Angel Group Update: Q2 2013

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Table of Contents

Q2 2013 Highlights p. 4

National Trends p. 6

Most Active Angels p.13

Regional Trends p. 16

Sector Trends p. 21

About the Halo Report p. 24

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Q2 2013 Highlights

4

Angel Group Update: Halo Report Q2 2013

Most Active Angel Groups

Total Deals Q2 •Central Texas Angel Network•Golden Seeds•Desert Angels•Dingman Center Angels•Tech Coast Angels•Alliance of Angels•Houston Angel Network•Launchpad Venture Group•New York Angels•Sand Hill Angels

Highlights

• Median Angel Round Size Dips to $590K in Q2 p.6

• Early Stage Pre-Money Valuations Remain Stable at $2.5M p.7

• 74% of Angel Group Deals are Syndicated p. 10

Angel Groups Active inEducation Technology•AIM Group•Golden Seeds•Investors’ Circle•Maine Angels•Sand Hill Angels•Sound Board Angel Fund

5

National Trends

6

Median Angel Round Size Q2 2013 Stable Year Over Year, Smaller than Q1

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013$0.00

$0.50

$1.00

Median Round Size Mean Round Size

*Angel rounds include angels & angel groups only

$900K$770K

$900K $870K$970K

$590K $600K$710K $700K

$590K

$M

7

Median Early Stage Pre-Money Valuation Rolling Year Steady at $2.5M (Q2 2013)

*Including all rounds with angel groups before Series A

$2.5MMedian

$1.2M1st Quartile

$3.0M3rd Quartile

$0.11M

$5.5M

8

Angels with Other Investors

Q2 2013 Median Round Size Trending up $1.95M when Angel Groups Co-Invest with Other Types of Investors

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$1.47 $1.59 $1.55

$1.40

$1.95

$2.29$2.52 $2.48

$2.04$2.83

Median Round Size Mean Round Size

$M

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1H 2013 Median Round Sizes for Angel Groups in Top Sectors: Internet, Healthcare, & Mobile/Telecom

Healthcare Internet Mobile / Telecom$0.00

$0.50

$1.00

$1.50

1H 2012 2H 2012 1H 2013

*For all deals involving angel groups, includes co-investors

$1.52

$1.00 $1.00

$M

$1.18

$1.01$1.10

$750K

$920K$970K

10

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 20130%

20%

40%

60%

80%

100%

72.5%

54.0%

72.9% 74.1% 74.2%

27.5%

46.0%

27.1% 25.9% 25.8%

Not Co-Invested Angel Group Co-Investment

Angel Groups Co-Invest 74% of Deals in Q2 2013

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Angel Groups Invest Close to Home72% of Q2 2013 deals completed in home state of investor group & company

Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 201340%

50%

60%

70%

80%

90%

100%

73%76%

70%

78%

72%

85% 85%

79%

87% 86%

Investor & Company in Same StateInvestor & Company in Same Region

#

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Active Angel Groups

13

Most Active Angel Groups Q2 2013 – Total Deals (Alpha Order)

5th

Seattle, WA

NY, MA, CA

Tucson, AZ

Sunnyvale, CA

New York, NY

Southern CA

Austin, TXCollege Park, MD

Houston, TX

Boston, MA

14

Angel Groups Active in Education Technology(Over the past 12 months)

National GroupCA, MA, NY

Sunnyvale, CA

Alabama

Portland, ME Morristown, NJ

15

Regional Trends

16

Texas Jumps Out of Southwest in Q2 2013 DealsShare of Angel Group Deals by Region Q2 2013

California

17.3%

Northwest

6.3%

Southwest

5.8%

Great Plains

6.8%Great Lakes

10.5%

Southeast

12.0%

Mid-Atlantic

7.9%

New England

13.6%

New York

8.9%

Texas

11.0%Texas

11.0%

17

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

16.1% 14.2% 17.3%

10.7%8.7%

13.6%

12.2%7.7%

12.0%

14.6%

13.7%

10.5%

6.8%

8.7%5.8%

10.2%

10.4%6.3%

6.3%

4.9%11.0%

6.3%

10.4%6.8%

4.9% 10.4% 8.9%

10.4%

7.9%

New York

Great Plains

Mid-Atlantic

Texas

Northwest

Southwest

Great Lakes

Southeast

New England

California

Q2 2013 Share of Angel Group Deals by Region

Q1 2013Q2 2012 Q2 2013

10.4%

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New England Takes Lead for Share of Dollars in Q2 2013Share of Angel Group Dollars by Region Q2 2013

