Trends in Angel Investing: Sneak Peak from the Halo Report

Live from the Angel Capital Association 2011 Summit in Cambridge, Mass., here are a few bits of preliminary data from the upcoming Halo Report, a new initiative started in February by the Angel Resource Institute, CB Insights, and Silicon Valley Bank.

  • Median angel round size varies by sector, from a high of $550,000 in healthcare to a low of $270,000 in internet.
  • 70% of VC dollars are invested in three states: California, Massachusetts and New York. Angel dollars are spread much more evenly over more states. (To my eye, the chart presented Washington as big a state for angel dollars as any.)
  • 82% of angels reporting have invested in software.

The most controversial preliminary finding shared was this: thirty-nine percent (39%) of angel backed companies have gone on to raise venture capital. Anand Sanwai of CB Insights, who presented this point and most of the data, explained that the stat was based on 1600 reported rounds. But a questioner from the audience stated that the percentage could not possibly be accurate.

Anecdotally, the 39% figure seems way high to me, too. Presumably numbers will be normalized over time. Not only does 2-out-of-5 seem to overstate what has happened historically; other data suggests that, whatever the real historical number has been, it may not be indicative of what we'll find in the future landscape. In a separate panel yesterday, Dave Berkus of Tech Coast Angels made the point that VC investing is now at about a tenth of what it was 10 years ago, and is (may be paraphrasing here) "no longer relevant as an asset class."

Media attentionSarah Dickey of the Angel Resource Institute also presented findings on what angel investors and angel groups find to be the most important goals and purposes for regular and predictable reporting on angel investing. In reverse order of importance, the top five were: media attention; transparency; market intelligence; benchmarking; and awareness of the angel industry.

Media awareness of angel capital appears to be on the uptick. Speaking anecdotally, many at the summit share the view that the ACA's efforts on Dodd-Frank last year have greatly increased awareness of angel investing, at least within the US Congress.

Sarah emphasized that the group aims to publish the Halo report quarterly.

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