angeled_bill bartee_market update & trends

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Angel Investing Trends and Highlights

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Page 1: AngelEd_Bill Bartee_Market Update & Trends

Angel Investing

Trends and Highlights

Page 2: AngelEd_Bill Bartee_Market Update & Trends

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

Page 3: AngelEd_Bill Bartee_Market Update & Trends

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.

Page 4: AngelEd_Bill Bartee_Market Update & Trends

But Remember

• Many die

• Some survive (1 – 5x) • A few thrive (20x+)

Page 5: AngelEd_Bill Bartee_Market Update & Trends

Startup Investor Ecosystem

Angels & Incubators($0-10M)

“Micro-VC” Funds ($10-100M)

“Big” VC Funds ($100-500M)

“Mega” VC Funds (>$500M)

StarfishSouthern Cross

General Catalyst

Pollenizer

Startmate

PushStart

Tank Stream

Carnegie

Blackbird

Sequoia

Accel

GBS

Netus

Innovation Bay Incubation

Seed

Series A

Series B

Series C+

Bootstrap, KickStarter, Crowdfunding

Page 6: AngelEd_Bill Bartee_Market Update & Trends

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

Page 7: AngelEd_Bill Bartee_Market Update & Trends

Median And Mean Round Size

Page 8: AngelEd_Bill Bartee_Market Update & Trends

Co-Investing Median Round Size

Page 9: AngelEd_Bill Bartee_Market Update & Trends

Q2’13 Sectors

• Internet – 37.2%

• Healthcare – 19.9%

• Mobile – 13.6%

• Software – 4.2%

Page 10: AngelEd_Bill Bartee_Market Update & Trends

Sectors

Page 11: AngelEd_Bill Bartee_Market Update & Trends

Round Size By Sector

Page 12: AngelEd_Bill Bartee_Market Update & Trends

U.S. Valuations

• First Quartile - $1.2M

• Median - $2.5M

• Third Quartile - $3.0M

• Top Quartile - $5.5

Page 13: AngelEd_Bill Bartee_Market Update & Trends

Valuations – Halo Report

Page 14: AngelEd_Bill Bartee_Market Update & Trends

Co-Invest Percentages

Page 15: AngelEd_Bill Bartee_Market Update & Trends

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

• Participation or 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

Page 16: AngelEd_Bill Bartee_Market Update & Trends

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

Page 17: AngelEd_Bill Bartee_Market Update & Trends

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-selection-crit

eria/• 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