Investment Activity in 2019 EXECUTIVE SUMMARY
The 14 groups that reported their deal flow information for 2019 received 6,551 approaches for funding. This is lower than in each of the previous three years. Just 9% of businesses were selected for presentation to investors. Angel investors undertook due diligence on 56% of these businesses and invested in 45% of them. Overall, angel groups made investments in just 2.4% of the businesses that applied for funding. The proportion of companies that attracted funding is lower than in 2017 and 2018. Future research will explore this development in more detail. Angel groups made 299 investments in 2019, investing a total of $163.9 million. This is the highest annual amount invested, up 14.8% on the 2018 figure and marginally exceeding the previous record amount in 2017. However, the number of investments was signifi- cantly lower than in the previous three years. Follow-on investments accounted for 45% of total investments, an increase on previous years, and 38% of the total amount invested, marginally down in 2018. Angel investors report using a variety of investment instruments, with none being dominant. The most commonly used instruments are common shares which account for 38% of the total, followed by convertible debentures, accounting for 29% of the total. Preferred shares are used in 19% of investments. Debt instruments are uncommon, used in just 2% of cases. There is considerable variation in valuations. Just over half (53%) of all investments were valued at between $2m and $6m and almost two-thirds (64%) were valued at $6m or less. The median valuation was $5m. New investments had a lower valuation than follow-on investments. The median value of a new investment was $5m with 76% valued at $6m or less (42% at $4m or less). This compares with a median valuation of $9m for follow-on investment. Investment activity measured in terms of number of investments is dominated by the Information and Communication Technologies (ICT) sector (48%) followed by the Life Sciences and Healthcare sector (20%). This dominance of ICT and Life Sciences and Healthcare has been a constant feature over time, although the proportion of
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ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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