2022
TABLE OF CONTENTS
Letter From Our CEO . . . . . . . . . . . . . . . . 2
2022 Highlights . . . . . . . . . . . . . . . . . . . . 4
Introduction. . . . . . . . . . . . . . . . . . . . . . . . 6
Key Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Investing by the Numbers. . . . . . . . . . . . 10
Initial vs. Follow-on Deals. . . . . . . . . . . . . . . . . . 17
Valuation Trends. . . . . . . . . . . . . . . . . . . . . . . . . 21
Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Regional Performance . . . . . . . . . . . . . . . . . . . . 27
Desert Angels Spotlight. . . . . . . . . . . . . . . . . . . 28
Angel Group Dynamics . . . . . . . . . . . . . . 34
Gender Diversity. . . . . . . . . . . . . . . . . . . . . . . . . 37
The Faces Of Company CEOs . . . . . . . . . 37
Commune Angels Spotlight. . . . . . . . . . . . . . . . 38
Ethnic Diversity. . . . . . . . . . . . . . . . . . . . . . . . . . 41
Angel Paydays: Focusing on Exits. . . . . . 43
Fall 2022 Group Update . . . . . . . . . . . . . 47
What’s Next. . . . . . . . . . . . . . . . . . . . . . . 52
Appendices. . . . . . . . . . . . . . . . . . . . . . . 54
The ACA Methodology . . . . . . . . . . . . . . . . . . . 54
Participating ACA Member Groups. . . . . . . . . . 55
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
: : Angel Funders Report 2022 | 1
2 | Angel Funders Report 2022 : : Letter From Our CEO
The Angel Capital Association publishes the Angel Funders Report annually
to increase awareness about angel investor activity and build a deeper
understanding of the investing environment. The report provides context
for seemingly disparate data points, identifies trends, and highlights
innovative ways that ACA members are working together to fuel the
entrepreneurial ecosystem.
Angel investors have proven their
resilience, enduring several years of
volatile markets driven by both the
COVID-19 pandemic and the end of the
great bull market where exits soared,
venture funds posted record returns, and
private company valuations exploded.
Investments made by individual angels and
angel groups continued to “fuel the tank”
for entrepreneurs and kept investment
pipelines flowing for venture capitalists.
Angels are patient with capital, and not
easily distracted by short-term market
trends, as proven in 2020 and 2021. ACA
predicts that this patience will continue
to pay off in the coming year. Market
volatility will likely lead to corrections in
areas like startup valuations, driving deal
terms that are more beneficial to investors,
and presenting a significant opportunity
for angels.
In recent years, the angel investor
community has been working aggressively
to emphasize the importance of
recruiting underrepresented founders
and investors. In 2021, data shows
that progress is erratic, and we must
continue to encourage progress in this
area. ACA wants and needs a broader
base of investors and entrepreneurs
as a permanent part of the ecosystem.
Our broad-based programs to increase
awareness and recruit new angel investors
working with communities and others
further these goals.
LETTER FROM OUR CEO
Insight into Angels and Their
Investments
Letter From Our CEO : : Angel Funders Report 2022 | 3
Angel investors play a unique role in
the investment and entrepreneurial
ecosystem that is not well understood by
many, including governments. The ACA
remains an active advocate in Washington
and beyond. We educate public policy
organizations about the value provided
by the angel ecosystems in the overall
economy. We advocate for the best
interests of investors and entrepreneurs
so that we can keep capital flowing
and live up to our unique ability to fuel
economic growth.
With members pumping over $1 billion
annually into start-ups, ACA is building
the entrepreneurial ecosystem and a new
community of leaders. We are committed
to increasing awareness of the importance
of angel investors to the overall economy.
A study conducted by Desert Angels
estimated that “For every $100,000 of
investment, these portfolio companies
1
Desert Angels Economic Impact Study September 2021
produce 5.8 direct jobs, $458,000 in
wages and $2.1 million in economic
output. In addition, their employees
generate an estimated $37,000 in state
and local revenues per $100,000
of investment.”1
We want to encourage many of the
millions of potential angels to join us.
If you are deploying capital to grow early
stage companies, you are part of this
critical ecosystem, and we invite you to
engage with us. Help us create a powerful
network of entrepreneurs, investors, and
community resources so that we can
continue to support economic growth.
Angel investing is a team sport, and ACA
welcomes you to join us as we strive to
make angel investing more accessible and
successful for all.
Patrick Gouhin
CEO, Angel Capital Association
Every $100,000
invested generated
5.8 direct jobs,
$458,000 in wages,
$2.1 million in
economic output and
$37,000 in state and
local revenue.
