Returns to Angels In Groups

Transcription

1 Returns to Angels In Groups August 26, 2015 Rob Wiltbank, PhD Use chat to submit questions Yes, you ll get the slides We re recorded, so come back and listen again 1

2 Mission: Fuel the success of angel groups and accredited individuals active in in the early-stage landscape World s largest trade group for angel investors o 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 2

3 ACA PARTNERS GOLD Robert E Wiltbank, Ph.D. Willamette University Angel Fund 3

4 60 Distribution of Returns by Venture Investment US: Overall Multiple: 2.6X Holding Period: 3.5 Approx 27% years IRR UK: Overall Multiple: 2.2X Holding Period: 3.6 years Approx 22% IRR Percent of Exits <1X 1X to 5X 5X to 10X 10X to 30X >30X Red Bars: U.K. % of exits in that Category Blue bars: U.S. % of exits in that Category Exit Multiple Distribution of Returns by Venture Investment US: Overall Multiple: 2.6X Holding Period: 3.5 Approx 27% years IRR UK: Overall Multiple: 2.2X Holding Period: 3.6 years Approx 22% IRR Percent of Exits % of investments produce 90% of Cash 10 - <1X 1X to 5X 5X to 10X 10X to 30X >30X Red Bars: U.K. % of exits in that Category Blue bars: U.S. % of exits in that Category Exit Multiple 4

5 60 50 Distribution of Returns by Venture Investment US: Overall Multiple: 2.6X Holding Period: 3.5 Approx 27% years IRR UK: Overall Multiple: 2.2X Holding Period: 3.6 years Approx 22% IRR 40 Percent of Exits Due Diligence Industry Expertise Follow On from Same Angel 10 - <1X 1X to 5X 5X to 10X 10X to 30X >30X Red Bars: U.K. % of exits in that Category Blue bars: U.S. % of exits in that Category Exit Multiple Distribution of Returns by Venture Investment Hold: 3.0 yrs. US: Overall Multiple: 2.6X Holding Period: 3.5 Approx 27% years IRR UK: Overall Multiple: 2.2X Holding Period: 3.6 years Approx 22% IRR Percent of Exits Hold: 3.3 yrs. 10 Hold: 4.6 yrs. Hold: 4.9 yrs. Hold: 6.0+ yrs. - <1X 1X to 5X 5X to 10X 10X to 30X >30X Red Bars: U.K. % of exits in that Category Blue bars: U.S. % of exits in that Category Exit Multiple 5

6 Private Acquisition by Public: Price from 96 to 06 Private Acquisition by Public: Price from 96 to 06 Only 15%> $50M 6

7 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 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 ,914 8, , % 3 under $5M 1, , , % 7 Whole Sample 1, ,655 9, , % 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 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 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 Aggregate Profit Profit $'s per deal Hypothetical ROI $5M-$100M ,914 8, , % 3 under $5M 1, , , % 7 Whole Sample 1, ,655 9, , % Includes ONLY deals with a MULTIPLE OF AT LEAST 1 Includes ONLY deals with complete data (70% of transactions) 7

