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Archive for April 16th, 2013

Angel investing shifted slightly in 2012

Halo Report: Silicon Valley Bank, CB Insights, Angel resource Institute

Silicon Valley hosts the country’s most active venture capital firms but has only one of the top 10 angel groups from 2012, in terms of the number of deals done.

Senior Technology Reporter- Silicon Valley Business Journal

Amid reports of an angel funding boom that threatens to become a Series A crunch, a new report shows early stage investing in 2012 was relatively calm.

The median deal size shrank slightly to $600,000 from $625,000 the year before. Valuations of the companies funded held steady at $2.5 million.

Those aren’t numbers you might expect to see from an overheating market

Meanwhile, only one of the top 10 angel groups that did the most deals in the country last year is based in Silicon Valley — Sand Hill Angels which ranked No. 6.

Here are some other trends found in the annual Halo Report from Silicon Valley Bank, CB Insights and the Angel Resource Institute released on Tuesday, just before the three-day Angel Capital Association Summit kicks off in San Francisco on Wednesday.

— Shift from the hubs: California and New England, which account for two-thirds of venture investing, aren’t as dominant in angel fundings. The regions accounted for about 31 percent of angel deals in 2012, down from 35 percent the year before. The big gainers were the Southwest (13.3 percent in 2012 from 11.4 percent the year before) and the Northwest (9.3 percent vs. 7.8 percent).

— Life science drops: Life science investing sent from 25 percent of deals in 2011 to 21 percent of deals in 2012. The biggest jump was in mobile and telecom deals, which grew to 13.3 percent from 9.3 percent. In terms of money, Internet startups were No. 1 with 27.3 percent and mobile/telecom was No. 2 with 26.5 percent.

Amid reports of an angel funding boom that threatens to become a Series A crunch, a new report shows early stage investing in 2012 was relatively calm.

The median deal size shrank slightly to $600,000 from $625,000 the year before. Valuations of the companies funded held steady at $2.5 million.

Those aren’t numbers you might expect to see from an overheating market.

Meanwhile, only one of the top 10 angel groups that did the most deals in the country last year is based in Silicon Valley — Sand Hill Angels which ranked No. 6.

Here are some other trends found in the annual Halo Report from Silicon Valley Bank, CB Insights and the Angel Resource Institute released on Tuesday, just before the three-day Angel Capital Association Summit kicks off in San Francisco on Wednesday.

— Shift from the hubs: California and New England, which account for two-thirds of venture investing, aren’t as dominant in angel fundings. The regions accounted for about 31 percent of angel deals in 2012, down from 35 percent the year before. The big gainers were the Southwest (13.3 percent in 2012 from 11.4 percent the year before) and the Northwest (9.3 percent vs. 7.8 percent).

— Life science drops: Life science investing sent from 25 percent of deals in 2011 to 21 percent of deals in 2012. The biggest jump was in mobile and telecom deals, which grew to 13.3 percent from 9.3 percent. In terms of money, Internet startups were No. 1 with 27.3 percent and mobile/telecom was No. 2 with 26.5 percent.

— More co-invested deals: The number of fundings where angels co-invest with other types of investors, such as venture firms, in growing dramatically. It made up just 41.4 percent of deals in 2010 but was up to 69.3 percent last year. But the median round size of a co-invested funding actually dropped in that same time frame, going from $3.58 million in 2010 to $2.97 million.

— Revenue first: Most startups that got money in 2012 (63 percent) also had revenue to show before the angels opened their wallets.

— Convertibles are in: The number of deals involving convertible debt, essentially a loan that turns into equity at later rounds, rose. It made up 11 percent of deals in 2012, nearly double the share of the year before.

Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.

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