Angel Investing
Trends and Highlights
A Few Facts
•
•
•
•
•
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$20B invested in the U.S. annually
60,000 companies – 80% seed
258,000 active angel investors
Ave...
Why Invest Early – High Return Potential
• $1000 in FB in 2005 = $624,500 today (62,450%)
• $1000 in Airbnb in 2009 = $589...
But Remember
• Many die

• Some survive (1 – 5x)
• A few thrive (20x+)
Startup Investor Ecosystem
Bootstrap, KickStarter,
Crowdfunding

Innovation Bay

Startmate
PushStart
Blackbird
Netus

Ange...
Highlights Q1 2013 – Halo Report
• Median Angel Round Size Up To $700K
• Pre-Money Valuations Average $2.5M
• 81% of deals...
Median And Mean Round Size
Co-Investing Median Round Size
Q2’13 Sectors
• Internet – 37.2%
• Healthcare – 19.9%
• Mobile – 13.6%

• Software – 4.2%
Sectors
Round Size By Sector
U.S. Valuations
• First Quartile - $1.2M
• Median - $2.5M

• Third Quartile - $3.0M
• Top Quartile - $5.5
Valuations – Halo Report
Co-Invest Percentages
Strategies to Enhance
Performance

•

Pick a Goal – Is this for fun, profit or philanthropy?

•

Invest Where You Have Ind...
Important Considerations
• Team, expertise, and market are most important
• Chemistry must be good

• Deep understanding o...
Places To Learn More
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•
•
•
•
•
•
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http://www.paulgraham.com/angelinvesting.html (Paul Graham)
https://angel.co (Angel ...
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AngelEd_Bill Bartee_Market Update & Trends

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AngelEd_Bill Bartee_Market Update & Trends

  1. 1. Angel Investing Trends and Highlights
  2. 2. A Few Facts • • • • • • $20B invested in the U.S. annually 60,000 companies – 80% seed 258,000 active angel investors Average investment size - $10K - $100K Not neat and tidy Hard work but fun
  3. 3. Why Invest Early – High Return Potential • $1000 in FB in 2005 = $624,500 today (62,450%) • $1000 in Airbnb in 2009 = $589,667 today (58,967%) • $1000 in Dropbox in 2008 = $391,500 today (39,150%) • Peter Thiel invested $500K in FB for 10.2% in 2004. He sold 16.8M shares at IPO for $638M and has another $396M left.
  4. 4. But Remember • Many die • Some survive (1 – 5x) • A few thrive (20x+)
  5. 5. Startup Investor Ecosystem Bootstrap, KickStarter, Crowdfunding Innovation Bay Startmate PushStart Blackbird Netus Angels& Incubators ($0-10M) “Micro-VC” Funds ($10-100M) Incubation Pollenizer Tank Stream Seed Carnegie Series A Southern Cross GBS Sequoia Accel “Big” VC Funds ($100-500M) Starfish Series B “Mega” VC Funds (>$500M) General Catalyst Series C+
  6. 6. Highlights Q1 2013 – Halo Report • Median Angel Round Size Up To $700K • Pre-Money Valuations Average $2.5M • 81% of deals occur in angel groups home state • Angel Groups Syndicate 3 Out of Every 4 Deals
  7. 7. Median And Mean Round Size
  8. 8. Co-Investing Median Round Size
  9. 9. Q2’13 Sectors • Internet – 37.2% • Healthcare – 19.9% • Mobile – 13.6% • Software – 4.2%
  10. 10. Sectors
  11. 11. Round Size By Sector
  12. 12. U.S. Valuations • First Quartile - $1.2M • Median - $2.5M • Third Quartile - $3.0M • Top Quartile - $5.5
  13. 13. Valuations – Halo Report
  14. 14. Co-Invest Percentages
  15. 15. Strategies to Enhance Performance • Pick a Goal – Is this for fun, profit or philanthropy? • Invest Where You Have Industry Expertise – Analysis indicated that expertise has a material impact on angel investors’ returns. Returns were nearly double for investments in ventures where the investor had related industry expertise and contacts. • Increase Due Diligence Time – Investors experienced better returns in the deals where they exercised more due diligence. Sixty-five percent of the exits with below-average time spent on due diligence reported a return that was less than their original investment. Losses occurred in only 45 percent of the deals where investors did above-average due diligence. • Syndicate or Co-Invest With Experts (pattern recognition) • Build a Portfolio (10 or more) – Look at a lot of deals before you invest • Participationor Adding Value – After an angel makes an investment, his or her participation in the venture – through mentoring, coaching, and financial monitoring – is significantly related to that venture’s returns, according to the study. • Be Careful With Follow-On Investing – Deals where the angel investor made follow-on investments generated significantly lower returns. In ventures where follow-on investments were made, nearly 70 percent of the exits occurred at a loss. • http://www.kauffman.org/research-and-policy/returns-of-angels-investors-in groups.aspx#sthash.TObynS6L.dpuf
  16. 16. Important Considerations • Team, expertise, and market are most important • Chemistry must be good • Deep understanding of the problem (authentic connection) + passion is key • Deal structure and valuations are important but secondary
  17. 17. Places To Learn More • • • • • • • • http://www.paulgraham.com/angelinvesting.html (Paul Graham) https://angel.co (Angel List) http://www.angelresourceinstitute.org (Angel Association US) http://www.fabricegrinda.com/entrepreneurship/9-business-selectioncriteria/ http://www.svb.com/halo-report/ (Halo Report) http://aaai.net.au (Australian Association of Angel Investors) http://www.tommckaskill.com/ebooks/angels.html(Tom McKaskill’s book An Introduction to Angel Investing) Innovation Bay, Sydney Angels, Melbourne Angels, SA Angels, etc
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