Tag Archives: Angel

Angel Resiliency during COVID-19

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Angel investing in the US has been remarkably resilient during COVID-19 as angels have adjusted to remote operations and actively sought new opportunities, as well as loyally supported their portfolio investments.

Angel investing showed the greatest growth in the number of deals done in the Fourth Quarter of 2020, according to On Grid Ventures analysis of Pitchbook/NCVA quarterly data.

Angel investing deals done grew 9% in the Fourth Quarter, while Seed and Early Stage, activity contracted -35% and -26%, respectively, and Late Stage increased 6%.

What’s going on?  I suspect Angels think like entrepreneurs, and see opportunity in times of extreme change.  Since they are basically accountable just to themselves (and, as some angels are quick to point out, their spouses!), they are freer to take risks as they seek opportunities. 

VC’s may have similar instincts, but are more heavily influenced by fund investment considerations and LPs.  Fundraising for some has been severely limited, and available funds were diverted to support troubled portfolio companies.  LP’s also tend to be far more conservative, and many lobbied their VC funds to cut back investing, and not make planned capital calls.

This is nothing new. It repeats the pattern from the Global Financial Crisis in 2009 when Angel investing grew 45%, while Early Stage and Later Stage VC contracted -35% and -21%, respectively.

  • Angel Resiliency During the 2009 Great Recession

The Facts on Deal Valuation and Structure

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Attention Entrepreneurs:  Investors at different stages have varied interests so you are likely to get different counsel from Big VCs, Big Accelerators, and other Big Shots.

I’ll keep this post brief and fact-based.  Early stage financing has supply and demand, and deal terms and valuation are determined by market factors.  When you determine valuation and deal structure for your company, consider the current data on Angel financing.

66% of Angel financings are done at a pre-money valuation of $4.5 million and under.60% of angel financing is done with Preferred Stock.

The source of this data is the Angel Capital Association’s new Angel Funders Report, dated August 2018 and released October 2018.  Drawn from 432 investment rounds in 2017 across 393 companies totaling $102 million invested.  Companies were located in 36 US States, Canada, and Israel.

So when you set your terms, the closer you can price your deal based on its merits relative to other angel deals getting funded, the faster your funding round will go, and the quicker you can get back to your business fundamentals.

Top 15 New York-Based Venture Capital-Backed Exits 2012 – 2017

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The Top 15 New York-Based Venture Capital-Backed Exits 2012 – 2017

As the NY early stage and VC community grow, so do the number of larger exits.  From CB Insights, here are the top 17 NY VC-backed exits for the past five years, with Yext at number five with its April 13, 2017, IPO.

 

 

The Venture Capital One Pager

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From VC John Backus, here is the Venture Capital One Pager!  A great primer on how the various rounds of financing work together — at least according to the standard playbook.

Big Caveats:  There are other playbooks!  Like the “take no outside capital” playbook, and the “one round and done” playbook.

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More info here.

Angel Report 2013: 207 companies funded in 1Q 2013

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The Halo Report is out for the first quarter of 2013, and covers 207 deals totaling $222 million dollars invested.angel-statue-1725x810_19365

Here are some of the key findings: 

  • Median investment is $680k per angel round. Median angel round sizes reached another five quarter high at $680K in Q1 2013 up from $550K a year ago and $650K last quarter.
  • $2.5 million valuation holds.  Pre-money valuations in early stage companies remain steady at $2.5M.
  • Close to Home: Eighty-one percent of deals were completed in the angel groups’ home state over the past 12 months.
  • New York Grows Again. Year over year, companies in the Great Plains region and New York saw the largest increase in angel group deals. 

 

A Venture Capital Recession in 2012

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The National Venture Capital Association data from Money Tree is out, and the VC industry is in a recession:

  • For the full year 2012:
    • VC funds invested declined 10%, to $26.5 billion
    • The number of VC deals done declined 6%, to 3,698.
  • Double-digit decreases in investment dollars across most industries, specifically the traditionally capital-intensive Clean Technology and Life Sciences sectors, offset the increases seen in the Software sector in 2012.
  • Stage of investment shifted from Seed to Early Stage as venture capitalists overall began engaging with companies later in their life cycle than in previous years. Investments into Seed Stage companies decreased 31 percent in terms of dollars and 38 percent in deals with $725 million going into 274 companies in 2012, the lowest annual seed dollars since 2003.
  • Internet-specific companies experienced a 5 percent decline in both dollars and deals for the fullyear 2012 with $6.7 billion going into 976 rounds compared to 2011 when $7.1 billion went into 1,033 deals. However, the year still marked the second highest level of Internet investment since 2001. These companies accounted for 25 percent of all venture capital dollars in 2012, up from 24 percent in 2011.
  • Investments in the NY Metro area held at 11% of the total number of deals, with 397 companies funded, but the dollars deployed declined 18% to $2.3 billion

More details here.

An Angel Bubble?

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I keep hearing that Silicon Valley is driving up the valuations of start-ups to absurd levels, and from both NYC-based and West Coast investors.  This piece from Business Insider, citing un-named sources, throws a few bombs at Y-Combinator for being the greatest instigator of the explosion in valuations.  The bubble in large company valuations is working its way to startups, and no doubt it is a bubble.

“Seven years ago, Paul Graham and his now-wife Jessica Livingston founded a startup accelerator, Y Combinator.

Since then, it has become the most competitive startup program in the world. Its acceptance rate is compared to that of an Ivy League school, with similar prestige stamped on each graduating startup.

To date, more than 460 startups have gone through the accelerator, and they’ve gone on to raise more than $1 billion collectively.

Among them are Dropbox, a file sharing and storage company that has raised $275 million at a $4 billion valuation. Airbnb, a consumer-to-consumer room-rental service, has raised $120 million at a $1.3 billion valuation. Socialcam, which graduated from Y Combinator’s program in March, was acquired this month for $60 million…”

Read more: http://ow.ly/cGZsQ