1.3 Investment Activity of Angel Groups in 2019: an Overview INTRODUCTION
These groups invested $163.9m in 299 businesses in 2019 (Table 2). Many of these investments also included other investors who co-invested in the deal, so the overall amounts raised by the businesses in investments in which angel groups participated is much larger. This is an increase in the amounts invested in both 2018 (+18.7%) and 2017 (+4.2%). However, the number of investments is significant- ly down on both 2018 (-45.5%) and 2017 (-37%). This reflects a significant increase in the average size of investment per company compared with 2018. The mean investment more than doubled from $282,167 to $506,987 while the median value (the mid-point between the lowest and highest value of investment) has increased from $120,000 to $169.814. These investment trends are also reflected in an increase in the mean amount invested per group (from $5.1m to $7.2m) (although the median fell from $2.1m to $1.7m) and a decline in the average number of investments made per group, with the median declining from 10.5 to 9 and the mean falling from 19.4 to 11.4. These trends are consistent with the growth in membership of angel groups. These trends are confirmed when the 20 groups that provided information in both 2018 and 2019 are separately examined (Table 2 columns 3 and 4). These groups made fewer investments in 2019 than in 2018 (231 compared to 308, a 25% decline) but increased the total amount invested from $99m to $129m, a 30% increase. This reflects an increase in the mean size of investment from $394,000 to $656,000. There was no change in the median size of investment ($150,000).
The significance of angel investors is underlined when compared with venture capital investment. Venture capital firms invested a “Record Breaking CAD $6.2B in 2019.” However, the vast majority of this was invested in a small number of large mega deals – just 28 investments of over $50m accounted for 55% the total amount invested. Venture capital funds made just 116 investments of $1m or less (the typical investment focus of angel groups), a total investment of just $41m 5 , less than 1%of the $6.2b invested. Moreover, this was a decline from 2018 which saw $80m invested in 210 investments of $1m or less. This is significantly less than the amount invested by angel groups. And it needs to be emphasised that only a minori- ty of angels operate via angel groups, hence the investments reported here represents a significant under estimation of overall angel investment ac- tivity. First, it only includes the visible segment of the angel market; it does not include investments made by angel investors investing on their own and in informal groups that typically go unrecorded 6 . Second, because some groups did not report their investments, it does not cover all of the investment activity in the visible market.
22
ANNUAL REPORT ON ANGEL INVESTING IN CANADA
Powered by FlippingBook