Angel Investing in Canada is Broken

Chris Herbert
5 days ago
5 min read

Introduction

So, you’re trying to get early-stage funding for your startup in Canada?

Buckle up, because it can feel like a total uphill slog. Let’s talk about why angel investing here sometimes just plain sucks—and what we can do about it.

What Is Angel Investing Anyway?

In a nutshell, angel investing is when individuals with money—“angels”—invest their own cash into very early-stage startups in exchange for equity.

This happens before the big venture capital firms get involved. At its best, it’s about belief—backing strong founders early, taking smart risks, and helping turn promising ideas into viable businesses.

Angel investing isn’t meant to be safe—it’s meant to be bold.

But in Canada, the boldness is often missing.

The Reality Check: Why It’s Tough in Canada

Unlike in the U.S., where robust ecosystems fuel angel investing in San Francisco, New York, Los Angeles, Boston, Seattle and Washington, D.C., Canada’s early-stage landscape is patchy at best.

Outside of a few metro hubs like Toronto, Calgary, Vancouver, or Montreal, most regions have small, fragmented investor networks—or none at all.

Even within those networks, the appetite for risk is low. Canadian angels tend to behave more like traditional lenders than early-stage backers.

Instead of funding potential, they wait for traction. Instead of helping founders validate and test, they want revenue already proven.

For a founder with a world-changing idea but no revenue yet, it’s like showing up to a seed bank and being told the plants have to be fully grown first.

The Knowledge Gap: When Angels Don’t Get the Market

A growing problem in the Canadian angel scene is they lack key competencies in innovation, technologies and venture development. The graphic below defines competency. You can learn more about building trusted professional relationships here.

Founders working on frontier tech—climate, AI, web3, deep science—often pitch to rooms full of investors who don’t understand the space. Good luck getting them to write and check. So why did they let you pitch? Bill them for your time.

And rather than admit it, those angels default to “come back when you have traction.”

But what if you’re inventing the category or a new innovation?

This dynamic leads to wasted pitches, mixed signals, and a lot of ghosting. Founders end up educating the room instead of raising capital.

Worse, some investors double down on outdated assumptions, failing to see where markets are heading.

Canada doesn’t just need more capital—it needs smarter and belief capital.

The Irony of the System

Here’s the real kicker: many angel networks in Canada are publicly funded.

Some receive government grants to support their network instead of investing in their own network! Is that how they acheive "traction"?

Yet they turn around and create closed, conservative and boys clubs systems that demand late-stage proof?

Angels don't lend, they invest and they invest early ... period. Otherwise they don't deserve to be on your cap table.

These networks can be run by executive directors who are not active entrepreneurs. They host pitch sessions, ask founders to “show more traction,” but have never had to earn traction of their own.

Founders show up ready to risk it all. The people across the table? Often just managing a program.

That mismatch creates a dynamic where investors expect startups to be both early and safe— an impossible combo. The result? Missed deals, jaded founders, and a national innovation engine running far below its potential.

The Accredited Investor Barrier: Another Brick in the Wall

Another frustrating layer? The outdated accredited investor rules.

To legally invest in most early-stage startups, Canadians need to be “accredited”—meaning they earn over $200K/year, hold $1M+ in financial assets (excluding their home), or have $5M in net assets.

Sounds protective in theory, but in practice, it’s just outdated gatekeeping.

Some of the most qualified people to invest—ex-founders, operators, subject-matter experts—are excluded. Meanwhile, those with wealth but no startup experience are welcomed in without question.

It’s a system that values bank accounts over belief, and paperwork over perspective.

Angels don't lend, they invest and they invest early ... period. Otherwise they don't deserve to be on your cap table.

And here’s the irony: many publicly funded angel groups are required to limit participation to these so-called accredited investors—shutting out the very people who could bring conviction and understanding to the table.

Instead of fueling innovation, the rule ends up reinforcing the status quo.

But here’s the good news: you don’t have to be accredited to invest in startups anymore.

Thanks to equity crowdfunding platforms like FrontFundr, everyday (most of us including yours truly) Canadians can now back early-stage companies they believe in—without having a couple million sitting around in a GIC or stocks, or connected.

Thye are regulated and risk-aware, but open to anyone that wants to invest in a Canadian startup. And guess what, they've been around for 10 years!

These platforms open up the door for a new kind of angel: one motivated by belief, not just balance sheets.

This is what modern startup investing should look like—accessible, transparent, and built on conviction.

What Angel Investing Should Be

Angel investing isn’t supposed to be a reward for founders who’ve already made it. It’s supposed to be a catalyst for the ones who haven’t—yet.

That means:

Backing great teams before there’s proof
Investing in conviction, not checklists
Creating space and buying time for risk-takers, not just gatekeepers
Valuing insight and experience, not just wealth

If we want to build a truly innovative economy in Canada, we need angels who believe in early-stage founders—and who actually invest early.

Conclusion

In short, yes, angel investing in Canada has some real hurdles. But by calling them out, we can start pushing for a system that actually supports early-stage innovation and startup founders the way it’s meant to: with courage, not caution.

About the Author

Chris Herbert is a seasoned entrepreneur, strategist, and content creator with a proven track record of empowering businesses to achieve growth and success.

As sales and marketing professional and cofounder of Mi6 Agency, he has been instrumental in helping entrepreneurs startups and ventures achieve significant milestones, including taking a startup to market that was acquired, preparing and promoting a venture for acquisition on behalf of a venture capitalist, and driving a company's growth from $15M to $40M, leading to its successful acquisition.

A former cofounder of Silicon Halton, Chris built a thriving tech community of 1500 members and hundreds of events, before selling his interest in 2024 to focus on the launch of Mi6's One2One service and rural entreprenership accelerator AREA 81, a rural entrepreneurship accelerator program offered by Mi6 Agency.

As a Level 3 Leanstack Coach, Chris applies methodologies like Running Lean to help entrepreneurs scale effectively. His insights on entrepreneurship, marketing, and SDGs are featured on Mi6agency.com, along with his 7Q Series on startup funding.

Why Chris Herbert and Mi6? Because our expertise transforms ventures into success stories.