Angel Group Valuations Continue Three-Quarter Climb

KANSAS CITY, Mo., SANTA CLARA, Calif., and NEW YORK, Oct. 9, 2014 /PRNewswire/ -- The Angel Resource Institute (ARI), Silicon Valley Bank (SVB) and CB Insights released the Q2 2014 Halo Report today, a national survey of angel group investment activity. The report finds median pre-money valuations continuing to climb for the third consecutive quarter reaching $3 million in Q2 2014. Round sizes dropped approximately 40 percent to $600K over the prior quarter when angel groups invested alone, but rose nearly 20 percent to $2 million when angels co-invested with other types of investors.

Texas became one of the most active regions in the US for angel investment in the second quarter, joining California and New England, and the angel groups in the Mid-Atlantic region invested nearly one-quarter of all angel group dollars during the same time period. Average round sizes rose significantly for healthcare companies by $1 million to $2.6 million, while round sizes for Internet companies fell by $1 million to $800K in the quarter.

Infographic.

"Higher valuations are consistent with the opinion that the market has been heating up and, in fact, may be contributing to the decline in round size," said Rob Wiltbank, Vice Chairman of Research, Angel Resource Institute.

Halo Report Q2 2014 Highlights:

Investor Syndicates Produce Bigger Rounds

Median angel round sizes were down from $990K to $600K, which is consistent with the second quarter a year ago. When angel groups co-invest with other types of investors, however, the median round size jumped to more than $2 million, a five-quarter high.

Valuations Continue to Rise

Median pre-money valuations rose to $3.0 million, from $2.7 million in Q1 2014, and after several steady quarters at $2.5 million.

Maine Angels Joins Most Active Angel Groups

In Q2 2014, the most active angel groups based on total completed deals were (alphabetic order): Alliance of Angels, Central Texas Angel Network, Desert Angels, Golden Seeds, Houston Angel Network, Launchpad Venture Group, Maine Angels and Tech Coast Angels.

Texan Angel Groups Pump Up the Volume

Angel groups in Texas closed 12% of all deals in Q2, following New England with 16% and California with 19% rounding out the top three regions. The Mid-Atlantic region dominated the share of dollars invested, accounting for 23% of all US angel investments in the quarter, including four syndicated deals over $10 million. California, New England, Texas and the Mid-Atlantic increased the number of deals and the dollars invested while angel groups in the Southeast and the Great Lakes region did fewer deals and invested less than during the prior quarter.

Software Companies Secure More Angel Investment

Together, Internet, healthcare and mobile companies received 73.3% of all angel group dollars, and software companies received 11% of all investments – a ten point jump over the prior two quarters. Healthcare and Internet companies were the most likely to close a deal, consistent with the prior quarter, while mobile deals decreased slightly.

The Halo Report includes aggregate analysis of investment activity by angels and angel groups and highlights trends in round sizes, location and industry preferences. The data is collected via survey and aggregation of public data using CB Insights innovative data analyses. The Q2 2014 Halo Report data is based on 206 deals totaling $594 million in total rounds including co-investors.  The transaction details are available in the CB Insights subscription database for users to review and analyze themselves.  Academics may also access some of the data through ARI.

Angel groups and individual angel investors interested in including their data in the Halo Report should contact JJ Knight of the Angel Resource Institute for details.  She can be reached at 910-523-5503 and [email protected].

The Angel Resource Institute (ARI) is a charitable organization devoted to education, mentoring and research in the field of angel investing, a growing driver of our entrepreneurial economy. ARI was founded by the Ewing Marion Kauffman Foundation. The programs of ARI include educational workshops and seminars, research projects and reports, and information about angel investing for the general public. ARI is affiliated with the Angel Capital Association, the professional association of angel groups in North America. More information is available at www.angelresourceinstitute.org.

Silicon Valley Bank is the premier bank for technology, life science, cleantech, venture capital, private equity and premium wine businesses. SVB provides industry knowledge and connections, financing, treasury management, corporate investment and international banking services to its clients worldwide through 28 US offices and six international operations.  (Nasdaq: SIVB) www.svb.com.

Silicon Valley Bank is the California bank subsidiary and the commercial banking operation of SVB Financial Group. Banking services are provided by Silicon Valley Bank, a member of the FDIC and the Federal Reserve System. SVB Financial Group is also a member of the Federal Reserve System.

CB Insights is a National Science Foundation-backed data-as-a-service firm that collects information on private companies and their investors and acquirers.  CB Insights data and technology is used by firms to make better marketing, procurement, lending, acquisition and equity investment decisions and to gather data-driven market and competitive intelligence.  The firm's data is regularly cited by leading media publications including the New York Times, Forbes, Bloomberg BusinessWeek and Fast Company among others.  For more information, visit http://www.cbinsights.com.

SOURCE Silicon Valley Bank; CB Insights; The Angel Resource Institute