FIGURE 9 Funding Success Funnel
100%
Application
Presentation
9.5%
Due Diligence
5.3%
Funded
2.4%
It would appear that raising finance was more difficult for startups in 2019 than in previous years. However, the smaller number of groups that provided information on the number of businesses at each stage in the funding funnel means that this conclusion can only be tentative. The proportion of businesses that were invited to present to angel groups (9%) is considerably lower than in previous
years. The proportion of those that advanced to the due diligence phase (26%) is also down on both 2018 and 2017, but higher than in earlier years. The proportion of businesses invited to present that attracted funding is also lower than in previous years (Table 5). There are several possible reasons for this change and we look forward to exploring this in future research.
TABLE 5 Presentation, Funding and Application Rates
2014
2015
2016
2017
2018
2019
Presentation rate 1
24%
30%
30%
14%
17%
9%
Funding rate 2
33%
21%
26%
41%
51%
26%
Application success rate 3
8%
6%
8%
6%
9%
2%
1 The ratio of presentations to applications
2 The ratio of presentations that result in funding
3 The ratio of applications that attract funding
There is considerable variation in these ratios across groups, reflecting their different operating models (Figure 10). Most groups undertake screen- ing, presenting only a minority of their applicants to their members. Only one group presented all of its applicants to their members. The proportion
of businesses that are presented to group mem- bers that go on to raise finance varies significantly across the groups, ranging from zero to 100%, with just 15% groups having a figure of over 75% fund- ing rates. Most of these groups presented less than 20 businesses to their members.
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ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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