University of Waterloo hopes to raise $1.2m to $1.8m for an angel fund to make equity investments in the winners of its Velocity Fund Finals competition.
University of Waterloo’s entrepreneurship program, Velocity, is seeking investors for an angel fund sized between $1.2m and $1.8m to support winners of its Velocity Fund Finals competition, Betakit reported yesterday.
The fund will be powered by online portal AngelList’s fundraising software, Angel Funds, and is expected to be ready ahead of the next Velocity Fund Finals in March 2019.
Equity investment from the fund would complement four $25,000 prizes already awarded to finalists in the competition, potentially doubling the overall cheque size to $50,000.
Velocity Fund Finals runs three times a year and is open to businesses founded by former and current Waterloo students as well as participants in the Velocity Garage startup incubator.
There have been 23 Velocity Fund Finals competitions since 2011, awarding a total of $2.3m of prize funding to 91 businesses. Of those, 74% remain active with a combined value of more than $1bn.
Velocity estimates equity investments matching the prize money awarded in the Velocity Fund Finals from 2011 until 2013 would have yielded an annual return of 57%.
Jay Shah, director of Velocity, conceded the move towards equity would create greater risk for the department but argued it was necessary to support the ambitions of participating businesses.
He told BetaKit: “This is an inherently riskier proposition that we are taking because we are putting our money where our mouth is. The types of companies we are seeing coming through Velocity over time require that amount [of funding.]”
– Feature image courtesy of University of Waterloo
