ACA Briefingand Angel Group Stats

May 20, 2008

 

Summary of ACA Membership – May, 2008

• Full Members 147• Provisional Members 18• Investors in Member Groups 6,800• States & Provinces 50• Affiliate Organizations 19

Affiliates

Full Members

Provisional Members

Members and Affiliates – April, 2008

 

Source: 2008 ACA Angel Group Confidence Survey

2007 Group Investment Data

• 10% increase in average investment per round from 2006, but same number of investments • 66% had follow-on or co-investments with venture capital firms• 25% had distributions to investors• Pacific Northwest: $2.5 mil in 13.5 companies average ($189K per round) – BUT limited data available

Average MedianNumber of Investments 7.3 5Total dollars invested $1.94 mil $1.1 milDollars invested per round $265,926Number of new companies 4.5

 

Average Size Investment Per Round - 2007

Percent of GroupsSource: 2008 ACA Angel Group Confidence Survey

0 10 20 30 40

> $750,000

$500,000 - $750,000

$250,000 - $500,000

$150,000 - $250,000

< $150,000

 

Investment Preference – 2007-2008

Source: 2008 ACA Angel Group Confidence Survey Percent of Groups

0 10 20 30 40 50 60 70 80 90

Telecommunications

Software

Semiconductors

Retail/ Distribution

Other

Networking & Equipment

Medical Devices & Equipment

Media & Entertainment

IT Services

Industrial/ Energy

Healthcare Services

Financial Services

Electronics/ Instrumentation

Consumer Products/ Services

Computers & Peripherals

Business Products/ Services

Biotechnology

 

Preferred Investment/Company Stage – 2007-2008

0

10

20

30

40

50

60

70

80

90

Seed/Startup Early Stage Expansion Later Stage

Percent of Groups

Source: 2008 ACA Angel Group Confidence Survey

 

Geography – Where do Groups Invest?

Percent of Groups

Source: 2008 ACA Angel Group Confidence Survey

0 5 10 15 20 25 30

No restrictions

Region

State/ province

4-hour drive

2-hour drive

 

2008 Prediction: Overall Investment Activity

Source: 2008 ACA Angel Group Confidence Survey

Percent of Groups

0 10 20 30 40 50 60

Other

Deals and dollars decrease

Deals decrease, dollars increase

Deals increase, dollars decrease

Everything is same

Deals and dollars increase

 

2008 Prediction:

How Many New Companies Will You Invest In?

Source: 2008 ACA Angel Group Confidence Survey

Percent of Groups

Companies0

5

10

15

20

25

30

35

40

45

None 1 to 2 3 to 5 6 to 9 10+

 

2008 Prediction:

How Will Conditions for Liquidity Change?

Source: 2008 ACA Angel Group Confidence Survey Percent of Groups

0 10 20 30 40 50 60

Strengthen signficantly

Strengthen slightly

No change

Decrease slightly

Decrease significantlly

 

Co-Investment/ Follow-On Preferences

Percent of GroupsSource: 2008 ACA Angel Group Confidence Survey

0 20 40 60 80 100

No co-investment

Other private equity

Family offices

Later-stage VC

Early-stage VC

Other angel groups

Individual angels

 

0

5

10

15

20

25

30

35

40

2 to 10 11 to 25 26 to 50 51 to 75 76 to 100 101+

Investors Per Group

Source: 2008 ACA Confidence Survey

Average = 55 Median = 41

Percent of Groups

 

Organization Types

0

5

10

15

20

25

30

35

40

LLC LP C-Corp 501c3 501c4 501c6 Non-Profit None

For Profit 48% (54 groups)

Non Profit 35%(39 groups)

No Structure

17% (20

groups)

Groups

Source: 2007 ACA Conf survey and membership applications – 113 groups reporting (2006-2007)

 

May 2007Source: Membership Applications, 2006-2007

Angel Networks

Networks w/Sidecar Funds

Angel Funds

ACA Membership: Networks and Funds

99

12

17

 

Trends Among ACA Member Groups

• University-connected angel groups• Green/ clean-tech focus• Women angel groups• Co-investment – regions, US, cross-border• Communication with angels world-wide• Growing relationships with VCs

