Angel investors helping entrepreneurs succeed

Northern Ontario Enterprise Gateway (NOEG) could be considered a matchmaking service, but its clients aren't looking for love. Instead, they are seeking private investors willing to take a chance on their entrepreneurial ideas.

Covering an area from Kenora to just north of Barrie, executive director Mary Long-Irwin matches angel investors with business owners.

“New businesses require a fair amount of dollars so I help them find an investor who is interested in that type of business or an investor who is interested in that type of entrepreneur and they have connections,” she said.

NOEG is a not-for-profit organization that is funded by the federal and provincial governments, local corporations and individuals. Its office is in Thunder Bay but its clients and investors come from all across the North.

Investors provide much needed cash but also valuable connections and advice. Long-Irwin said one entrepreneur was able to find a manufacturer for her product and a major retailer with the help of an investor.

“It is not just the money,” she said. “It's the investor's network, experience and contacts that can really help an entrepreneur.”

The organization helps entrepreneurs become investor ready. And for every 10 entrepreneurs, only two will get investments.

“The ideas may be off the wall, they don't have money or they just don't have a chance of succeeding,” Long-Irwin said.

Others overvalue their businesses.

“We get this a lot, for instance, when someone is seeking $100,000 and they are willing to give up 10 per cent. They say their business is worth $1 million but their total financing is only $150,000. We say no and tell them that their business is only worth $150,000,” she said.

“The entrepreneurs say the business will be worth $1 million in five years but they are using investor money and the investor is taking all the risk, so we make sure that doesn't happen.”

Some have refused investments based on more realistic evaluations while others “get it.”

“Clients realize without (investors) they have nothing and with them they have a lot,” Long-Irwin said.

NOEG is always looking for investors and all they have to do is contact Long-Irwin. Their privacy is guaranteed and she won't send them any potential deals if she wouldn't do them herself.

“I send them an overview of a potential business and tell them what the person is looking for and what percentage they are willing to give up and how they will get paid,” she said. “Once they look it over and they don't contact me, I don't bother them. If they are interested, they get the business plan and a bit more detail and we meet and then they decide if they want to go ahead or not.”

The investors make no bones that they are in it for the money and want to make a return on the investment.

“They did not become millionaires by being stupid,” Long-Irwin said.” It is a risk but the rewards are generally very good. Some investors have done extremely well.”

NEOG was established five years ago but the first three to four years was spent on education. Now, its focus is on making deals and over the last few years, 22 have been made.

The total investment has been $7.6 million and the entrepreneurs have also invested $2.5 million of their own money. An additional $9.2 million has been leveraged from government-type sources such as Northern Ontario Heritage Fund Corp. and $11.4 million has been raised from conventional sources like banks.

From those 22 deals, 270 full-time jobs have been created along with six part-time positions. About 150 temporary construction jobs and another general 200 temporary positions have been realized.

“As the businesses expand and grow and they become fully operational, we estimate there will be another 460 new jobs,” Long-Irwin said.

All the businesses have succeeded and two of the deals have been closed, meaning the investor has been paid back.

“Businesses are the bedrock of our communities and they are the ones who will support the sports teams and help out. They have their roots imbedded into the North and they want to see the North succeed. They were successful and now they want to give back as investors,” she said.