rob wiltbank, phd - angel capital association slide... · years 6.5 12.2 0.000 avg growth rate...

8/27/2015

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Returns to Angels In

Groups

August 26, 2015

Rob Wiltbank, PhD

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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


Investment






Holding Period: 3.5


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


Investment






Holding Period: 3.5


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


Investment






Holding Period: 3.5


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


Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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



Acceleration

Larger Wins

Pain of Capital Intensity

Diminishing Returns to Raising Capital


Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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




Test of

Significant

Difference

Inc Year 1994 1987 0.000


Exit year 2001 1999 0.000

Tech Bubble 0.28 0.11 0.000



Same State 0.32 0.25 0.006


Assets (M's) 12.79 9.63 0.007

Revenue (M's) 16.84 18.33 0.449


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



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.


$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 [email protected], 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.

[email protected]


mailto:[email protected]

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/

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Questions

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http://www.angelcapitalassociation.org/events/webinars/

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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/

http://www.angelcapitalassociation.org/events/

rob wiltbank, phd - angel capital association slide... · years 6.5 12.2 0.000 avg growth rate...

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