 

New Activities and Member Benefits• Public policy committee – education/ policy leadership• Regional/ collaboration committee – networking and co-investment

support• Directors and Officers’ insurance program – Chubb Insurance/AH&T• Updated membership directory, searchable on-line• Partnership with National Venture Capital Association• Research – Returns of Angels in Angel Groups• Investment data partnership – Dow Jones VentureOne

• Provide us your ideas to build the value of your membership

 

Best Practice Guidance Papers

• Board Governance• Negotiating Deal Terms• VC – Angel Group Relationships• State Angel Tax Credit Programs

• Reports will be released after Summit

Angel Group Financial Performance Research• Angel Capital Education Foundation, paid by Kauffman Foundation• Rob Wiltbank (Willamette University) and Warren Boeker

(University of Washington)• First opportunity to understand the ROI of angels connected to

angel groups and drivers behind returns• Released November, 2007• Responses:

– 538 angels (accredited investors)– 3,097 investments– 1,137 exits and closures

Profile of Angels - Median• Years investing 9• Number of investments 10• Total exits/ closures 2• Years as entrepreneur 14.5• Number ventures founded 2.7• Age 57• Percent of wealth in angel investing 10%• Education Masters degree

Heavily Concentrated in EARLY investments– 34% seed stage, 39% startup, 18% early growth– 45% had no revenues when the initial investment was made

Invested Returned

Dollars per deal: $50K $40K median $191K $486K mean

Group-Affiliated Angel Investments

Distribution of Returns by Venture Investment

35% - 0XOverall Multiple: 2.6X

Avg Holding Period: 3.5 years

Average IRR: 27%

3 yr

3.3 yr

4.6 yr

4.9 yr 6 yr0

10

20

30

40

50

60

< 1X 1X to 5X 5X to 10X 10X to 30X > 30X

Exit Multiples

Perc

ent o

f Tot

al E

xits

The Impact of Time in Due Diligence

Overall Multiple for High Diligence 5.9X (4.1years)

Overall Multiple for Low Diligence 1.1X (3.4 years)

Median: 20 hours

26% involved over 40 hours

-

10

20

30

40

50

60

70

< 1X 1X to 5X 5X to 10X 10X to 30X > 30X

Exit Multiples

Perc

ent o

f Exi

ts

Low Diligence High Diligence

Relationship to Industry Expertise50% of deals were not related.

When related, they typically had 14 years of experience

High 3.7X (4.0 years)Low 1.3X (3.6 years)

-

10

20

30

40

50

60

70

< 1X 1X to 5X 5X to 10X 10X to 30X > 30X

Exit Multiples

Per

cent

of E

xits

Low Industry Expertise High Industry Expertise

Impact of ParticipationMentoring, Board, Financial Monitoring

High = 1 or 2 times per monthLow = 1 or 2 times per year

High 3.7X (4.0 years)

Low 1.3X (3.6 years)

-

10

20

30

40

50

60

< 1X 1X to 5X 5X to 10X 10X to 30X > 30X

Exit Multiples

Per

cent

of E

xits

Low Participation High Participation

Relationship with Follow On Investment (Same Angel)

No 3.6X (3.3 years)

Yes 1.4X (3.9 years)

30% of deals had follow on investments

-

10

20

30

40

50

60

70

80

< 1X 1X to 5X 5X to 10X 10X to 30X > 30X

Exit Multiples

Per

cent

of

Exi

ts

Follow-On YesFollow-On No

Venture Capital Involvement35% of deals took on VC investment at some point

-

10

20

30

40

50

60

70

< 1X 1X to 5X 5X to 10X 10X to 30X > 30X

Exit Multiples

Perc

ent o

f Exi

ts

VC No VC

 

Thoughts and Questions?

• We’ll continue developing new programs for angel groups through:– ACA Annual Members Meeting at Summit– Regional meetings– Surveys– Open to ongoing suggestions

 

Need More Information?

Marianne HudsonAngel Capital Association8527 Bluejacket StLenexa, KS 66214913-894-4703mhudson@angelcapitalassociation.orgwww.angelcapitaleducation.orgwww.angelcapitalassociation.org