tech scene; they were engineers and worked for a local high tech company. And if this is who you are approaching today you'd be in for a rough ride. There have been few liquidity events for the local tech guys and most people in this spaces RRSPs are still in 'Nortel Hangover' mode.... these aren't the people in the angel market anymore. They just can't afford 10K for a startup right now. In any event that's the stereotype. That, however, has not been my experience. Angels in my experience have been real estate agents (commercial and residential), lawyers, accountants, teachers, professors or civil servants, few are engineers, they are usually over the age of 45 have kids my age (20-30) or older and have already paid off the majority of their mortgages. They usually do not own cottages (some do) and generally are very well read. These are the guys who were here for the tech market back when there were no tech angels. These people helped start Mitel, Gandalf and SHL. These are Ottawa's surviving angels. They are unsung heroes of our success, these guys are why Ottawa has beat out numerous other places in Canada to be the best place to start a risky high tech company. Our ecosystem should make other cities blush. If you're in Ottawa and looking for Angels my advice is to hit the local events. At these you're not meeting the angels you'll be meeting a member of their network who lives breathes and eats tech. Make an evangelist out of them. There are tons of these events (I'll post them soon if I find time) The "stereotypical" (tech guy) angel is gone right now as the liquidity events have been hard to come by. their disappearance is because they were 'screwed by VC's' - they were diluted, and its quite likely that they would have lost the entire investment without the dilution. I think these guys will slowly start investing again as we continue to see more local IPO's or buyouts. Things are getting better. (I hope!) But the normal non-tech employed angel are usually still interested in hearing about good small companies to investment in why? Well, their RRSP was better diversified in 2000, and while they enjoy business from tech companies they also had clients from other industries or they work in safe (read government) jobs. They're thriving. And since early November, I've watched three Angel funded deals happen in Ottawa. In other words the Angels are still out there. On that note - If you are looking for advice for friends and family rounds - there is a free event in Toronto on the subject (I know some of you reading this are from there.) There was one at BarCampOttawa2 by Austin Hill a few months back so I doubt we'll see one at the next event. Bleeding into my next point - While Ottawa has had a tough time, some places, while also being beat up during the down turn have had an easier ride of it. So on that note let me start the mud slinging :) Waterloo, Ontario I was there last month - and have had the enjoyment of meeting several graduates (or soon to join those ranks) from the University (there are two Uni's - but I've only visited Waterloo.) Waterloo should be doing really well in the startup arena. They have successful anchor tech firms (RIM, OpenText, Microsoft among others) to retain talent and they have a university that graduates slightly less engineering/compsci students than Ottawa & Carleton Universities combined. There are numerous other advantages (to many to list) but to say the least - statistically speaking, they look well placed to compete. However, they don't. Ottawa, Montreal, Toronto & Vancouver, kick their ass in VC funding... (click on that link) Well VC investments generally follow on after an angel round. And from where I sit there doesn't seem to be a hotbed of entrepreneurial activity going on in the Kitchener-Waterloo area. There are great companies but you don't hear a lot about their startup scene. And while democamps and barcamps in ottawa have outgrown their spaces... the Waterloo camps tend to be sparsely attended.... Waterloo's dearth of VC deals is a sign of the troubles of a local market not having enough angels. IMHO While Waterloo has angels, there aren't enough to create a scale to really push their VC numbers up. It's a bit of a joke that while the local economy has got numerous Blackberryonaires, who have retained their share values, few of them have taken up the mantle to be Tech-angels. While in Ottawa back during the boom you could always count on nortel-ionaires to invest in an angel round, some are still investing. The discussion in Waterloo shouldn't be about the amount (or lack) of VC dollars, it should be the lack of Angel money. I don't know of anyone who would disagree with me on this, and if you do please set me straight, but if you're a Waterloo professor don't bother. Local VC's, entrepreneurs and angels complain about it, while some VC's actively help out. Surprisingly, Waterloo locals making money off tech; real estate agents, lawyers, accountants, teachers, professors and civil servants - all of them wouldn't be there without the local tech economy, but they're not interested in getting involved! This flies in the face of what Waterloo has going for it. Most VC's (our group is an exception) don't invest in companies that are asking for less than $3-5 million. But Waterloo has funds entirely devoted to the sub-million market. There is a local liquidity wealth machine (hello RIM!), there is talent galore coming out of universities and private companies, there is no shortage of knowledge & its cheap to live there. Best of all there are graduates willing to put their butts on the line to start a new company (but little support). So why are locals unwilling to help create the next RIM? When that question gets answered it will raise Waterloo from an also ran (with Kingston, or Hamilton) into a growth engine for tech startups. This half of the post comes after reading this post by Mark McQueen who put me on to the waterloo facts & who also runs the Wellington Fund The Gary Will and Mark discussion is also top notch. Looking at how long this post is I probably should have split it up.... oh well!