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Investors

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Builders

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Diversity & Inclusion

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Regulation & Policy

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Resources

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03.4

Angels

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Angels Survey Respondents

There has been a growing interest in angel investing in Europe over the past few years. Last year we found the data was scarce and very few studies were conducted on the topic. As such, we created a set of questions specifically targeted to respondents who identified as angel investors in the survey and received close to 100 responses from all over Europe.

58% of angel investors who responded to the survey have been angel investing for over six years. Breaking this down by age group, it becomes clear that respondents belonging to older age groups are more experienced in angel investing. However, the European tech ecosystem has hinted on a shift in paradigm and on greater diversification across angel investor profiles with the continued rise of unicorns and the emergence of talent mafias.

How long have you been angel investing?

Source:
Note:
Angel investor respondents only. Numbers may not add up to 100 due to rounding.

As mentioned above, the European tech ecosystem is proving that both recycled tech talent and capital continue to nurture the ecosystem. Nearly 80% of angel respondents have worked at a tech start-up and or founded their own business and are now focusing on investing in and supporting early stage companies.

Have you worked in a tech start-up or scale-up or started / co-founded a business?

Source:

Legend

  • Yes
  • No
Note:
Angel respondents only.

Expectedly, the majority of angel investor respondents come from a tech background. Nearly 80% of them have had previous experience working at a tech start-up or scale-up mostly as founders, followed by senior leaders and operators in CxO positions. In terms of investing experience, a large number of the angel investor respondents have been a part of wider angel syndicate and, on average, have been investing for over six years.

What was your capacity in the tech start-up or scale-up?

Source:
Note:
Angel investor respondents only.

The next generation of tech leaders now has the opportunity to vote for the teams they believe can build the next global success story out of Europe.

Angel investing has been democratized by the rise of scout programs, with investments no longer just coming from a small pool of previously successful entrepreneurs. The next generation of tech leaders now has the opportunity to vote for the teams they believe can build the next global success story out of Europe. Scout programs are just another measure of Europe’s maturing tech ecosystem, where it has become increasingly common to start a company rather than simply join one. People invest in people and, in a fragmented European market, those best-placed to spot talent early on are often former colleagues at tech companies - where many scout initiatives are now focused.

Sonali De Rycker

Accel

Partner

Investment portfolio diversification varies significantly across angel investors. While 59% of angel investors respondents have made less than 10 investments to date, including nearly a quarter that have made fewer than five, around 4% have built portfolios with over 50 investments. This comes as no surprise; while some angels are more experienced and have been investing over longer periods of time, others are simply just starting out.

How many start-ups do you currently have in your portfolio?

Source:
Note:
Angel investor respondents only.

Investment activity across angel investor respondents provides a forward-looking view and insight into upcoming trends defining the earliest stages of entrepreneurial activity. It's incredibly interesting to understand the categories that are most exciting to Europe's angel investor community, which could potentially define upcoming trends across the ecosystem. Interestingly, angel investor respondents prominently ranked sectors that closely correlate to current macro thematic challenges as ones they are most excited about such as edtech, digital health, biotech/life sciences and climate.

Which sectors are you most excited about?

Source:
Note:
Angel investor respondents only.

It would be safe to assume that European angel investment activity largely plays out in localised ways given the inherent importance and element of relationships at the earliest stages of investment. The survey responses drive a wedge through that assumption. Although nearly a quarter of respondents focus on local investments at the national level, the largest share of angels, nearly half (46%) focus on European-wide investments, while a further 17% focus globally, suggesting that even at the earliest stages, capital flows across European hubs are more interconnected than many might think.

What is your geographical focus for investments?

Source:
Note:
Angel investor respondents only.

The majority of angel investor respondents (61%) have remained consistent in their deployment strategy despite the Covid-19 pandemic, which is broadly aligned with the sentiment shared by VCs. Though angels more frequently cited a slow down in the pace of investments compared to VC respondents, they also more frequently cited in an increase in investment speed.

Since the start of Covid-19, have you revised your deployment strategy?

Source:

Legend

  • Share of angel investors
  • Share of VC investors
Note:
Angel investor and VC respondents only.

At what pace are angels deploying capital? This varies across respondents. Almost a third (27%) are very active and make more than five investments per year on average, while another third (34%) make between 1-2 investments.

How many new investments do you typically do in a year?

Source:
Note:
Angel investor respondents only.