4 | Angel Funders Report 2022 : : 2022 Highlights
REPORT FEATURES
Data from
participating angel
groups, summarizing
the details behind
record-setting
investments across
North America
Regional data
showing how active
investors and
promising startups
are benefiting from
angel capital in every
state and region
Reports from key
group leaders on
surviving COVID-19
and beyond
Fall 2022 update
from major angel
groups regarding
current investing
environment
Expanded
information on exits
ACA Angel Groups Invested
$950M
Angel Portfolio Companies Leveraged
Their Investments to Raise More Than
$5B TOTAL
Leveraged Their
Initial Angel
Investments by
5X
The Median Exit
Multiple of Invested
Capital Increased to
2.7X
IN 2021…
2022 HIGHLIGHTS
2022 Highlights : : Angel Funders Report 2022 | 5
Each Angel Group Invests About
$5.3M per year
Top Industries for Angel Group Investments
Medical/
Health Care
Health
Technology
Biotechnology
Software
as a Service
Clean/Green
Technology
ON AVERAGE…
Women Raised $1.01 For Every
$1.00 Raised By Men In Initial Rounds
MORE DIVERSE
Women CEOs Raised Initial Investments on Par with Men
6 | Angel Funders Report 2022 : : Introduction
INTRODUCTION
2021 proved once again that angel investors combine both the vision to invest in an
inherently risky asset class and the fortitude to maintain a steady hand in rocky seas.
Angels invest not only their money but also their time and expertise (estimated at one
million mentoring hours annually) in helping start-ups weather unpredictable markets.
In 2021, angels maintained their investment momentum based on the number of deals.
Angels mitigate their risks by investing smaller amounts in multiple investments across a
variety of companies over time. Angel investors also balance risk by investing with other
angels. ACA works closely with angel groups, accredited platforms, and family offices to
provide syndication, professional development, and networking opportunities to facilitate
more successful investments.
As the largest association of angel investors in the world, ACA is committed to providing
thought leadership through essential data and analysis, in addition to professional
development and networking opportunities. Since angel investing often begins as an
informal relationship between entrepreneurs and angels, there is typically a data gap at
this important stage. Data collected and reported directly by angel investors provides
more accurate and deeper insights into early stage investments than other venture
focused reports. ACA’s yearly report represents the most comprehensive review of current
investments from the angel community available improving the overall quality of reporting
and analysis of this asset class.
ACA launched its data initiative in 2018 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 ACA member
groups. We collect data 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.
Introduction : : Angel Funders Report 2022 | 7
We estimate total angel investment levels and the total amount raised by our portfolio
companies using the actual data reported, supplemental information and industry reports
as the foundation. 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.
2021 was an unusual year for angel investing, buffeted by many factors, including the
COVID-19 roller coaster, VCs aggressively going after angel deals, skyrocketing valuations,
and a SPAC IPO surge early in the year.
The decrease in VC activity in early stage deals with an
increase in later stage deals has been one of the most
notable and impactful trends in 2021. The best exit market
in years caused unprecedented returns to venture funds,
in turn leading fund investors to invest unprecedented
amounts of capital into new funds. The increased amount of
capital available to chase deals caused a dramatic increase
in valuations, especially in later rounds. The overall increase
in valuations place investors at great risk if or when markets
cool down and valuations are unsustainable. These high
valuations increase the probability of companies being
forced into down rounds (lower valuations) in subsequent
financings. In contrast, angels kept their heads while VCs
and others around them were losing theirs, maintaining
consistent valuation levels.
Angel investors continued to support early stage deals via initial and follow-on
investments, investing the highest dollar total since we began collecting this data.
This is seen in an increase in the amount each group invested in each deal.
The consistency of investing trends in 2021 in the face of overall market volatility
demonstrate angels’ critical role of supporting the creation and growth of early stage
companies. Angels continue to focus their greatest share of dollars on the earliest rounds,
Seed and Series A, investing fewer dollars in later stage rounds. Angels invested primarily
in preferred equity deals followed by convertible notes, with some regional use in SAFEs.
Overall, SAFEs remained outside the angel mainstream, accounting for only 9% of angel
deals, up only slightly from 2020.
The best exit market
in years caused
unprecedented
returns to venture
funds, in turn
leading fund
investors to invest
unprecedented
amounts of capital
into new funds.
