Angel Resource Institute 2020 TM Report HAnnual ReportL onO Angel Investments AGGREGATED NATIONAL & REGIONAL DATA The HALO Report TM is a collaborative effort of the Angel Resource Institute TM and Pitchbook TM intended to raise awareness of early stage investment activities highlighting trends that may inform our decisions and impact opportunities for angels and entrepreneurs. HALO ReportTM Partners HALO REPORT TM CONTENTS The 2020 HALO Report: A Retrospective Look at a Pivotal Year .....................3 2020 HALO Report Highlights & Trends ....................4 Geographic Analysis of Investor Regions ...................5 Non-US funding to US companies ................................9 The Top 10 Angel Groups ...............................................9 Deal Structure and Investment Stage Statistics ... 10 Overall Financial Statistics (2020 Seed & Series A) ............................................... 11 Report Contacts Three Years’ Data: Gwen C. Edwards Seed / Series A Investment Metrics ........................ 12 Angel Resource Institute, Board of Trustees Industry Analysis .............................................................. 13 Industry Segments & Valuation .................................. 14 ARI Data Team [email protected] Industry Statistics ............................................................ 15 Gender & Ethnicity .......................................................... 16 Gender & Ethnicity - Regional Comparisons .......... 17 Capital Raising Attributes - Seed Deals Only ......... 18 CEO Gender & Ethnicity by Industry ......................... 22 Super Angels ..................................................................... 23 Notable Changes to the Landscape for Angels ..... 25 For more information about ARI, please visit angelresource.org National Summary & Regional Statistics ................ 26 ©2021 | Angel Resource Institute About the HALO Report .............................................. 37 Page 2 of 38 The 2020 HALO Report: A Retrospective Look at a Pivotal Year The year 2020 was one that stressed all systems, ments going. New Seed? Too risky! Many groups Some of our findings: including the purse strings of entrepreneurs slowed their meeting schedules, others continued 1. Investors in our study put $4.62B to work vs and investors alike. The new Black Swan was to meet over Zoom, but with a focus on protect- $4.33B in 2019; and more in Seed compa- the Covid-19. In retrospect we observed strong ing current investments vs investing new capital nies in a year over year comparison: $2.84B entrepreneurial spirit at every turn. Ingenuity into new companies – the riskiest of all. vs $2.5B. By Q4 investor optimism was high, and adaptability emerged in our systems. We This reserve did not last long. Entrepreneurial despite continued economic and political saw winners and losers, but with an array of new uncertainty. opportunities. activity continued under these new, evolving conditions, while angel investing direction and 2. California rose for the first time in a few years As Covid hit our world, our Nation and the angel processes evolved as well. to 21% of all transactions going to Califor- community, major questions immediately arose nia based companies; while the South East -- Will education ever be the same? Health Care? Within less than 6-7 months, we were back to Region is clearly a region on the move. investing in these new Seed Deals, as investors The notion of “9-5” in office? Retail? How we use 3. Traditional business categories continue to our homes? What role would government play, saw better valuations, more well tested MVPs, and more companies solving real problems. Over be muddled. “Prop Tech” in the real estate both in attacking the immediate problem of the category, and materials science companies virus and in mitigating the effects of the virus on the year, the price of Series A rounds rose, while Series Seed declined. in either biotech or material science. We saw the economy? Uncertainty abounded! So much chemical companies as CBD and CBD compa- was already positioned to be disrupted before the Our study stands as a solid summary of almost nies as Pharma. pandemic hit that Covid-19 accelerated. 2,000 early stage companies and the capital they 4. We saw a decrease in the disparity between And we saw social systems disturbed, across raised in this remarkable year of economic and male and female entrepreneurs along our gender and ethnicity, as CEOs -- women and men social disruption. investment metrics, as both CEOs faced -- became home teachers for their families, and pressure to do more with less. And we saw women for the first time in decades found them- that ethnic female leaders had the greatest selves having to choose between family and ca- challenges per these metrics. Which led us to reer. Entrepreneurs of color found more reasons a deeper dive into the statistics. to rethink, to speak out, and to innovate. 