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transcript
8/27/2015
1
Returns to Angels In
Groups
August 26, 2015
Rob Wiltbank, PhD
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8/27/2015
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• Mission: Fuel the success of angel groups and accredited
individuals active in in the early-stage landscape
• World’s largest trade group for angel investorso 220+ angel groups
o 13,000 accredited investors
o Voice of accredited individuals,
portals, and family offices
• 50 US states + Canada
• Research/ education partner
MEMBER GROUPS & ACCREDITED PLATFORMS
New Dominion Angels
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ACA PARTNERS
GOLD
Robert E Wiltbank, Ph.D.
Willamette University
Angel Fund
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-
10
20
30
40
50
60
<1X 1X to 5X 5X to 10X 10X to 30X >30X
Exit Multiple
Percen
t o
f E
xits
Distribution of Returns by Venture
Investment
Red Bars: U.K. % of exits in that Category
Blue bars: U.S. % of exits in that Category
UK: Overall Multiple: 2.2X
Holding Period: 3.6 years
US: Overall Multiple: 2.6X
Holding Period: 3.5
years Approx 22% IRRApprox 27% IRR
-
10
20
30
40
50
60
<1X 1X to 5X 5X to 10X 10X to 30X >30X
Exit Multiple
Percen
t o
f E
xits
Distribution of Returns by Venture
Investment
Red Bars: U.K. % of exits in that Category
Blue bars: U.S. % of exits in that Category
UK: Overall Multiple: 2.2X
Holding Period: 3.6 years
US: Overall Multiple: 2.6X
Holding Period: 3.5
years Approx 22% IRRApprox 27% IRR
10% of investments
produce
90% of Cash
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-
10
20
30
40
50
60
<1X 1X to 5X 5X to 10X 10X to 30X >30X
Exit Multiple
Percen
t o
f E
xits
Distribution of Returns by Venture
Investment
Red Bars: U.K. % of exits in that Category
Blue bars: U.S. % of exits in that Category
UK: Overall Multiple: 2.2X
Holding Period: 3.6 years
US: Overall Multiple: 2.6X
Holding Period: 3.5
years Approx 22% IRRApprox 27% IRR
Due Diligence
Industry Expertise
Follow On from Same
Angel
-
10
20
30
40
50
60
<1X 1X to 5X 5X to 10X 10X to 30X >30X
Exit Multiple
Percen
t o
f E
xits
Distribution of Returns by Venture
Investment
Red Bars: U.K. % of exits in that Category
Blue bars: U.S. % of exits in that Category
UK: Overall Multiple: 2.2X
Holding Period: 3.6 years
US: Overall Multiple: 2.6X
Holding Period: 3.5
years Approx 22% IRRApprox 27% IRR
Hold: 3.0 yrs.
Hold: 3.3 yrs.
Hold: 4.6 yrs.
Hold: 4.9 yrs. Hold: 6.0+ yrs.
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Private Acquisition by Public: Price from ‘96 to ‘06
Only 15%> $50M
Private Acquisition by Public: Price from ‘96 to ‘06
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Acquisitions of Private Ventures by Public Corporations
Paid In Capital Range Deal Count
Median
Price
Median Paid
in Capital
Median
Multiple
Sum of
Price
Sum Paid In
Capital
Aggregate
Multiple
Aggregate
Profit
Profit $'s
per deal
Hypothetical
ROI
$5M-$100M 322 60.2 14.0 3.5 34,914 8,260 4.2 26,654 82.8 20% 30% failure rate
under $5M 1,359 10.3 0.2 53.6 35,741 931 38.4 34,810 25.6 48% 70% failure rate
Whole Sample 1,530 14.8 0.5 24.5 70,655 9,192 7.7 61,463 40.2 29%
Includes ONLY deals with a MULTIPLE OF AT LEAST 1
Includes ONLY deals with complete data (70% of transactions)
Diminishing Returns to Invested Capital
Public buying Private: Acquisitions from ‘96 to ’06
Includes only exits of multiple >1
Includes only those with complete data
• Smaller venture deals do get to exits
• The returns to those deals are quite attractive
ROI equates if 3 and 7 year holding periods
ROI equates if smaller deals fail 91% of the time
Acquisitions of Private Ventures by Public Corporations
Paid In Capital Range Deal Count
Median
Price
Median Paid
in Capital
Median
Multiple
Sum of
Price
Sum Paid In
Capital
Aggregate
Multiple
Aggregate
Profit
Profit $'s
per deal
Hypothetical
ROI
$5M-$100M 322 60.2 14.0 3.5 34,914 8,260 4.2 26,654 82.8 20% 30% failure rate
under $5M 1,359 10.3 0.2 53.6 35,741 931 38.4 34,810 25.6 48% 70% failure rate
Whole Sample 1,530 14.8 0.5 24.5 70,655 9,192 7.7 61,463 40.2 29%
Includes ONLY deals with a MULTIPLE OF AT LEAST 1
Includes ONLY deals with complete data (70% of transactions)
