Angel Funders Report 2021 - Flipbook - Page 8
Angel Investing Today: 2020, A Year Like No Other
The Angel Capital Association (ACA) and its members have always known that
angel investing is not for the faint of heart. It’s an asset class built for risk takers,
innovators, and people with experience-based intuition about what it takes to
be successful. 2020, the year that will forever be known for the global pandemic,
demonstrated the fortitude necessary to be an angel.
The year began with strong growth for angel investors, quickly followed by
lockdown, confusion, re-examination, and eventually, resurgence. If 2020 taught
us nothing else, it demonstrated the incredible resiliency of both entrepreneurs
and early-stage investors.
As the largest association of angel investors in the world, ACA is committed to
providing essential data and analysis. Since angel investing often begins as an
informal relationship between entrepreneurs and angels, there is typically a data
gap at this important stage. There is little data about angel investing due to
the more intimate, less public nature of the asset class. We believe that angelcollected and reported data provides more accurate and deeper insights.
In 2018, ACA launched its data initiative to help early-stage investors make better
investment decisions, and to help the business community better understand
angel investing’s impact on new business formation, job growth, and economic
prosperity. The initiative also helps entrepreneurs gain a deeper understanding of
how and why angels invest, helping them prepare for raising capital and building
strong investor relationships.
The Angel Funders Report is based on direct investment data solicited from all
ACA member groups. We collect data directly from a broad spectrum of angel
investors, including leading angel groups across North America, so that we
can provide powerful first-hand information on the current state of early stage
investing. Our angel investing experts analyze and enhance the data with their
knowledge of trends and best practices, developing a comprehensive insider’s
view to share with the broader investment community. The ACA member
organizations that provide the information for this report take many forms—
groups of ACA members, angel networks, angel funds, networks with sidecar
funds, and more.
6 | Introduction
The Angel Funders Report, released annually, shows the impact that angel
investing has on innovation, the startup ecosystem, and the larger economy.
In 2021, we are happy to report that angel investing is strong and continues to
grow. Angels, and angel groups, invested more dollars in more companies than
prior years. During a year of constant change and uncertainty, angels continued
to provide unique support, funding, mentoring, and operational expertise to help
young companies survive and grow. We estimate that ACA members volunteer
more than one million hours annually mentoring founders and their companies.
With the help of angels, portfolio companies pivoted to meet changing market
needs and found creative ways to keep their businesses afloat, including
navigating the world of PPP loans. Many portfolio companies reported that they
applied for and received these critical funds.
Funding from angels provided powerful leverage to startups, enabling companies
to raise $6 additional dollars for every dollar invested by angels. Overall, angel
portfolio companies raised more than $4 billion in 2020.
The pandemic also triggered changes in angel investing practices. After moving
to the world of “zooming,” angels expanded their investment radius. Almost half
of all deals in 2020 were done outside of the group’s local region. Angels also
increased their support of existing portfolio companies with more follow-on deals
after their initial funding.
In another key focus area for ACA, 2020 also saw an increase in the formation of
new angel organizations and ACA membership by women and people of color.
Women-led companies now represent almost one third of all investments, and
Black entrepreneurs captured a record 15% of first round angel dollars. Overall,
Black entrepreneurs captured 10% of all angel investment dollars, representing a
faster rate of change than venture capital diversity initiatives have been able
Angel Funders Report 2021 | 7