How to Make a High Risk Angel Investment Low Risk
Make an Investment with a BC Angel Fund
Since 2011, E-Fund has been actively making angel investments in British Columbia with a focus on product-ready emerging technology companies, from software to medical devices to clean tech. It has invested in 13 emerging companies of which 2 have already exited and provided a nice cash return for E-Fund investors.
Diversify with a Pooled Angel Investment for Better Returns
Now angel investing is generally perceived to be “high risk, high reward” which it is and the overall riskiness of early stage investments has kept many people outside this game. As a result this has been the domain of high net worth individuals with little access to the general public. Many are relegated to investing in the public markets which are extremely volatile or real estate which in Vancouver appears to have to have hit its peak for a while. Diversification into privately owned companies with high potential for return is not always easy but this now has changed with the emergence of ‘angel funds’ where smaller investors pool their funds to make angel investments, while at the same time combining their expertise and experiences to jointly make better investment decisions.
Get a 30% VCC Tax Credit of up to $60,000 per year
E-Fund is probably one of the first to explore this new model and so far with success. But what makes investment in E-Fund even more compelling is the tax driven nature. E-Fund is a Venture Capital Company (VCC) under British Columbia law, which means that for every dollar invested in E-Fund by a BC resident, the government will give you back $0.30 cents. To put it differently, if you invest $10,000 in E-Fund in any given tax year (which runs concurrent with the RRSP calendar) you will receive $3,000 back from the government through your tax return for that very same year. Tax credits are given up to an investment amount of $200,000 annually, or $60,000 in tax refunds. Here is some frequently asked questions and answers on angel investing with E-Fund.
De-risk your Angel Investment with a Tax Saving that can reach 74%
What is even more interesting is that you can invest through your RRSP (and/or your TFSA) and that way you can take advantage of any related tax benefits. To put it plainly, you can derive up to 44% tax benefit if you invest in your RRSP and you can layer the 30% VCC tax credit on top of that. A $10,000 investment could effectively cost you only $2,400 in that particular scenario. Investors who want to diversify some of their current RRSP investments into angel investments by investing in E-Fund will also receive a 30% tax refund. We consider that a giant first step to de-risking your investment.
De-risk your Angel Investment with Active Participation in E-Fund's Investment Process
Once your are invested in the fund you not only benefit from diversification inside the fund over a number of companies, you can also actively advise and participate in the investment process to further de-risk your investment and help the fund achieve strong returns. That is what we mean when we say that E-Fund stands for Investing Via Teams. Many investors have followed this route and we now have some seventy-five investors as members in E-Fund who have not only invested, but who also actively take part in evaluating new companies and help make investment recommendations to the E-Fund board.
Learn more and get your 2016 VCC Tax Credit
Contact us to meet and talk about angel investing and E-Fund over a coffee. The E-Fund team will be happy to meet interested and aspiring angel investors and address any questions you may have.E-Fund III just launched and we are actively raising funds for investment and tax credit refunds for fiscal 2016 (deadline is February 28, but contact us soon to secure your 2016 VCC tax credit as they tend to run out sooner). By Pieter Dorsman, CFO and Director of E-Fund