Angel Investing statistics in US 2014 - “Angel investing medians of round size and valuation increased significantly”
The annual spring meeting of Angel Capital Association, US angels' national organization, is a perfect opportunity to both make new interesting contacts and learn how angel investing is done in US.
Annual ACA meeting, San Diego 14.-16.4.2015.
The annual spring meeting of Angel Capital Association, US angels' national organization, is a perfect opportunity to both make new interesting contacts and learn how angel investing is done in US. On April 14th-16th, over 600 angel investors and angel network representatives from assembled in San Diego. Most delegates were from US, but other geographies such as Australia, New Zealand and India were also represented. Even some Europeans had taken the long flight to San Diego..
One of the interesting subjects on the agenda was the announcement of US statistics of 2014 angel investing, HALO report. According to the survey, medians of both the round size and valuation increased significantly; angel round from $600k to $800k, and valuation from $2.5M to $3.0M. Additionally, there was increase across the board, not just in internet-sector deals. As a matter of fact, share of internet deals fell from 42% in 2013 to 34%. We in Finland have also seen a similar trend, where the range of angel deals becomes more and more varied across industries.
"US angel investing at roughly $25B"
Total volume of angel investing in US is as difficult to survey as everywhere else, but it has been estimated to be on the same level as annual VC investments in 2014, at roughly $25B. 2014 HALO report is based on 870 deals, totaling $1.65B.
Angel investing practices in US are another interesting subject for a European, where angel investing culture in younger than in US. One major difference is that angels in US invest more tightly as part of an angel group, whereas in Europe angels tend to invest more individually and case-by-case. Many US angel groups even have their angel funds, some more than one. These funds are typically $1-3M, and an investing committee makes the investment decisions. Syndication between angel funds is also quite common.
"One major difference is that angels in US invest more tightly as part of an angel group, whereas in Europe angels tend to invest more individually and case-by-case."
One of the biggest differences between European and US angel investing is actually in the approach of public regulating organisations. In US, a business angel in practice needs to be an accredited investor in order to make angel investments. Main requirements for accreditation are $1M net worth, not including residence, and $200.000 annual income. In Europe, accreditation is not required for angel investing. It seems that in US, the regulators emphasis is in protecting companies from unprofessional investors. In Europe, regulator is more concerned in protecting investors from unprofessional companies and middlemen.
A lot has been talked about the impact of crowdfunding in angels and private investing in general. In US, equity crowdfunding is still open for accredited investors only, and with $300M was at 2% of the entire crowdfunding market in 2014. Lion's share of crowdfunding dollars went to P2P lending. Even in UK, where equity crowdfunding is open to everyone, it represented 5% of total 2014 crowfunding market, with P2P lending again at 75%. Future of equity crowdfunding for unaccredited investors is still uncertain in the US, but many crowdfunding platforms are now cooperating closely and syndicating with angel groups. 14 platforms have even joined the ACA.
"Many crowdfunding platforms are now cooperating closely and syndicating with angel groups."
Even though angel investing in US still remains the domain of wealthy individuals more than in Europe, it is very much a growing and developing business sector. There are many well developed angel practices and business models we can learn from in Europe. Having said that, there is valuable experience on broader "public capitalism" in Europe, which our US colleagues can benefit from.
FiBAN chairman 2015
FiBAN's news about startup investing.