Angel Funders Report 2021 - Flipbook - Page 24
FIGURE 11. Valuations Are Rising Especially in Later Stages
Pre-money valuations continued to increase in 2020 across all financing rounds.
As shown in Figure 11, seed stage valuations saw the smallest increases at
8%, while later stage deals dominated by venture capitalists saw much more
dramatic increases of more than 20%. This data is consistent with other reports,
highlighting the strong activity in IPOs and SPACs that is driving up overall
valuations. Valuations are also being driven up by the willingness of investors to
pay more for what they perceive to be less risky, more “mature” companies. This
is a trend that will be followed closely in the coming years.
Despite these growing valuations, angels continue to show the greatest interest
and participation in lower, more reasonably valued rounds. Historically, the
amounts angels invested per deal did not vary greatly based on the overall deal
valuation. Angels invested between $100-$150K per deal, whether the valuation
was under $2.5 million or up to $20 million. Investments only increased to more
than $200K when valuations hit the $20 million+ level. In 2020, this behavior
changed, and angels demonstrated a strong preference for rounds valued at less
than $5 million. Angel investments in rounds under $2.5 million increased almost
70%, to $224K, as shown in Figure 12. Median angel investments in $5 million+
rounds decreased. This data will be analyzed in coming years to determine if this
is a one-time response to an uncertain economic environment or part of a longerterm trend.
FIGURE 12. Angels Invested More at Lower Valuations
This valuation sensitivity may also be seen in the regional valuation information.
As seen in Figure 13, across regions, there was not an increase in valuation over
2019, with most regions pricing rounds between $5 million and $7 million as
compared to $6 million in 2019. The New York and California markets have higher
valuations ($8 million-$10 million), but these numbers stayed steady from 2019.
ACA analysts also noted the higher caps on notes seen in most regional markets
and hypothesize that entrepreneurs may have wanted to delay pre-money
valuations in the hopes that post-pandemic valuations would be higher.
22 | Valuation Trends
Angel Funders Report 2021 | 23