The survey provides insight into the demographics of European angel investors on a self-reported basis. To no surprise, there was a lack of diversity and representation across demographic groups. The share of angels who self-identified as Black, Multi-Ethnic, Asian or Hispanic/Latinx represented 15% of the angel respondents, 23% identified as women and 63% are aged 46 and older. Some existing trends have the potential to change the status quo and have meaningful impact on angel investor demographics. One example is the launch of AngelList's Rolling Venture Funds in the US earlier this year, which has been made possible by a regulatory change by the SEC and the tech infrastructure provided by AngelList. This structure makes it easier for individuals to leverage their reach and experience to raise funds. It also has the potential to enable greater diversity across GPs by opening up access to different LP capital pools. 70 of these rolling funds have been set up in the US by active investors. Their possible arrival in Europe should be encouraged and welcomed.

Angel survey respondents by age group and gender

Source:
Note:
Angel investor respondents only.

Respondents also shared insight into the level of diversity within their angel investment portfolios. It’s interesting to look at founder diversity within angel investor portfolios especially given these early stage companies are at the top of the investment funnel and consequently provide visibility on upcoming talent and deal flow for subsequent institutional investment rounds.

What percentage of your portfolio companies have at least one founder from an underrepresented background in the founding team?

Source:
Note:
Angel investor respondents only. Underrepresented across gender, ethnicity, disability, socioeconomic status.

The newer generation of angel investors, as represented by those that have started to angel invest within the last five years, appear to be investing in a more diverse set of founders. This provides some insight - though not causal evidence - that the pool of founders at the angel investment stage has more recently started to diversify with greater numbers of underrepresented founders.

Share of underrepresented founders by angel experience

Source:

Legend

  • Less or equal to 25%
  • Between 26 and 50%
  • Over 50%
Note:
Angel investor respondents only.

The most established angel investors with the largest portfolios also appear to have invested in a less diverse portfolio of founders.

Share of underrepresented founders by portfolio size

Source:

Legend

  • Less or equal to 25%
  • Between 26 and 50%
  • 50%+
Note:
Angel investor respondents only.

Supporting entrepreneurs and new businesses along with financial returns are the top two motivations for angel investing by our survey respondents. This insight is interesting in the context of the main motivations shared by angel investors for why they are investing in start-ups. For those angels that are former operators, the main motivation is to give back by supporting entrepreneurs and new businesses. Their capital is important, but their operating experience and networks can be even more accretive for the founders they back. It’s important that underrepresented founders are able to access this.

What is your main motivation for investing in start-ups?

Source:
Note:
Angel investor respondents only.

As we highlighted in last year's report, a large share of angel investment activity is not "visible," which makes it hard to track capital flows across Europe in the earliest stage of funding. Still, Dealroom's data supports our survey findings. It is also a helpful proxy for the type of founding teams getting capital and although this only puts the finger on gender imbalances, it is a stark reminder that diversity is an issue at every stage of the stack.

Cumulative capital invested ($M) by angel investors by founding team gender, 2016-2020

Legend

  • Capital invested ($M)
Note:
Data as of 30 September 2020.

Talent Recycling

We gathered a list of over 100 ex-operators from $B+ European companies that had become investors, either through angel or institutional investing. This is not an exhaustive list and is entirely based on manual scraping of publicly available sources, but is a large enough sample to represent the type of investors emerging from the first generation of successful scale-ups.

13 companies count more than three angels actively investing in the European ecosystem and a further 16 have two or less angel alumni. Still it is remarkable to see that Skype, Spotify and Just Eat / Takeaway account for over 40% of the sample cohort.

Share of ex-operator angels by alumni company

Source:
Note:
Numbers don't add up to 100, as some had experience in more than one company.

At my last count there were more than 20 start-ups founded by TransferWise alumni, there are probably many more today. This mini ecosystem is supported with hires, advisory, connections and in many cases angel funding from other ex TransferWisers.

An entrepreneurial mindset is a non-negotiable part of life at TransferWise, we encourage it and we hire for it. Everybody in the business has incredibly hard problems to solve, now just as much as in the earliest days, and an entrepreneurial spirit is essential in overcoming those challenges. At my last count there were more than 20 start-ups founded by TransferWise alumni, there are probably many more today. This mini ecosystem is supported with hires, advisory, connections and in many cases angel funding from other ex TransferWisers. That network is hard to replicate, and incredibly valuable. This very special environment is making more people feel supported to take the leap and solve other hard problems in the world once their time at TransferWise is up.

Taavet Hinrikus

TransferWise

Co-Founder & CEO

Similar to our survey respondents, there is a lack of diversity amongst ex-operators. There were only 10% of underrepresented ethnicities and 8% of women in the sample.

Share of ex-operator angels by ethnicity and by gender

Source:
Note:
Angel investor respondents only.

