The Angel Group Landscape in North America

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• The Angel Group Landscape in North America
• Marianne Hudson
• November 20, 2007

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Potential Angels in the United States
U.S. Millionaires
3 study Estimates of Informal Investors
Center for Venture Research - Active Angels (est.)
4,200,000
Investors in angel groups
1,000,000
225,000
10,000
3
Growth in North American Angel Organizations
Sources Center for Venture Research (pre 03
data) and Kauffman Foundation/ACEF (04-07 data)
4
Summary of ACA Membership October, 2007

• Full Members 124
• Provisional Members 13
• Investors in Operating Groups
  6,000
• States Provinces 45
• Affiliate Organizations 16
• International Partners 2

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Members and Affiliates August, 2007
Full Members
Provisional Members
Affiliates
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2006 Group Investment Data

• 72 co-invested with venture capital firms
• 29 had distributions to investors
• Investment up 23 from 2005

Source 2007 ACA Angel Group Confidence Survey
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Average Size Investment Per Round
Percent of Groups
Source 2007 ACA Angel Group Confidence Survey
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Investment Preference by Industry
Percent of Groups
Source ACA Conf Survey and Membership
applications - 86 groups reporting (2006-2007)
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Preferred Investment/Company Stage
Percent of Groups
Source 2007 ACA Angel Group Confidence Survey
10
Geography Where do Groups Invest?
Percent of Groups
Source 2007 ACA Angel Group Confidence Survey
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Co-Investment/ Follow-On Preferences
Percent of Groups
Source 2007 ACA Angel Group Confidence Survey
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Deal Flow Average Deals Presented Per Year
Percent of Groups
Deals
Source 2007 ACA Angel Group Confidence Survey
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Investors Per Group
Average 44 Median 38
Percent of Groups
Source ACA Conf survey and membership
applications - 116 groups reporting (2006-2007)
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ACA Membership Networks and Funds
99 12 17
Angel Networks
Networks w/Sidecar Funds
Angel Funds
May 2007 Source Membership Applications,
2006-2007
15
Years in Operation
Average 4.6 Median 4
Groups
Source ACA Conf survey and membership
applications - 110 groups reporting (2006-2007)
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Revenue Sources for Group Operation
Percent of Groups
Ec Dev Group receives money from state or local
government In-Kind Group receives support from
parent entity Other Half supported by
management fees for funds
Source ACA Conf survey and membership
applications 105 groups reporting (2006-2007)
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Angel Capital Association

• Annual Summit professional development
• Regional Meetings (co-investment, networking)
• 2007 Angel Group Confidence Report (semi-annual)
• SEC accreditation proposal feedback
• Weekly PR, speaking engagements
• Discounts on Power of Angel Investing programs
• Branding, membership directory, recruit
  recommendations
• Members Only Web site
• www.angelcapitalassociation.org

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Angel Capital Education Foundation

• Full day seminars
• Angel Investing Overview
• Starting an Angel Organization
• Half day workshops
• Term Sheets
• Due Diligence
• Valuation and Portfolio Strategy
• Post-Investment Relationship
• Research and data
• Financial performance of angels connected to
  angel groups
• Investment best practices
• Quarterly data on angel group investments
• Group demographics

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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
• Release scheduled for November, 2007
• Responses
• 538 angels (accredited investors)
• 3,097 investments
• 1,137 exits and closures

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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

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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

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Distribution of Returns by Venture Investment
3 yr
Overall Multiple 2.6X
35 - 0X
Avg Holding Period 3.5 years
Average IRR 27
3.3 yr
4.6 yr
4.9 yr
6 yr
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Impact of Time in Due Diligence
Median 20 hours 26 involved over 40 hours
Overall Multiple for High Diligence 5.9X
(4.1years)
Overall Multiple for Low Diligence 1.1X (3.4
years)
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50 of deals were not related. When related,
they typically had 14 years of experience
Relationship to Industry Expertise
High 3.7X (4.0 years)
Low 1.3X (3.6 years)
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Impact of ParticipationMentoring, Board,
Financial Monitoring
High 1 or 2 times per month Low 1 or 2 times
per year
High 3.7X (4.0 years)
Low 1.3X (3.6 years)
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Relationship with Follow On Investment (Same
Angel)
30 of deals had follow on investments
No 3.6X (3.3 years)
Yes 1.4X (3.9 years)
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Venture Capital Involvement Effects
35 of deals took on VC investment at some point
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Need More Information?
Marianne Hudson Angel Capital Education
Foundation Angel Capital Association 8527
Bluejacket St Suite 216 Lenexa, KS
66214 913-894-4703 mhudson_at_angelcapitalassociation
.org www.angelcapitaleducation.org www.angelcapita
lassociation.org