By Ishpreet Khanuja
There is no textbook for becoming an effective angel investor, just as there is no script for building a high-growth startup that attracts early-stage capital. But when a group of seasoned investors came together for the recent ‘Angel Investing 101: Case Study & Lessons Learned’ panel hosted by Brampton Angels, they pulled back the curtain on the signs they know to watch out for and the deals that taught them what not to do.
Moderated by Geoff Simonett, Altitude Accelerator’s Entrepreneur-in-Residence and president, Pinelands Capital, the panel featured deep-tech champion and Managing Partner at Anexa Capital Dejana Dua, venture finance veteran and president of LarchHill Capital Graham McBride, and expert HealthTech advisor and chairman of Able Innovation Paul Schiffner. From pitch red flags to founder chemistry, the conversation emphasized the importance of conviction and connection in what is often thought of as a purely numbers game.
Founder-Investor Fit: The First Step
“Investment goes beyond just writing the check—it has to,” says Dua. For her, founder-investor fit is non-negotiable. While she considers markets, data, and product carefully, her final decisions often come down to trust and alignment. She shared, “I look for companies that are disruptive. They don’t necessarily have to be first-to-market or the only game in town. They just have to be better. And sometimes that means having some measurable traction by way of pilots, or who is on their team, or their advisory board. I’m a very deliberate, hands-on investor.”
Simonett added that ‘fit’ includes coachability. Openness to feedback and the ability to adapt under pressure are valuable traits that enable a startup to fail fast and pivot quickly, rather than spending months overthinking.
Ingredients of Success
While every pitch deck tells a story, seasoned investors know how to spot the gaps. Dua recalls advising founders to avoid getting overly technical with their storytelling and going back to the basics. She shares her early-stage checklist: Does the founder understand the problem? Can they articulate the business clearly, as though explaining it to a five-year-old? Do they understand their numbers? She looks for a founding team with complementary strengths, especially at the pre-seed stage, and finds value in the presence of a co-founder or strong advisory board.
Schiffner confesses to looking for teams with a clear competitive advantage, not just a big market. It could be deep subject matter expertise or a founding team that has clearly done their homework, as long as there exists substance to back up the story.
They say investing is part science and part instinct, but never guesswork. Describing his use of frameworks like the Predictive Index to assess team dynamics, personalities, and decision-making under pressure, McBride explained, “There’s a great analogy from Moneyball. All the old guys are sitting around saying ‘this guy can’t hit the curve’ or ‘He’s got another girlfriend.’ There is comfort in that old school way of thinking. But over the years, I’ve learned the value of using tools to really understand what people are made of. Like in Moneyball, it’s about the data behind who you want on your team, or who you want to back as an investor.”
But data alone does not close a deal. It is about pattern recognition and spotting recurring issues, behaviors, or blind spots that signal risk or reward. Dua added that sometimes the best diligence happens after the pitch. She will sometimes track founders for months after check-ins and newsletters, observing how they respond to feedback.
When Red Flags Surface
Smart investing is as much about identifying opportunities as it is about walking away. When asked about the importance of founder reputation, Schiffner recalled a deal where everything looked right, until someone in his network raised concerns. He said, “I recently did a lot of due diligence on a deal and really liked everything, got excited about it. But someone I respect mentioned something that made me uncomfortable with the CEO. Even if the concern is unfounded, I figured there are plenty of other places to put my money. So, I walked away.”
Trust is foundational, and recovering from a bad quarter is much harder than recovering from complicated team dynamics. “I never worry about the good ones,” shares Simonett. “But I am much more cognizant of potentially making a mistake.”
Dua echoes that opinion in what she calls a ‘vibe match.’ If the energy feels off, even if the pitch is strong, she will pause, especially in a space driven by relationships.
What is a Fair Valuation?
When asked about their approach to navigating unrealistic valuations, the panel reflected on their experiences with this issue across markets. McBride explained that inflated pre-revenue valuations are common. He said, « Five or six years ago, I saw a stat that said across the VC board, the median positive exit for a Canadian investor was a $20 million valuation. So if you have that in your head as ‘this worked out okay and I’m going to get my money back with a return,’ you need to think about that as the midpoint of where your exit is going to be––which is how I always look at it. When somebody comes in at, for example, $15 million pre-revenue valuation, that gives me very little return over whatever period I have to hold. »
Dua added that what matters most is how the founder reacts when valuations are challenged. Reasonable pushback is expected, but stubbornness or defensiveness is often the real early sign of conflict. She also noted, “There are ways you can structure the deal, things you can include in your term sheet. One clause I always ask for when signing SAFEs or convertible notes is a Most Favored Nation (MFN) clause. It gives me seven to fourteen business days to match the terms of any future investor. So, if I go in early at a $5 million valuation and someone like M12 Ventures comes in later at an $8 million valuation, I get to decide whether to stick with my original terms or match theirs. »
Does Failure Come with a Timeline?
Angel investing is not about instant gratification. Many early-stage startups fail as early as two years. In response to a question from the audience, Dua spoke candidly about the ‘valley of death’ or the difficult middle stretch where cash is tight, traction is uncertain, and optimism starts to fade, as she states
“After the friends and family round, you’re building your MVP, you have pilots––but you are not generating revenue. This chasm is where companies die. To survive means to fundraise or to generate a second income to keep the company going.
She noted, “For a medical device or hardware company, the lifecycle might be 7-10 years. For enterprise SaaS, exits can happen in 3-5 years. It really depends on the business model and how quickly you can scale. In Canada, one advantage is access to non-dilutive funding. Programs like IRAP and SR&ED can inject just enough capital to sustain operations through that tough period. It’s not enough to grow, but it might keep the heartbeat going long enough to survive. »
The stories and insights exchanged throughout the discussion made it very clear that the best deals are not just the ones that generate returns. For an investor to find value in the work that they do, they have to know that they made a difference and that their experience, networks, and instincts have helped the founder overcome the odds and persevere.
If you are a founder reading this, know that every pitch is just the start of a relationship. And if you are an investor, remember that the cheque is the easy part. The real work and the real reward come after.
Brampton Angels is actively seeking new investors who are passionate about supporting early-stage founders. If you’re interested in joining our community of angel investors and driving innovation in Canada’s startup ecosystem, visit us HERE to learn more about becoming a member.
