In this article, you will find the key points of Center for Venture Research report about angel investment and get explanations of the changes happening in the market.
The review of the report is republished with the author’s permission.
Center for Venture Research presented the report “THE ANGEL MARKET IN 2018” where researchers analyzed investors and startups in 2018. It the infographic below you can find the key points of this report:
Some highlights from the report:
👉 The number of active angel investors increased comparing to 2017 (334 565 in 2018 and 288 380 in 2017). The number of entrepreneurial ventures in 2018 also grew by 7,4% over this number in 2017. These changes could have occurred due to two factors. Increase in the number of entrepreneurial ventures is most likely caused by the decrease of institutional investors in seed and startup deals. The smaller deals size could partially lead to an increase in the number of angel investors in 2018.
👉 As for the stage of the startups that raise funds, in 2018 angel investors increased investments in expansion stage companies up to 21%. Investments in the early stage in 2018 have remained the same as in 2017. However, there was a decrease in angel investments in the seed and startup stage (34% in 2018 vs. 27% in 2017). This increase in expansion financing indicates that angels were concerned with building a longer runway for their investments.
👉Decrease in deal price showed that angel investors invested less money in more deals. That’s why subsequent valuations decreased. The average angel deal size was $349,620, a decrease of 10.1% from 2017, and the average equity received was 12.1% with a deal valuation of $2.9 million, down by 9.1%.
👉 The report also provides information about yield rates. The yield rate is defined as the percentage of investment opportunities that are brought to the attention of investors that result in an investment. In 2018 this index was 23,2%, which is 3,4% lower than the yield rate in 2017. The yield rate shows that startups have 1 chance from 4 to get fundraising from angel investors. So, the yield rate appears to have stabilized in the 20% range which appears to be, from a market perspective, a sustainable rate.
👉 The CRV report also pays attention to women entrepreneurs and investors. In 2018 there were 29,5% of women among the total number of angel investors. It is bigger by 10% compared to 2017. There were 25,9% of women entrepreneurs who were seeking the angel capital and 17,5% of these women who got it. For example, in 2017 the number of women entrepreneurs who raised funds was 23,4%.
In the report “THE ANGEL MARKET IN 2018” you can also find data about exits, job growth, minority entrepreneurs and investors.