8 | Angel Funders Report 2022 : : Introduction
Industry trends were relatively stable — life sciences and IT continued to lead the
industries in share of dollars and number of deals. Despite the risky aspects of early stage
investments, angels remain steadfast, with constant support of early stage entrepreneurs,
rather than simply following market trends. In fact, making initial investments during rough
times is often a secret to long-term success.
One area of divergent trends was in the support of diverse
entrepreneurs. Progress in this area was uneven – women
entrepreneurs were able to garner more investment dollars
per deal for the first time, but initial investments in companies
led by Black CEOs reverted to historical levels after a very
strong 2020 performance.
2021 was a strong year for exits, primarily via acquisitions,
with median returns increasing to 2.7X vs 1.6X for prior years
ACA experts predict additional shifts in 2022, including lower
valuations spreading across various rounds and industries in
response to market changes and inflation. Despite volatility,
recent feedback from ACA members indicates that their
appetite for early stage investing remains strong.
ACA experts
predict additional
shifts in 2022,
including lower
valuations
spreading across
various rounds
and industries in
response to market
changes and
inflation.
Introduction : : Angel Funders Report 2022 | 9
KEY FINDINGS
Key findings from ACA’s 2021 data collection and analysis include:
•
ACA member groups invested approximately $950 million in 2021 in more than
1,000 companies and even more deals.2
•
On average, angel groups invested a total of $5.3 million per group, an increase
of 15% from 2020. The total amount invested in 2021 represents the highest total
since we began tracking this data.
•
Angels invested more dollars per company than years prior, although the absolute
number of deals per group declined slightly.
•
Portfolio companies raised a total of more than $5 billion (est.), leveraging their
initial angel investments by 5X.
•
Angels continued to focus on investing in seed-stage deals in 2021, reducing
investments in later rounds. Angels invested more than 50% of their dollars in Series
Seed, which accounted for nearly 60% of deals, up from 50% in the prior two years.
•
The path to greater diversity in angel investing is proving uneven, with women
CEOs making gains in the level of investment, but declining in overall number of
CEOs landing deals in 2021. Asian or Asian American CEOs nearly doubled their
amount of investment, and Latinx CEOs increased by more than 100% -- but Black
CEOs tracked at about half of the amount invested in 2020.
•
Health and life sciences have increasingly displaced long time angel mainstays
like enterprise software, fintech, and hardware. In 2021, about 1/3 of all deals
were related to life sciences, and the remaining 2/3 of deals were spread among
other areas. Medical technology and health technology continued to lead among
verticals, although they have receded from their 2020 COVID-19 driven dominance.
•
Angels have made positive returns on their investments. In 2021, for companies still
operating at time of exit their median return was 2.7X.
2
A single company typically has more than one angel investor and has more than one round of investment. Each
investment made by an angel group counts as one deal. That is why numbers of companies invested in may be less
than the number of investments made.
10 | Angel Funders Report 2022 : : Investing By The Numbers
INVESTING BY THE NUMBERS
The Depth of the ACA Database of Angel Group Investments
Continued to Grow.
In 2021, 69 reporting groups invested in 951 companies for a total of $362M in investments,
representing the highest dollar amount since we started capturing data. Based on this
sample, it is estimated that ACA member groups invested over $950M in 2021. Overall, we
estimate that these portfolio companies raised a total around $5B in 2021.
Among the reporting groups, they invested in 951 companies and 1202 deals. Their average
total annual investment per group was $5.3M with over 17 deals per group (see Figure 1).
FIGURE 1. Angels Engaged in More Deals in 2020
Year
Average Group
Annual Investment
Median Group
Annual Investment
Average # deals
per group
2021
$5.3M
$3.0M
17.7
2020
$4.6M
$2.3M
19.5
2019
$4.0M
$1.5M
13.8
Investing By The Numbers : : Angel Funders Report 2022 | 11
Angels made their investments in many small deals, with 24% of deals invested in rounds
of less than $1M. In these small deals, the group’s individual investment was less than
$200K 62% of the time. This relatively small deal size was indicative of how early stage
these companies were, placing angels on the bleeding edge of capital formation and job
creation in this economy (see Figure 2).
FIGURE 2. Angels Make Many Small Investments
# OF ANGEL DEALS
$ INVESTED PER DEAL
100
200
300
400
$1M
$900K
$800K
$700K
$600K
$500K
$400K
$300K
$200K
$100K
62+%
11
17
21
31
57
60
86
163
300
413
The “sweet” spot for angel investing is seed stage, and 59% of all deals were in this
category in 2021 (see Figure 3). This was 9 percentage points higher than prior years
(see Figure 4). Angels play an essential role in providing the source of initial funding for
start-ups. Over 855 of all deals were Series A or earlier. This commitment to the earliest
deals has been consistent over time.
