While angel networks and corporates too have increased deal participation in early stages, angel investors need to wait longer for exit rounds, as per the latest ‘LetsVenture Early Stage Investing Report 2017’.
The report, which was presented at LetsVenture’s flagship event LetsIgnite 2017 conference in Bengaluru last week, analysed close to 1,800 deals covering 1,450 startups that have raised $710 Mn cumulatively since 2010. Out of this chunk, NCR accounted for $200 Mn, Bengaluru for $150 Mn and Mumbai for $120 Mn.
The first highlight of the report is early stage investor base – which grew 1x in 2016 but with substantial churn.
Meanwhile, the dollar value of early investing stage deals also declined in 2016.
More so, the average early stage deal size declined by almost 10% in 2016 to $0.55 Mn. The report also noted that established angel networks have a median deal size of $440K while for emerging angel networks, the median deal size is $300K.
Another significant highlight of the report was: while the number of seed rounds are growing, the number of follow-on rounds have not been keeping pace. As per the data, of the startups formed in 2015, 377 raised seed rounds but only eight have managed to close Series A rounds.
In 2016, out of the startups formed, 36 raised seed rounds but only one managed to close a Series A round.
A similar trend was noted in Series A rounds which saw fewer new investors coming in this year (37%) as compared to the last year(50%).
Similarly, another cause of concern for angel investors was the number of exit events which too fell in 2016.
However, the data revealed that if there is a marque investor in a seed round, the chances of an exit for an angel investor increases. As per the report, 7.34% of startups that had an exit event had at least one marquee angel, while only 3.9% of startups with no marquee angel had an exit event. Also, 24% of marquee angels saw an exit event, while 16% of other angels saw an exit event. The top 100 angel investors in India count as marquee investors in the report.
The report also noted that first generation entrepreneurs now form almost 50% of the country’s prolific angel investors, followed by corporate executives at 38%, experienced angel investors at 7%, and family wealth at 5%.
What was also noted was that increasingly, angel investors are forming formal/ informal groups based on location, sector or experience. In fact, investing is becoming more social with more unique groups co-investing together in a number of deals.
In the future, more domain/ expertise-based groups are expected to form.
Chaitanya Ramalingegowda, VP investor relations, LetsVenture surmised, “ Angel investing sentiment remained steady in 2016 with a similar number of new angel investors entering the space as in 2015. Lead angels with domain expertise and patience will end up making handsome returns.”
The event also saw the introduction of LetsVenture awards – a set of annual awards to recognise industry leaders, influencers and ecosystem stalwarts in the early-stage investing space based on public data, voting, and external jury.
Most Successful Angel Group – Indian Angel Network
Most Successful Angel Group (Emerging) – 50K Ventures
Best in Class Accelerator (Corporate) – Microsoft Accelerator
Best in Class Accelerator (Independent) – GSF Accelerator