California

17.1%

Northwest

4.6%

Southwest

4.5%

Great Plains

9.7%Great Lakes

14.5%

Southeast

10.1%

Mid-Atlantic

8.9%

New England

18.7%

New York

5.9%

Texas

6.1%

Texas

6.1%

19

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

19.3% 16.6% 17.1%

8.2% 9.6%18.7%

8.3% 10.1%

10.1%16.5% 11.5%

14.5%7.7%

11.7%

4.4%6.7% 6.7%4.6%

9.2% 8.9% 6.1%

8.5%10.8% 9.7%

5.3% 7.2% 5.9%

6.8% 8.9%

New York

Great Plains

Mid-Atlantic

Texas

Northwest

Southwest

Great Lakes

Southeast

New England

California

3.7%

Q2 2013 Share of Angel Group Dollars

Q1 2013Q2 2012 Q2 2013

20

Sector Trends

21

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

30.9% 35.2% 37.2%

23.0%19.8% 19.9%

12.7% 14.8% 13.6%6.4% 3.3% 6.3%7.8% 7.7%

5.8%8.8%

2.2%4.2%

1.0%2.2%

1.6%9.3%

14.8% 11.5%Other

Energy & Utilities

Software

Computer Hdwr & Svcs

Industrial

Mobile & Telecom

Healthcare

Internet

Internet, Healthcare & Mobile Deals Combine for 70% of Q2 2013 Deals Q2 2013 Share of Angel Group Deals by Sector

Q1 2013Q2 2012 Q2 2013

22

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

32.2% 35.8%30.3%

27.2% 23.1% 35.9%

13.4% 14.2%

12.7%5.8% 6.5%

5.1%7.3% 4.2%3.2%

9.1% 5.8%0.9% 2.7%4.2%

8.8%4.4%

Other

Energy & Utilities

Software

Computer Hdwr & Svcs

Industrial

Mobile & Telecom

Healthcare

Internet

2.1%3.4%

Q2 2013 Share of Angel Group Dollars by Sector

Q2 2012 Q1 2013 Q2 2013

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About the Halo Report™

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What is the Halo Report™?

Angel Group Investment Trends: The Angel Resource Institute, Silicon Valley Bank and

CB Insights set out to raise awareness of early stage investment activities by angel

investment groups. The Halo Report is the result. The research series highlights angel

investment activity and trends in North America and provides much sought after data that

has not been previously available to entrepreneurs or early stage investors.

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.

Get Involved: Angel groups and individual angel investors interested in including their

data in the Halo Report should contact Sarah Dickey, ARI Vice-President of Research:

913-894-4700 and sdickey@angelcapitalassociation.org.

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Understanding the Data: Special Round Types and Industry Sectors

The Halo Report™ provides analysis and trends on US angel and angel group activity.

Angels and angel groups invest alone, together, and with many other types of investors. Unless otherwise noted the Halo Report data includes all rounds that have at least one angel group participating and may include other types of investors in those rounds.

This report discusses angel group investment trends for 1H 2013, which represents a total of 379 deals and $461M in total rounds including co-investors.

A few charts report on an “Angel Round,” a special classification of investment when angel groups invest alone or just with other angels and angel groups.

Unless otherwise noted, values of less than <1% are included, but are not labeled or noted as a change in activity.

Internet Mobile & Telecom Software Energy & Utilities Computer Hardware & Services Healthcare

Industrial Automotive & Transportation Business Products & Services Consumer Products & ServicesElectronics Environmental Services & Equipment

Financial Services Food & Beverages Leisure Media Metals & Mining Retail Risk & Security

Halo Report Industry Sectors

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Angel Resource InstituteSarah Dickey, sdickey@angelcapitalassociation.orgThe 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 Carrie Walsh, cwalsh@svb.comSilicon 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 U.S. 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 InsightsAnand Sanwal, asanwal@cbinsights.comCB 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, BusinessWeek and Fast Company among others.  For more information, visit http://www.cbinsights.com.

Halo Report Contacts

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Angel Resource Institute and Silicon Valley Bank co-produce the Halo Report™ with data powered by CB Insights. Angel Resource Institute and CB Insights are independent third parties and are not affiliates of Silicon Valley Bank. This material, including without limitation to the statistical information herein, is provided for informational purposes only. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction.  ©2012 SVB Financial Group. All rights reserved. SVB>, SVB Financial Group, and Silicon Valley Bank are registered trademarks.