How would angel groups fare if evaluated on the criteria we use to evaluate VC funds? We applied our Investor Mosaic algorithms to answer this and other questions about elite angel investment groups. For reference, Investor Mosaic takes into account factors such as past performance, network strength (who they know), selection aptitude and brand among other factors, and quantifies them to score and quantitatively rank investors. Specifically, we looked at 370 angel groups that have made at least one investment over the past two years.
The top-ranked group is Life Science Angels and also includes well known names like New York Angels and Sand Hill Angels, as well as more geographically-specific groups like Maine Angels, Central Texas Angel Network, and Pasadena Angels.
The full analysis highlights who the top angels are and then details some of the Investor Mosaic dimensions that may be of interest and some other trends among the top angel investors:
- Who are the top 20 angel groups?
- Which angel groups have the best network?
- Which angel groups have the highest investment follow-on rate?
- Which sectors are the top 20 angel groups focused on?
- Where are the top 20 angel groups investing geographically?
Life Science Angels top angel group rankings
Life Science Angels ranked first among all angel groups based on Investor Mosaic. The healthcare-focused angel group based out of Silicon Valley has invested in Zogenix, a pharmaceutical company which went public in 2010, as well as Nanostim, a medical device which was acquired by St. Jude Medical for up to $188.5M, among others.
Queen City Angels and Boston Harbor Angels rounded out the top 3 as both their “hit rate” and exits were among the best of all angel groups. Cincinatti-based Queen City Angels’ notable investments included a pair of Ohio-based healthcare companies in Akebia Therapeutics, a biopharmaceutical company that went public in March 2014 at a $310.9M valuation, and Aerpio Therapeutics, a clinical-stage biopharmaceutical company focused on therapies for vascular diseases.
Boston Harbor Angels’ notable investments also featured a biotech insulin company Smart Cells, which was acquired by Merck for $500M, as well as data storage company Carbonite, which went public in 2011 at a $325M valuation.
In all three cases, the notable investments were in companies that were local to each investor group. See below for the full rankings.
Tech Coast Angels has the strongest network
The network of an investor is incredibly important both for raising additional capital, as well as strategic expertise in a given area. Tech Coast Angels, which claims to be the largest angel investment organization in the US, features over 300 members covering all of Southern California and led all angel groups in terms of network centrality – a measure of network strength. Palisades Ventures was the most prolific follow-on VC for Tech Coast Angels, as the LA-based VC shares multiple portfolio companies with Tech Coast Angels.
Heading north, Sand Hill Angels ranked second in network centrality among all angel groups. The 100+ member group, which ranked in the top 3 most active angel groups in the Q1 2014 Halo Report, most often sees follow-on investments from VCs such as New Venture Partners, DFJ Gotham Ventures, and ECentury Capital. Their recent investments include participation in restaurant tech company NoWait’s $10M Series B, as well as Storefront’s $7.3M Series A. The full rankings below.
Maine Angels has the highest follow-on rate
Another factor in evaluating angel groups is their ability to get their portfolio companies follow-on funding. When analyzing all angel groups with 10+ investments that were eligible for follow-on funding (investment made >13 months ago and which remained private), Maine Angels ranked first with over 80% of all investments raising follow-on funding including EzCater, Netclarity, JamHub, and others.
Rounding out the top 5 was Launchpad Venture Group, Atlanta Technology Angels, Northern Kentucky Angel Investment Network, and Alliance of Angels. Of note, only 2 of the top 20 angel groups by follow-on rate were based in California (Sand Hill Angels, Life Science Angels), a sign that perhaps location in a major market is not the most important factor in follow-on fundraising. It also underscores the fact that angel groups help to fill a gap in markets where VC may not be as prevalent.
Internet & Healthcare take the majority of the deal share
On a sector basis, the top 20 angel groups have invested heavily in both Internet and Healthcare startups since 2011 with the two sectors combining for 55% of all deals in the timeframe. Healthcare and Internet investments were spread across 1100 deals with rounds totaling over $2.7B. Practice Fusion is a high flyer which Band of Angels invested in and which received a recent $85M investment from top tier VC firms including Kleiner Perkins Caufield & Byers and Felicis Ventures.
California accounts for 1/3 of deals, but geographic diversity remains high
California led all states in terms of deal share of the top 20 angel groups’ investments since 2011 at 33%, with 7 of the top 20 angel groups being based in CA. Massachusetts and Washington rounded out the top 3 with a 13% deal share each, with 3 of the 20 groups being based in MA (Golden Seeds, Launchpad Venture Group, Boston Harbor Angels), while Alliance of Angels participated in a high number of local, Washington-based investments.
Overall the top 20 angel groups were very diverse geographically with their headquarters spanning 10 different states including Arizona (Desert Angels, Arizona Tech Investor Forum), Georgia (Atlanta Technology Angels), New York (New York Angels, TiE Angels), Ohio (Queen City Angels), Pennsylvania (BlueTree Allied Angels), South Carolina (Upstate Carolina Angel Network), and Texas (Central Texas Angel Network), in addition to the previously mentioned California, Massachusetts, and Washington.
The geographic diversity is not surprising as angel groups are often dedicated to investments in a specific region that might not be as heavily penetrated by larger VC firms as other major markets. As the creation of new Micro VC funds continues, it will be interesting to see which angel investors spin out from angel groups to form their own funds, and how that affects angel groups in more saturated markets moving forward.
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photo credit: Dvidshub // Flickr