There's a new breed of angel investor in Ottawa and Purple Angel founder Irving Ebert is one of them.

"The evolutionary nature of angels is changing. We've had to disabuse ourselves of picking winners," he says. "Winners aren't picked, they're made."

"There's a lot more attention (paid) to questions like, 'What is enough money to make sure the company can make significant progress?' and 'How can we improve our risk-management skills?' " Ebert says.

In Ottawa, the hub of Canadian high-technology R&D, some angels are still on the sidelines licking the wounds sustained during the 2000 tech wreck, or rethinking investment strategies.

Irving Ebert

"The goal of active angels is to keep investing," Ebert says. "Any way to better understand the nuances (of the market) will result in continued investing. This is why we got together."

The 10-member Purple Angel collective was formed in 2001 and is made up of former mid- and upper-level managers at Bell-Northern Research and Nortel Networks.

Although each member makes investment decisions individually, there is a certain wiseness gained from being able to tap in to the experience of other experts.

Members of the early-stage investment collective have put a combined $3 million into 15 companies during the past four years, including Triacta Power Technologies Inc., an electricity-management company; DNA Genotek Inc, which preserves DNA; as well as N-Able Technologies, which creates information technology (IT) management software and is scheduled for an IPO in November.

All are in the Ottawa area since angel investors tend to invest within 100 kilometres of home.

There haven't been any winners yet - although N-Able may the first - or even any lift or increase in market valuation. That is not a problem for Purple Angel, however, because it works on a three- to five-year horizon.

While they may seem like a coffeehouse investment club, the sums of money are higher, usually ranging from $50,000 to $150,000.

"I wouldn't be willing to go out there by myself. Sharing resources and results is very comfortable," says Laurie Davis, another Purple Angel.

"(Smart) investing comes down to dispassionate decision-making, and if that can be better achieved as part of a group, then that's what works," Davis says.

The same kind of logic - if 10 heads are good then 50 are better - may point to where Purple Angel and other Ottawa angels are heading.

Last year, Ebert and Davis joined Rod Anderson and Rainer Paduch from the equally colourfully named Band of Scoundrels collective to form the Ottawa Angel Alliance.

So far, it has attracted 30 members, including two venture capitalists, and hopes to have 50 by the end of the year.

"We don't have any statistical outcomes, but the alliance can ensure more capital available to deal with key milestones," Anderson says. "It provides easier line-of-sight on diversification and the (combined experience of members) creates more knowledge sets in most high-tech industries.

"(It) is basically about taking risk out and putting value in to companies who have a viable chance," Anderson says.

The alliance has obvious networking, mentorship and due-diligence benefits, but was formed to generate more seed money with the hope there would be higher returns on investment.

Each member is expected to invest $50,000 during a two-year period. Part of the return is the shared collective experience, since each investment is made individually rather than from pooled funds.

The alliance has about $1.5 million available. By law, angels must have a net worth of at least $1 million, or an annual salary of at least $200,000.

The alliance also appears to be a smart move for a part of the investment community that now better understands the requirements needed to create and sustain a technology startup.

Ebert describes it as scale - more money from angels goes in at the start to help entrepreneurs spend more time working on products and customer relationships, rather than trying to attract the funds needed to move ahead.

Scale also means owning a bigger part of the company from the beginning, which translates into more power in the boardroom and less susceptibility to being edged out because of share dilution if additional money comes in from venture capitalists (VCs).

"We think of ourselves as partners to VCs, who tend to run in herds and don't have our time and expertise," Ebert says. "(But) we're not doing this for community spirit. It's all about self-interest."

Ebert says the alliance's inspiration came from the United States, where angel collectives emerged before the tech-market collapse in 2000, and have become a major force in entrepreneurial activity.

Communities with organized angel groups create better companies, he adds.

The alliance's main goal is to encourage a local angel community that is hesitant to continue doing things as individuals. It is estimated that there are fewer than 100 angels active in the Ottawa area, down from about 300 at the height of the tech boom.

The alliance hopes to get them back into the game. "I think it appeals to those who are saying to themselves: 'Maybe I'd like to get into this and here's how I can do it,' " Davis says.

Angel investors provide the first significant spark of cash that get startup companies off the ground.

(Mike Levin can be reached at levin@businessedge.ca)