12 | Angel Funders Report 2022 : : Investing By The Numbers
FIGURE 3. Angels Focus on Seed Rounds
% DEALS
0%
10%
20%
30%
40%
50%
60%
Series C+
Series B
Series A
Seed
7%
13%
10%
28%
52%
$150K
$158K
$165K
$198K
59%
26%
4%
$0K
$40K
$80K
$120K
$160K
$200K
$240K
Series C+
Series B
Series A
Seed
2021 MEDIAN DEAL SIZE
COMPANY FUNDING ROUND
% Deals % $ Invested 2021 Median Deal Size
FIGURE 4. Seed and Series A Dominated Angel Investments
20
40
60
80
100
2021
2020
2019
52%
34%
43%
11%
12%
17%
15%
25%
43%
28%
13%
7%
Seed
Series A
Series B
Series C+
0%
20%
40%
60%
80%
100%
2021
2020
2019
59%
27%
10%
4%
7%
8%
35%
50%
50%
28%
8%
13%
% OF DEALS BY SERIES
% OF DOLLARS BY SERIES
Investing By The Numbers : : Angel Funders Report 2022 | 13
Angels continued to invest in smaller rounds (< $2.5M), although the overall investment
trend continued to move toward larger rounds. 54% of angel groups invested $2.5M
or more in 2021, compared to 45% in 2020 (see Figure 5). ACA experts believe this
was driven in part by investments being made in larger follow-on rounds, which will be
discussed in more detail later in the report.
FIGURE 5. Small Deals are Key; Larger Follow-on Rounds are Growing
Under $1M
$1M to $2.5M
$2.5M to $5M
$5M to $10M
$10M+
0%
20%
40%
60%
80%
100%
2019
2020
2021
24%
27%
33%
32%
16%
7%
11%
28%
25%
9%
11%
22%
29%
10%
15%
% TOTAL GROUP INVESTMENT BY DEAL SIZE
TOTAL INVESTED BY ANGELS
54%
WERE OVER $2.5M
Angel dominance is also seen in their contribution percentage within each round, as
compared to venture capitalists and other groups. Angel groups contributed 32% of
the seed round capital versus having other groups fill their rounds (68%), a significantly
greater percentage than the prior years (see Figure 6). As venture capitalists and others
retreated to later stage rounds, angels held their focus and increased their participation.
Angels were also attracted to the more “reasonable” early stage valuations, covered in
more detail in the valuation section of the report. Angel investments tend to taper off as
companies mature, but smart angels were still making meaningful investments during
follow-on rounds for their most promising companies (see Figures 6 and 7).
14 | Angel Funders Report 2022 : : Investing By The Numbers
FIGURE 6. Angels Contribution to Seed Round Grew in 2021
0%
20%
40%
60%
80%
100%
2021
2020
2019
$ Invested by Angels
$ Invested by Other Investors (VCs, etc.)
32% OF THE SEED ROUND CAPITAL
CAME FROM ANGELS, AN INCREASE
FROM PREVIOUS YEARS
23%
19%
81%
68%
32%
71%
% TOTAL INVESTMENT
FIGURE 7. Angel Investments Taper in Later Rounds
0%
20%
40%
60%
80%
100%
Series B
Series A
Seed
Series B
Series A
Seed
Series B
Series A
Seed
% TOTAL INVESTMENT
% Invested by Angels % Invested by VCs
2019
2020
2021
46%
54%
81%
19%
6%
94%
56%
44%
53%
47%
50%
50%
14%
86%
19%
81%
93%
7%
Investing By The Numbers : : Angel Funders Report 2022 | 15
Reflecting the early stages of many of these investments, about a quarter of the companies
reported no revenue at time of funding, with another 40% reporting less than $500K in
annual revenue. In 2020, about 1/3 of the companies were pre-revenue. The increase in
funded companies with revenue can be attributed to the increase in follow-on funding and
increased caution by investors, who wanted to see a track record before investing
(see Figure 8).
FIGURE 8. More Companies in 2021 Had Some Revenue at Funding
0%
20%
40%
60%
80%
100%
2019
2020
2021
Pre-revenue
Under $500K
$500K to $1M
$1M to $3M
$3M+
22%
33%
24%
32%
13%
18%
13%
37%
11%
11%
8%
40%
13%
13%
12%
% TOTAL GROUP INVESTMENT BY DEAL SIZE
78%
The need to see a track record doesn’t necessarily extend to company leadership, as
Figure 9 shows, angels consistently backed new CEOs. 71% of investments featured
a first-time CEO, as compared to just 29% of the companies having an experienced
CEO at the helm.