This is not entirely surprising in turn when looking at the gender composition by C-level title in companies that have raised Series A or Series B. Women represent less than 20% of senior management in these companies.

Gender composition by C-level title

Legend

  • Women
  • Men
Note:
Based on a sample of founders and executives in CxO positions at 348 European VC-backed tech companies that raised a Series A or B round between 1 October 2019 and 30 September 2020 with more than $10M in total funding.

This is not a trend that is changing either. For the past three years, the share of CTOs has been at stagnating at a mere 1% and this is not by lack of talent in the ecosystem. The system needs fixing at every layer and as much as investors have work to do on rebalancing capital allocation, the founders of tomorrow also need guidance and support on assembling a more diverse team.

Share of women (%) by executive-level positions of selected European Series A and B venture-backed companies

Legend

  • 2017
  • 2018
  • 2019
  • 2020
Note:
Based on a sample of founders & executives in CxO positions at European VC-backed tech companies that raised a Series A or B round with more than $10M in total funding in that respective year (Q3 FY). 2020 includes 348 companies.

Breaking the cycle

Widening access to capital to a more diverse group of individuals should accelerate the rebalancing of the founder makeup at the later stages. The Atomico angel programme was started in 2018 on this premise and with now two angel cohorts of 23 active individuals and close to 90 investments made, there is a sufficient sample size to put this hypothesis to the test. Given the rise of more angel and scout programs around Europe, it is perhaps a good time to share some of our key findings.

Atomico Angel Program Cohort 2

Andy Davis

Andy Davis

United Kingdom

Sarah Drinkwater

Sarah Drinkwater

United Kingdom

Robert Gaal

Robert Gaal

The Netherlands

Cédric Giorgi

Cédric Giorgi

France

Gulnaz Khusainova

Gulnaz Khusainova

Denmark

Harry McLaverty

Harry McLaverty

United Kingdom

Deepali Nangia

Deepali Nangia

United Kingdom

Maud Pasturaud

Maud Pasturaud

France

Marcus Ross

Marcus Ross

Germany

Christine Spiten

Christine Spiten

Norway

Danica Krajic

Danica Krajic

Sweden

Tine Thygesen

Tine Thygesen

Denmark

Katja Toropainen

Katja Toropainen

Finland

Karina Univer

Karina Univer

Estonia

Ville Vesterinen

Ville Vesterinen

Finland

Over 60% of angels in the first two cohorts were women and over 20% from an underrepresented ethnicity. We will be materially improving on the ethnic makeup of our next cohort.

Atomico Angel Programme cohorts breakdown by gender and by ethnicity

Source:

Legend

  • Women
  • Men

Comparing angel investors who have made up to 10 investments with angel investors in the Atomico program, we can see the stark difference in the makeup of the founders they back.

Share of underrepresented founders in portfolio of survey respondents versus Atomico Angels

Source:

Legend

  • Less or equal to 25%
  • Between 26 and 50%
  • Over 50%
Note:
Underrepresented in the context of Atomico angels is defined as Women founders and founders from underrepresented ethnicity.

Drilling down on the portfolio diversity makeup of Atomico angels, there are some interesting differences. Given the large proportion of women angels on the program, there is a much larger representation of women founders in the angels portfolio, with over 35% of angels stating 50%+ of companies in their portfolio has at least a women founder. Although the share of angels with a number of investments involving at least one founder from an underrepresented ethnicity is much lower at 13%, it is likely to change with more underrepresented ethnicity in future cohorts. Indeed, the six angels who are themselves from underrepresented ethnicity collectively led 20 investments, of which 55% were backing founders from underrepresented ethnicity.

Share of angels based on share of companies in portfolio by team diversity makeup

Source:

Legend

  • Less or equal to 25%
  • Between 26 and 50%
  • Over 50%
Note:
Based on Atomico angels from cohort one and two investments to date.

Creating a stronger network of angels is a way to build a stronger European start-up ecosystem...But one of the key obstacles to creating such a network is accessibility.

I think creating a stronger network of angels is a way to build a stronger European start-up ecosystem. Angel investors usually bring more market expertise and personal experience and passion to the start-ups they invest in, which is so valuable in the early days.

But one of the key obstacles to creating such a network is accessibility. Angel investing is still something that only very few people are doing and are able to do. And there aren’t many resources to support them or attract new ones.

There is this notion that to be an angel investor, one has to be able to invest big checks. In some countries that is still the case due to laws that are tailored more towards professional investors.

While we’re waiting for legislation to catch up, it has been great to see that crowd-investing platforms, like Funderbeam, are becoming more popular. Another example is the launch of an angel syndicate by Unconventional Ventures.

Gulnaz Khusainova

Easysize

Founder