1. Angel Investing
Trends and Highlights

2. A Few Facts
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$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. 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. But Remember
• Many die
• Some survive (1 – 5x)
• A few thrive (20x+)

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. 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. Median And Mean Round Size

8. Co-Investing Median Round Size

9. Q2’13 Sectors
• Internet – 37.2%
• Healthcare – 19.9%
• Mobile – 13.6%
• Software – 4.2%

10. Sectors

11. Round Size By Sector

12. U.S. Valuations
• First Quartile - $1.2M
• Median - $2.5M
• Third Quartile - $3.0M
• Top Quartile - $5.5

13. Valuations – Halo Report

14. Co-Invest Percentages

15. Strategies to Enhance
Performance
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Pick a Goal – Is this for fun, profit or philanthropy?
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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.
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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.
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Syndicate or Co-Invest With Experts (pattern recognition)
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Build a Portfolio (10 or more) – Look at a lot of deals before you invest
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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.
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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.
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http://www.kauffman.org/research-and-policy/returns-of-angels-investors-in groups.aspx#sthash.TObynS6L.dpuf

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. Places To Learn More
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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