Diminishing Returns to Invested Capital
Public buying Private: Acquisitions from ‘96 to ’06
Includes only exits of multiple >1
Includes only those with complete data
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Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Acceleration
Larger Wins
Pain of Capital Intensity
Diminishing Returns to Raising Capital
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Variable N= 539 Burners N=514 Earners
Test of
Significant
Difference
Inc Year 1994 1987 0.000
Seller Population 16,643,472 11,136,083 0.000
Exit year 2001 1999 0.000
Tech Bubble 0.28 0.11 0.000
Exit VC activity (M's) 288.5 144.3 0.000
Founding VC Activity (M's) 238.4 115.7 0.000
Same State 0.32 0.25 0.006
Shareholder's Equity (M's) -2.17 3.56 0.000
Assets (M's) 12.79 9.63 0.007
Revenue (M's) 16.84 18.33 0.449
Retained Earnings (10,310,733.73) 3,310,482.26 0.000
Paid in Capital 13,919,446 95,055 0.000
Total Cashout 37,051,885 18,442,152 0.000
Years 6.5 12.2 0.000
Avg Growth Rate 266.3% 188.8% 0.006
Deal Profit Dollars 22,236,724 18,347,816 0.064
Return on Capital 16.3% 53.8% 0.046
Acceleration
Larger Wins
Pain of Capital Intensity
Diminishing Returns to Raising Capital
• Raise past $1.1M = marginal effect of dilution >
acceleration
8/27/2015
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2015 U.S. Angel Investor Returns Study Underway
Completely Private & Confidential
ARIHaloReport.com/returns2015
Very PRACTICAL researchWhat are the returns to group angel investing? Are there strategies that improve returns?
With YOUR help it will be the largest data set ever collected.
Even if no exits yet, please participate, takes only a few minutes.
ARIHaloReport.com/returns2015
$0.3
$0.5 $0.5$0.6
$0.8$0.56
$0.73 $0.83
$1.00
$1.64
$0.0
$0.5
$1.0
$1.5
$2.0
2010 2011 2012 2013 2014
Mill
ion
s U
SD
Median Round Size Mean Round Size
Median and Mean Round Sizes – Angels Only2014 Sees Both Mean & Median Angel Round Size Increase Significantly
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Median Round Sizes Up Across IndustriesDeal Size Up Across The Board, Healthcare Deals Show Largest Increase
$1.00
$0.75 $0.81
$1.57
$1.10 $1.12
$2.00
$1.20 $1.23
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
Healthcare Internet Mobile / Telecom
Mill
ion
s U
SD
2012 2013 2014
Median Seed Stage Pre-Money ValuationMedian Valuation Up 20% From 2013, Highest Ever Top Valuation In HALO
$0.30M
$13.5M
MEDIAN :
$3.0M
3rd Quartile:
$4.4M
1st Quartile:
$2.0M
$9.3M
3rd Quartile:
$4.2M
$2.5MMEDIAN :
1st Quartile:
$1.4M
$0.50M
2013 2014
8/27/2015
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For more information about ARI’s educational programs, contact Jessi Freitag at jessi@angelresource.org, or 503.406.8802.
Interested in continuing to grow your knowledge on early-stage investing?
Popular courses include:• Angel Investing Overview• Trends in Raising Capital• Starting an Angel Group
ARI has successfully delivered nearly 400 programs in the US and in 40 other countries, covering all aspects of early-stage investing and entrepreneurship. Every program is taught by an exited investor with more than 10 years of experience in
early-stage ventures.
Robert E Wiltbank,
Ph.D.
Wiltbank@Willamette.edu
ARIHaloReport.com/returns2015
8/27/2015
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ADDITIONAL RESOURCES
Marianne HudsonExecutive DirectorAngel Capital Association
Christopher MirabileManaging Director, Launchpad; Board Chair, Angel Capital Association
http://www.angelcapitalassociation.org/news-forbes/
http://www.angelcapitalassociation.org/news-inc/
THANK YOU!
UPCOMING
WEBINARS
September 9, 2015: Key Practices of
Expert Entrepreneurs, Rob Wiltbank,
PhD
September 23, 2015: Best Practices:
Portfolio Strategy, Bill Payne, Angel
Resource Institute
Webinar programs archived
at:www.angelcapitalassociation.org/ev
ents/webinars/
Audience
Questions
8/27/2015
13
UPCOMING ACA EVENTS
• October 21, 2015: New England Regional Meeting – Boston, MA
• October 23, 2015: Southwest Regional Meeting - Tucson, AZ
• November 9 – 10, 2015: Angel Insights Exchange, New Orleans, LA
• May 9 – 11, 2016: ACA Summit, Philadelphia, PA
• http://www.angelcapitalassociation.org/events/