At the start of the New Year, it is a tendency to evaluate the performance of firms or industries in the previous year. As MatchingWINGS we do a similar review. Based on public data on growth funding that we have gathered last year, we conclude that the impact of Business Angels is increasing through their involvement in larger investments.
AVERAGE AMOUNTS PUBLISHED ANGEL INVESTMENTS SUBSTANTIALLY INCREASED
In 2019, we traced 43 startups that received funding from one or more Angel investors. Although the number of deals is lower than the year before (2018: 52 startups) the total amount is almost twice as high: these 43 deals represent a total amount of €85.3 million (2018: €44.7 million). In 2019, the average amount of published Angel investments was €2 million while the average was below €1 million in 2018. The higher average is due to a number of investments by super angels (ex-executives of scale-up companies) providing over €5 million funding in a single deal.
FORMAL INVESTORS ARE MORE FREQUENTLY COLLABORATING WITH BUSINESS ANGELS
In the same year, Angels were providing co-funding in 39 deals led by Venture Capitalists, Regional Development Agencies or Corporates. Compared to the previous year the number of co-funding deals doubled (2018: 20 deals). The total amount of these deals was €103.7 million (2018: €64.4 million); the share of angels in these deals is unknown. In conversations with Venture Capital Funds information was gathered that the share of angel co-funding can be up to 50% of the total invested amount. However, it is unclear how representative this percentage is.
In many news articles on the co-funding deals, the names of the angel investors are revealed and it is highlighted that their industry and/or scale-up experience will be utilized when growing the invested company. That bigger investors allow angels who usually invest smaller tickets in the syndicate, is a clear indication that additional benefits from the smart funding of angels are expected.
ARE ANGELS MOVING TO LATER STAGE INVESTMENTS?
We do not believe that Business Angels are no longer involved in the first external financing round of a startup. We would like to emphasize that conclusions above are based on published deals. From the investors of our MatchingWINGS network and the contacts with startup entrepreneurs, we know that a substantial number of startups receive investments between €100,000 and €500,000. However, most of these angel investments are not published. Studies of European Business Angel Networks (e.g. EBAN Statistical Compendium 2017) indicate that throughout Europe approximately 1 out of 10 angel deals are visible.
We strongly believe that formal investors, such as Venture Capitalists and Regional Development companies or funds, have incentives to publish their investments. Publication provides for example exposure which will positively affect the gathering of new funds. Such incentives do not apply for angels that invest their own money. Since Angels generally invest in smaller deals, we can safely assume that these smaller deals are less represented in our database.
MatchingWINGS has spent time and effort to register angel investment transactions in the Dutch market. Based on a variety of news sites, newsletters and social media announcements, MatchingWINGS has built a database of Dutch startup equity and convertible loan transactions. Only transactions of which information is available in the public domain and can be verified by external sources have been added. Confidential or informal information about deals from the MatchingWINGS network is not included.