Wednesday, April 30, 2014

Angel Investing in 2013 Approaches Record High; 298,800 Individuals Invested $24.8 Billion Says UNH Study

Market Size.  The angel investor market in 2013 continued the upward trend started in 2010 in both investment dollars and in number of investments. 

Total investment in 2013 was $24.8 billion, an increase of 8.3% over 2012, according to the Center for Venture Research at the University of New Hampshire.  A total of 70,730 entrepreneurial ventures received angel funding in 2013, an increase of 5.5% over 2012 investments.  The number of active investors in 2013 was 298,800 individuals, an increase of 11.4% from 2012. 
The increase in both total dollars and the number of investments resulted in a deal size for 2013 that was slightly higher than in 2012 (an increase in deal size of 2.6% from 2012).  These data indicate that angels were active investors in 2013 but those that did invest decreased their individual investments from $85,435 in 2012 to $83,050 in 2013, a decrease of 2.8%.  The $24.8 billion in total investments is close to the market high of $26.0 billion that occurred in 2007.

Job Growth. Angel investments were a significant contributor to job growth with the creation of 290,020 new jobs in the United States in 2013, or 4.1 jobs per angel investment.

Sector Analysis. Software remained in the top sector position with 23% of total angel investments in 2013, followed by Media (16%), Healthcare Services/Medical Devices and Equipment (14%), Biotech (11%), Retail (7%) and Financial Services/Business Products and Services (7%).  The jump in Media investments from 6th place in 2012 to 2nd in 2013 reflects the growing investor interest in social media and applications.

Stage. Angels increased their investments in the seed and start-up stage, with 45% of 2013 angel investments in the seed and start-up stage, up from 35% in 2012.  The biggest factor in this increase was in the seed stage with 21% of angel investments in 2013, up from 9% in 2012.  Angels also exhibited an increased interest in early stage investing with 41% of investments in the early stage, up from 33% in 2012.  Expansion financing exhibited a significant decrease to 12% of deals in 2013, down from 29% in 2012.  Investment activity was evenly divided between new, first sequence investments and follow-on investments, unchanged from 2012.  This increase in seed/start-up stage is an encouraging sign since seed capital is the stage of need for our nation’s entrepreneurs.

Valuation.  The average angel deal size in 2013 was $350,830, an increase of 2.6% from 2012, and the average equity received was 12.5% with a deal valuation of $2.8 million.

Yield Rates. The yield rate is defined as the percentage of investment opportunities that are brought to the attention of investors that result in an investment.  In 2013 the yield rate was 21.6%, virtually identical to 2012 (21.3%).  While a high yield rate is an encouraging development for entrepreneurs seeking angel capital there is a question of the sustainability of this rate and it is possible that the yield rate will retreat to the historical average of 15%.

Women and Minority Entrepreneurs and Investors. In 2013, women angels represented 19.4% of the angel market, similar to 2012 (21.8%).  Women-owned ventures accounted for 23% of the entrepreneurs that were seeking angel capital and 19% of these women entrepreneurs received angel investment in 2013.  It is interesting to note that fewer women entrepreneurs were seeking angel capital in 2012 (16%) but more of those women received angel capital in 2012 (25%).  This high yield rate for women entrepreneurs in 2012 may have attracted more women entrepreneurs to the market and account for the increase in the percentage of women seeking angel capital in 2013. 

Minority angels accounted for 4% of the angel population and minority-owned firms represented 7% of the entrepreneurs that presented their business concept to angels, figures comparable to 2012.  The yield rate for these minority-owned firms was 13%, which is below the market yield rate in 2013.  Thus, the goal would be to both increase the percentage of minority entrepreneurs seeking angel capital and increase the quality.


The Center for Venture Research (CVR) has been conducting research on the angel market since 1980.  The CVR’s mission is to provide an understanding of the angel market through quality research. The CVR is dedicated to providing reliable and timely information on the angel market to entrepreneurs, private investors and public policymakers.

The Center for Venture Research would like to thank all the angel groups and individual angels that participate in our research efforts.  The response rate for this survey was 29%.  The Center for VentureResearch also provides seminars to angels and entrepreneurs, and research reports on aspects of the angel market are also available.

The full citation for this report is: Jeffrey Sohl, “The Angel Investor Market in 2013:  A Return to Seed Investing”, Center for Venture Research, April 30, 2014.

Subscribe to the Angel Investing News

Thursday, April 10, 2014

Is it a boom? VC financing and exits hit record quarterly levels says CB Insights report

Now is the fourteenth winter of our discontent, made glorious summer not by the software of Sun but by the venture capital database built upon it. Some of the quarter’s highlights are:
The quarter saw $9.99 billion invested into 880 deals. Things got busy in Q1 2014 as venture capital investment hit its highest quarterly mark since Q2 2001. Compared to the same quarter last year, Q1 2014 saw fundings jump a notable 44% while deal activity rose 5%.

The most VC-backed IPOs since Q3 2000.   35 U.S.-based VC-backed companies went public in Q1, the highest quarterly tally since Q3 2000.  VC-backed M&A also jumped in Q1 - the 174 venture-backed mergers or acquisitions in Q1 represented 69% growth from the same quarter last year.
Clean tech has good news – What? Yes really.  Funding and deals both climb for the first time in a long while. Green tech startups saw the highest deal and funding total the sector has received over the past five quarters in Q1’14. Compared to the same quarter last year, Q1 2014 saw a notable 38% increase in VC funding dollars and a 9% rise in deals.

The contrarian: Mobile falls below  $1B in VCAfter 2 quarters of over a billion in VC investment, mobile eased up a bit falling below $1 billion in total funding for the quarter.

500 Startups, NEA and Kleiner lead – The most active VCs in the quarter each participated in 30 or more deals. 500 Startups led venture capital investors by unique company deals in Q1 2014, followed by Silicon Valley heavyweights Kleiner Perkins Caufield & Byers and New Enterprise Associates.

Mega deals drive late stage VC activity. Behind notable mega-deals including Cloudera and Tango, Q1 saw late-stage VC funding share (Series D/Series E+) hit 47%, a five- quarter high. With companies taking longer to go public, Series E+ deal share also hit a five-quarter high at 10%.

Geography.  The top two VC-backed deals in California accounted for more VC dollars than all deals in either NY and Mass. On a sequential basis, California VC funding jumped 56% raking in $5.75B. Washington fell from its Q4 highs while Texas showed strength hitting a five quarter high.

The full report from CBInsights is available by clicking here. 

This report covers equity financings into emerging companies. Funding must come from venture capital firms including corporate venture groups. Angel investments are not included unless an investment round included Angels investing alongside a venture capital firm or corporate venture group    

 Subscribe to the Angel Investing News