presents THE ANGEL CONNECTION
THANK YOU SPONSORS Premier Partner
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THANK YOU SPONSORS Premier Partner
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THANK YOU SPONSORS Association Partners
presents THE ANGEL CONNECTION
Catherine Mott CEO and Founder BlueTree Capital Group and BlueTree Allied Angels
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Growth in North American Angel Organizations 300 250 200 150 100 50 0 1999 2000 2001 2002 2003 2004 2005 2006 Sources: Center for Venture Research (pre 03 data) and Kauffman Foundation/ACEF (04-06 data)
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How much is being invested? (Data Source UNH) Angel Investments $25.6B in 2006 $21B in 2005 $22.5B in 2004 $18B in 2003 $15B in 2002 VC Investments $22B in 2006 $21.5B in 2005 $21.5B in 2004 $19.4B in 2003 $21.4B in 2002
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;< Stage Pre-Seed Seed/Start- Up Early Later Source Founders, Friends and Family Individual Angels Funding Gap between $500,000 and $2,000,000/$5,000,000 Venture Funds, Banks Investment $25,000 to $100,000 $100,000 to $500,000 $2,000,000/$5,000,000 and up
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Define the Group Structure Care & Feeding of an Angel Group Screening Due Diligence The Investment Process Community Building Group Management Monitor, Report & Advise Deal Structure Negotiation Capital Sources
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Members and Affiliates April, 2008 Full Members Provisional Members Affiliates
2007 Group Investment Data Average Median Number of Investments 7.3 5 Total dollars invested $1.94 mil $1.1 mil Dollars invested per round $265,926 Number of new companies 4.5 10% increase in average investment per round from 2006 66% had follow-on or co-investments with venture capital firms 25% had distributions to investors Source: 2008 ACA Angel Group Confidence Survey
Average Size Investment Per Round - 2007 < $150,000 $150,000 - $250,000 $250,000 - $500,000 $500,000 - $750,000 > $750,000 0 10 20 30 40 Source: 2008 ACA Angel Group Confidence Survey Percent of Groups
Investment Preference 2007-2008 Biotechnology Business Products/ Services Computers & Peripherals Consumer Products/ Services Electronics/ Instrumentation Financial Services Healthcare Services Industrial/ Energy IT Services Media & Entertainment Medical Devices & Equipment Networking & Equipment Other Retail/ Distribution Semiconductors Software Telecommunications 0 10 20 30 40 50 60 70 80 90 Source: 2008 ACA Angel Group Confidence Survey Percent of Groups
Preferred Investment/Company Stage 2007-2008 Percent of Groups 90 80 70 60 50 40 30 20 10 0 Seed/Startup Early Stage Expansion Later Stage Source: 2008 ACA Angel Group Confidence Survey
Geography Where do Groups Invest? 2-hour drive 4-hour drive State/ province Region No restrictions 0 5 10 15 20 25 30 Percent of Groups Source: 2008 ACA Angel Group Confidence Survey
2008 Prediction: Overall Investment Activity Deals and dollars increase Everything is same Deals increase, dollars decrease Deals decrease, dollars increase Deals and dollars decrease Other 0 10 20 30 40 50 60 Source: 2008 ACA Angel Group Confidence Survey Percent of Groups
Percent of Groups 2008 Prediction: How Many New Companies Will You Invest In? 45 40 35 30 25 20 15 10 5 0 None 1 to 2 3 to 5 6 to 9 10+ Companies Source: 2008 ACA Angel Group Confidence Survey
2008 Prediction: How Will Conditions for Liquidity Change? Decrease significantlly Decrease slightly No change Strengthen slightly Strengthen signficantly 0 10 20 30 40 50 60 Source: 2008 ACA Angel Group Confidence Survey Percent of Groups
Co-Investment/ Follow-On Preferences Individual angels Other angel groups Early-stage VC Later-stage VC Family offices Other private equity No co-investment 0 20 40 60 80 100 Source: 2008 ACA Angel Group Confidence Survey Percent of Groups
Investors Per Group Average = 55 Median = 41 40 35 30 25 20 15 10 5 0 2 to 10 11 to 25 26 to 50 51 to 75 76 to 100 101+ Percent of Groups Source: 2008 ACA Confidence Survey
Organization Types Groups 40 35 30 25 20 15 10 5 For Profit 48% (54 groups) Non Profit 35% (39 groups) No Structure 17% (20 groups) 0 LLC LP C-Corp 501c3 501c4 501c6 Non-Profit None Source: 2007 ACA Conf survey and membership applications 113 groups reporting (2006-2007)
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 coinvestment 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
Best Practice Guidance Papers Board Governance Negotiating Deal Terms VC Angel Group Relationships State Angel Tax Credit Programs Due Diligence Practices Sourcing Best Deals Practices
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
Group-Affiliated Angel Investments 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
Distribution of Returns by Venture Investment 60 3 yr Percent of Total Exits 50 40 30 20 35% - 0X 3.3 yr Overall Multiple: 2.6X Avg Holding Period: 3.5 years Average IRR: 27% 10 0 4.6 yr 4.9 yr 6 yr < 1X 1X to 5X 5X to 10X 10X to 30X > 30X Exit Multiples
The Impact of Time in Due Diligence 70 Median: 20 hours 26% involved over 40 hours Percent of Exits 60 50 40 30 Overall Multiple for High Diligence 5.9X (4.1years) Overall Multiple for Low Diligence 1.1X (3.4 years) 20 10 - < 1X 1X to 5X 5X to 10X 10X to 30X > 30X Exit Multiples Low Diligence High Diligence
Relationship to Industry Expertise 50% of deals were not related. When related, they typically had 14 years of experience 70 60 50 High 3.7X (4.0 years) Low 1.3X (3.6 years) Percent of Exits 40 30 20 10 - < 1X 1X to 5X 5X to 10X 10X to 30X > 30X Exit Multiples Low Industry Expertise High Industry Expertise
Impact of Participation Mentoring, Board, Financial Monitoring High = 1 or 2 times per month Low = 1 or 2 times per year 60 50 High 3.7X (4.0 years) Low 1.3X (3.6 years) 40 Percent of Exits 30 20 10 - < 1X 1X to 5X 5X to 10X 10X to 30X > 30X Exit Multiples Low Participation High Participation
Relationship with Follow On Investment (Same Angel) 80 70 60 30% of deals had follow on investments No 3.6X (3.3 years) Yes 1.4X (3.9 years) Percent of Exits 50 40 30 20 10 - < 1X 1X to 5X 5X to 10X 10X to 30X > 30X Exit Multiples Follow-On Yes Follow-On No
Venture Capital Involvement 70 60 35% of deals took on VC investment at some point 50 Percent of Exits 40 30 20 10 - < 1X 1X to 5X 5X to 10X 10X to 30X > 30X Exit Multiples 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
For more Info - Executive Director Marianne Hudson Angel Capital Association 8527 Bluejacket St Lenexa, KS 66214 913-894-4703 mhudson@angelcapitalassociation.org www.angelcapitaleducation.org www.angelcapitalassociation.org
presents THE ANGEL CONNECTION