Angels stepping up in Canada to fund medical innovation startups
PETERBOROUGH, ON, June 10, 2014 /CNW/ - Hungry for funding, fledging life sciences start-ups are turning to angel investors in Canada more than ever before, as traditional venture capitalists shift their attention and cash away to previously-funded enterprises situated further along the development pipeline.
Savvy life sciences start-ups, says Martin Yuill, executive director at the Greater Peterborough Innovation Cluster, Trent University in Peterborough, ON, are finding ways to get in front of new-style investors in a refreshed funding landscape.
According to Industry Canada, life science companies are "small and medium-sized companies developing diagnostics, biopharmaceuticals, pharmaceuticals and medical devices, as well as global companies with research, development and manufacturing operations in Canada, serving both domestic and international markets."
Angel investors are groups of high net worth individuals who are looking for investment opportunities. In 2013 angels invested $89 million into start-up companies across Canada, says Yuill, and $21 million of that went into life sciences concerns. He notes that angel investment in Canada is taking off: in 2013, overall angel investment was up 120% over 2012. The median angel investment in life science start-ups was $1.1 million, Yuill adds.
PKA SoftTouch of Lakefield, ON is one Canadian life sciences company whose leader took the time to learn the new funding eco-system. The company is looking for $2 million over the next two years for its unique globally patented micro-needle, a device that painlessly injects medication just beneath the skin's surface and has revolutionary implications for replacing the traditional syringe in a wide range of medical applications.
Recently, Dick Crawford, PKA chairman and CEO and Innovation Cluster client, grabbed a spot negotiated at a discount by Yuill for local life science companies at the Life Sciences Nation conference, Redefining Early Stage Investments (RESI) in Boston.
Crawford said his attendance at the conference was perfectly timed for the micro-needle's next stage of development. "I came away from the conference energized, with ten different ways to raise money – angels among them," he says.
Crawford says he was also drawn to "family office" and private high net-worth investors, entities still new to Canada but increasingly popular in the United States. Philanthropic investment is increasing in the U.S. as wealthy families search out solutions to illnesses and chronic health conditions that may be present in their own families, and this trend is expected to spread to Canada. Crawford says it's important to consider some of the new funding options available.
Other players in the start-up landscape, Crawford learned, include large pharmaceutical and biotech company investment arms, foundations, advocacy and non-profit investment groups (sometimes dubbed venture philanthropy.)
Canadians investors follow U.S. trends more slowly, says Yuill. In the U.S., venture capitalists are fleeing start-ups in droves because of a changing regulatory climate, leaving the "family office firms", angel investor groups and foundations to fill the void.
"I encourage start-ups to focus, as Dick Crawford has, on the big picture as much as they can," he says.
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