16 | Angel Funders Report 2022 : : Investing By The Numbers
FIGURE 9. Angels Consistently Back First-Time CEOs
0%
20%
40%
60%
80%
100%
2021
2020
2019
% CEOs
CEOs Without Previous Experience
CEOs With Previous Experience
59%
62%
38%
29%
71%
41%
Impact investing, as defined by investing in B-corps, was still a small part of angel investing.
C-corps and LLCs made up the strongest percentage of investments (see Figure 10).
FIGURE 10. Most Investments are Made Into C-corps
% DEALS
0%
20%
40%
60%
80%
100%
S Corp
B Corp
Limited Liability Company
C-Corp
$128K
$213K
$60K
$366K
88%
11%
1%
1%
% Deals 2021 Median Deal Size
$0K
$80K
$160K
$240K
$320K
$400K
MEDIAN INVESTMENT
TAX STRUCTURE OF FUNDED COMPANIES IN 2021
Investing By The Numbers : : Angel Funders Report 2022 | 17
INITIAL VS. FOLLOW-ON DEALS
As startups grow, they advance through multiple funding rounds; typically, a company
begins with a small seed (or a “pre-seed”) round and raises progressively larger Series A,
B, and C or even later funding rounds. As companies mature, they increase in value and
ambition, and need more funding as they address new markets an geographies. Initial vs.
follow-on funding types are defined by the action of the angel investor, rather than the
company’s investment round label. The first investment an angel makes in a company is
that angel’s “initial” investment. All subsequent investments made by that same investor
in the same company are called “follow-on” investments. Therefore, an initial investment
by one angel may be a follow-on investment for a different angel. Many groups tend to
make a smaller initial investment, investing again as the company makes progress against
its milestones and needs to raise additional funding to develop additional products or
expand operations into new markets.
Angels were active in both initial and follow-on rounds. Total investment dollars went up
in 2021, although total deal count went down. While there was an increase in dollars
invested in both initial and follow-on deals, follow-on dollars jumped over 25% from 2020
(see Figure 11). Overall, angels devoted more than half of their deals each year to “new”
companies and about 45% of their activity to following on with investment into companies
into which they had already invested (see Figure 12).
FIGURE 11. Initial and, Especially, Follow-on Investments Grew in 2021
AMOUNT INVESTED
Initial
Follow-on
INITIAL
FOLLOW-ON
$0K
$50K
$100K
$150K
$200K
$250K
$300K
$350K
2021
2020
2019
2021
2020
2019
$277K
$238K
$276K
$220K
$266K
$338K
18 | Angel Funders Report 2022 : : Investing By The Numbers
FIGURE 12. Initial Investments Remain Over 50% of All Deals
0%
20%
40%
60%
80%
100%
2021
2020
2019
Initial
Follow-on
51%
54%
46%
45%
55%
49%
% TOTAL DEALS
On a per group basis, the number of follow-on deals remained steady, although the
investment dollars increased. There was a slight increase in the number of new deals,
again demonstrating angels’ commitment to funding new investments (see Figure 13).
FIGURE 13. Number of Initial Deals Per Group Increased in 2021
10
15
20
2021
2020
2019
Initial
Follow-on
5.7
8.1
6.9
6.9
8.4
5.5
AVERAGE # DEALS PER ANGEL GROUP
Investing By The Numbers : : Angel Funders Report 2022 | 19
Angels continued to focus mostly on the earlier stages of company development, with
correspondingly smaller rounds. There continued to be meaningful participation in
later rounds for successful portfolio companies. The preponderance of investing when
the round size is under $1 million is mainly initial funding. However, follow-on investing
typically was part of later, larger rounds as the companies grew and required more funding
(see Figure 14).
FIGURE 14. Initial Investments are Primarily Done in Smaller Rounds
0%
20%
40%
60%
80%
100%
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
% TOTAL INVESTMENT
Initial
Follow-on
UNDER $1M
$1M TO $2.5M
$2.5M TO $5M
TOTAL INVESTED AMOUNT IN INITIAL VS. FOLLOW-ON INVESTMENT
BY COMPANY FUNDING ROUND
$5M TO $10M
$10M+
52%
48%
63%
37%
64%
36%
68%
32%
45%
55%
58%
42%
30%
70%
47%
53%
36%
64%
32%
68%