5. We saw more Super Angels and more cor- Somehow, amidst all of the disruption, almost all porate Super Angels and learned they are of our angel led companies weathered the storm. paying 50% less than other angels. By mid-March most angels were in hyper alert 6. We saw more angels staying close to home mode, focused on existing companies in their with their investments than in over a decade. portfolios, advising on cost cutting measures, and securing enough capital to keep their invest- 2020 was a unique year in many ways. We hope this report serves to inform and inspire. Page 3 of 38 2020 HALO Report Highlights & Trends The Year of the Pandemic -- Angel Investing in a Disrupted Economy The 2020 Halo Report is based on an analy- Our focus remains most intently on these early sis of 2,198 transactions completed in 2020. stage deals. Our goal is to continue to serve Our focus continued to be on Seed and Series the angel community with relevant data on A companies. We noted 55 identified Later trends, challenges, and opportunities from as Stage transactions, and included them in our large a set of transactional data as possible. New vs. Follow On count, but excluded them in the analysis of other metrics. This enabled us We continue to thank the many angel groups to analyze 1664 Seed Stage Transactions, and who provide us their data, and enhance the 285 Series A Transactions. In addition, there quality of this study, along with our research are 194 Transactions that are prior to Series B, partner relationship with Pitchbook. but where the Stage was not clearly identifi- able. These transactions represented a total of $4.617B invested, of which $2.84B is clearly Seed or Pre-Seed, and $1.024B is Series A, ( A1, or a convertible note leading to a Series A). Data Validation & Methodology, 2020 HALO Report TM Angels and angel groups invest alone, together, and with many Data was sourced directly from angel groups through the Angel This material and report, including (without limitation) other types of investors. Unless otherwise noted, the 2020 HALO Resource Institute’s data portal (www.arihaloreport.com), via the statistical information provided herein, is intended for Report TM data includes funding rounds that have at least one email, from direct conversations with group leaders or their informational purposes only. The material is based in part on angel group or Super Angel participating and may include other administrators, and/or via Pitchbook. When required/available, the information from third-party sources that are believed to be types of investors in those rounds. Note that “Median Angel Group SEC Form D was reviewed to validate “round size” vs. “equity sold”. reliable, but which have not necessarily been independently Investment” is the median size of reported investments made by verified; for this reason, the information is not represented as Angel groups in the reported deals. There are many groups that Some charts include statistics for data outside of the United accurate or complete. The information should not be viewed as have the capability of making significantly higher investments; States. To maintain readability we included a “z_” prefix to force tax, investment, legal or other advice, nor is it to be relied upon however, the 2020 data showed that many of these groups also presentation of this data to the bottom of the chart or graph when in making any investment or other decisions. You should obtain invested smaller amounts of capital. It is important to note that it made sense to do so. relevant and specific professional advice before making any the “Median Funding Round Size” includes investments from Angel investment decision. Nothing relating to this material should be groups and non-angel groups including venture capital funds and construed as a solicitation, offer, or recommendation to acquire or family offices. dispose of any investment, or to engage in any other transaction. Page 4 of 38 Geographic Analysis of Investor Regions Where are the deals located? 7.62% For the first year in a long time, California’s percent of total deals in the US exceeded 21%. 8.42% The other regions were not markedly different 3.96% 10.25% from 2019, with the exception of NY, which de- creased by 1.75% as a percent of total US deals 7.71% in Seed and Series A. 8.87% The second most active region in the US in 2020 was again the South East at almost 16%, followed by the South West, also again over 21.10% 10% of total deals nationwide. The Great 10.18% Lakes, North West, Mid Atlantic, and New York were all close between 8.87 and 8.37 as a % of 15.74% total early stage deals, followed by the North East, Texas, and Great Plains. 7.22% It appears that more companies in California found financing in this difficult year, with vi- brancy continuing in the South East and South West. New York companies seeking capital appear to have been more impacted by the pandemic relative to 2019, with a slight de- cline in total numbers funded. * Puerto Rico included with South East Region, Hawaii with California, and Alaska with the North West region. Page 5 of 38 overall outside of one’s region of all investments across the country, and 27% even at par with 2019.