In many cases, angel groups invest alongside other investors as part of a larger syndicate, so the overall deal size is often much larger than angel group investments alone would indicate. These syndicated investments give businesses significant financial runway to scale up. In 2019, the median size of deals that involve both angel groups and other investors was $825,000.
This represents a decline from the past two years. In contrast the mean size of deals, which has been rising year-on-year, more than doubled in 2019 to $5.6m (Figure 14). However, this reflects one very large deal: excluding this deal brings the mean deal size down to $2.9m which is a slight increase on 2018.
FIGURE 14 Median and Mean Deal Sizes
$6,000
$1,200
$5,000
$1,000
$1,003
$987
$800
$4,000
$825
Median Mean (All) Mean (Others)
$600
$3,000
$600
$600
$400
$2,000
$200
$1,000
$0
2015
2016
2017
2018
2019
Year
Note: Mean (Others) excludes one large deal amount ($392,000,000)
Angels report using a variety of investment instruments, with none being dominant (Figure 19). The most commonly used instruments are common shares which account for 38% of the total, followed by con- vertible 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. Relative to 2018 data, the major changes were a decrease in the use of convertible debentures from 37% to 29% and decline in preferred shares from 23% to 19%. This may be explained by the new category of SAFE Notes reported in 2019, which accounted for 12% of deal structures. 3.4 Deal Structures INVESTMENT ACTIVITY IN 2019
FIGURE 15 Deal Structures
38%
29%
19%
12%
2%
Common Shares Convertible Debenture
SAFE Notes Loan (Debt) Preferred Shares
43
ANNUAL REPORT ON ANGEL INVESTING IN CANADA
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