8 Inc Year Significant Test of Variable Seller Population N= ,643,472 Burners N=514 11,136,083 Earners Difference Significant Variable Inc Exit Year year N= 539 Burners N=514 Earners Difference Inc Seller Tech Year Bubble Population 16,643, ,136, Diminishing Returns to Raising Capital Seller Exit year VC Population activity (M's) 16,643, ,136, Exit Tech Founding year Bubble VC Activity (M's) Tech Exit Same VC Bubble State activity (M's) Exit Founding Shareholder's VC activity VC Equity Activity (M's) (M's) Founding Same Assets State (M's) VC Activity (M's) Test of Same Shareholder's Revenue State (M's) Equity (M's) Significant Shareholder's Assets Retained Variable (M's) Earnings Equity (M's) N= (10,310,733.73) 539 Burners N=514 3,310, Earners Difference Assets Revenue Paid Inc Year in Capital (M's) 13,919, , Revenue Retained Total Seller Cashout Population (M's) Earnings (10,310,733.73) 37,051,885 16,643, ,310, ,442,152 11,136, Acceleration Retained Paid Years Exit year Capital Earnings (10,310,733.73) 13,919, ,310, , Paid Total Avg Tech Growth in Cashout Bubble Capital Rate 13,919,446 37,051, % ,442,152 95, % Larger Wins Total Years Deal Exit VC Profit Cashout activity Dollars (M's) 37,051,885 22,236, ,442,152 18,347, Years Avg Return Founding Growth on VC Capital Rate Activity (M's) 266.3% 16.3% % 53.8% Pain of Capital Intensity Avg Deal Same Growth Profit StateDollars Rate 22,236, % ,347, % Deal Return Shareholder's Profit on Capital Dollars Equity (M's) 22,236, % ,347, % Return Assets on (M's) Capital 16.3% % Revenue (M's) Retained Earnings (10,310,733.73) 3,310, Paid in Capital 13,919,446 95,055 Total Cashout 37,051,885 18,442,152 Years Avg Growth Rate 266.3% 188.8% Deal Profit Dollars 22,236,724 18,347, Return on Capital 16.3% 53.8% Inc Year Significant Test of Variable Seller Population N= ,643,472 Burners N=514 11,136,083 Earners Difference Significant Variable Inc Exit Year year N= 539 Burners N=514 Earners Difference Inc Seller Tech Year Bubble Population 16,643, ,136, Diminishing Returns to Raising Capital Seller Exit year VC Population activity (M's) 16,643, ,136, Exit Tech Founding year Bubble VC Activity (M's) Tech Exit Same VC Bubble State activity (M's) Exit Founding Shareholder's VC activity VC Equity Activity (M's) (M's) Founding Same Assets State (M's) VC Activity (M's) Test of Same Shareholder's Revenue State (M's) Equity (M's) Significant Shareholder's Assets Retained Variable (M's) Earnings Equity (M's) N= (10,310,733.73) 539 Burners N=514 3,310, Earners Difference Assets Revenue Paid Inc Year in Capital (M's) 13,919, , Revenue Retained Total Seller Cashout Population (M's) Earnings (10,310,733.73) 37,051,885 16,643, ,310, ,442,152 11,136, Acceleration Retained Paid Years Exit year Capital Earnings (10,310,733.73) 13,919, ,310, , Paid Total Avg Tech Growth in Cashout Bubble Capital Rate 13,919,446 37,051, % ,442,152 95, % Larger Wins Total Years Deal Exit VC Profit Cashout activity Dollars (M's) 37,051,885 22,236, ,442,152 18,347, Years Avg Return Founding Growth on VC Capital Rate Activity (M's) 266.3% 16.3% % 53.8% Pain of Capital Intensity Avg Deal Same Growth Profit StateDollars Rate 22,236, % ,347, % Deal Return Shareholder's Profit on Capital Dollars Equity (M's) 22,236, % ,347, % Return Assets on (M's) Capital 16.3% % Revenue (M's) Retained Earnings (10,310,733.73) 3,310, acceleration Paid in Capital 13,919,446 95,055 Total Cashout 37,051,885 18,442,152 Years Avg Growth Rate 266.3% 188.8% Deal Profit Dollars 22,236,724 18,347, Return on Capital 16.3% 53.8% Raise past $1.1M = marginal effect of dilution > 8

9 Millions USD 8/27/ U.S. Angel Investor Returns Study Underway ARIHaloReport.com/returns2015 Very PRACTICAL research What are the returns to group angel investing? Are there strategies that improve returns? Completely Private & Confidential 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 Median and Mean Round Sizes Angels Only 2014 Sees Both Mean & Median Angel Round Size Increase Significantly $2.0 $1.64 $1.5 $1.00 $1.0 $0.5 $0.56 $0.3 $0.73 $0.83 $0.5 $0.5 $0.6 $0.8 $ Median Round Size Mean Round Size 9

10 Millions USD 8/27/2015 Median Round Sizes Up Across Industries Deal Size Up Across The Board, Healthcare Deals Show Largest Increase $2.5 $2.0 $2.00 $1.57 $1.5 $1.0 $1.00 $0.75 $1.20 $1.23 $1.10 $1.12 $0.81 $0.5 $0.0 Healthcare Internet Mobile / Telecom Median Seed Stage Pre-Money Valuation Median Valuation Up 20% From 2013, Highest Ever Top Valuation In HALO $9.3M $13.5M rd Quartile: $4.2M 3 rd Quartile: $4.4M MEDIAN : $2.5M MEDIAN : $3.0M 1 st Quartile: $1.4M 1 st Quartile: $2.0M $0.50M $0.30M 10

11 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 For more information about ARI s educational programs, contact Jessi Freitag at jessi@angelresource.org, or 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. ARIHaloReport.com/returns2015 Robert E Wiltbank, Ph.D. Wiltbank@Willamette.edu 11

12 ADDITIONAL RESOURCES Marianne Hudson Executive Director Angel Capital Association Christopher Mirabile Managing Director, Launchpad; Board Chair, Angel Capital Association ews-forbes/ ews-inc/ THANK YOU! UPCOMING WEBINARS Audience Questions 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: ents/webinars/ 12

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 13