Approaching angel investors.

When he split off from Sudbury marketing firm 50 Carleton & Associates to start his own "virtual worlds" marketing business, Mario Parise hadn't anticipated needing outside investment to help manage the company's growth.

Just three months after starting 1up Marketing with his wife, Evelyne Gervais, he now finds he needs more employees to keep up with day-to-day management issues.

As a result, he's looking to angel investment conferences like the one recently hosted in Sudbury by the Northern Ontario Enterprise Gateway (NOEG).

"Even if we don't get any investors, it's been great just to see where the gaps are and to see what our strengths are," Parise says.

Twenty-four entrepreneurs, including Parise, participated in a series of workshops recently hosted by the Northern Ontario Enterprise Gateway in conjunction with the Northwestern Ontario Innovation Centre, the Northern Centre for Advanced Technology (NORCAT) and North Carolina's Small Business and Technology Development Center (SBTDC).

A conference in Thunder Bay from Nov. 6-9 and a single-day workshop in Sudbury on Nov. 14 discussed the pros and cons, do's and don'ts of angel investment. This investment system finds businesses making a pitch to investors who typically seek an equity share in exchange for their money and knowledge.

Speakers included Tim Janke of the SBTDC, who pointed out the importance of telling potential investors the size of market they want to reach.

Keynote speaker Michael Atkins, president of Laurentian Media, also shared lessons learned throughout his many years as an investor, including the need to prepare a solid business plan, hire managers when necessary, and never stray from your interests.

Small business owners seeking angel investment often lack this kind of knowledge, says Jim Noble, NOEG's regional coordinator, who adds that more workshops are being planned.

Entrepreneurs also need to know that Canada has a $5 billion funding gap for start-ups, according to Daniel Mothersill, president of the National Angel Organization.

Angel investors help to provide roughly $3.5 billion of that total every year, though money is often the least important component. Most investors are serial entrepreneurs and can provide contacts, wisdom and mentorship that will take the company to the next level.

Start-up businesses looking to present their case to angel investment groups often make a series of common mistakes, he says. For starters, they usually have an insufficient management team, they over-value their company when making investment pitches and they fail to protect their intellectual property.

While someone may believe they have a great idea, an idea alone is not worth $5 million. In fact, he says the net sum value of a "killer idea" is actually zero, unless it can be concretely translated into an actual business.

However, the reverse is also true. Under-valuing one's company is a significant problem in places like Northern Ontario, he says.

Pointing to Thunder Bay success story Harvey Cardwell, founder of the national Robin's Donuts chain, Mothersill says it's possible for good ideas in any field to flourish with the proper finances and direction.

"Stuff can and does get done, but a lot of it has to do with positioning and asking what you have to do to take it to that (next) level."

www.angelinvestor.ca

www.noeg.ca

www.oneupmarketing.ca

By NICK STEWART

Northern Ontario Business