It takes more than a global pandemic to stop an emerging group, the “business angels”. Despite the coronavirus crisis, this group of investors is still betting on Spanish startups, as concluded in the Business Angels 2020 Report, prepared by the Spanish Business Angels Association (AEBAN).
Investment is maintained
After a positive 2019 in terms of startup investment (with a record number of direct operations through crowd equity platforms), investors maintain their bet for 2020. A total of 77% of business angels who invested in 2019 have repeated this year. Moreover, two out of three investors in 2019 have made a follow-on investment, i.e. a startup investment that was already in their portfolio.
The investment pace expects to be maintained in the last four months, resulting in a similar volume of activity to the previous year. The data is surprisingly encouraging in Spain: 2019 investors maintain a high activity rate, even higher than in the UK.
In this regard, Spain is getting closer to more mature countries, as far as business angels are concerned. The average age of Spanish investors is already close to 53, compared to 55 and 57 in the United Kingdom and the United States, respectively. One out of every two Spanish business angels is between 45 and 54 years old, resulting in a tendency for more experienced investors. Three out of four investors have at least three years of investment experience.
As for the number of contributions, almost 50% of all business angels make investments between 10,000 and 25,000 euros, whereas 28% invest more than 25,000 euros, and three out of ten invest less than 10,000 euros.
Most investors are Men
The downside of this report is once again the scarce presence of women among business angels. Similar to the previous three years, the number of women investors is around 10%. However, the statistics for women entrepreneurs who receive financing are much more positive. Two out of every three investors have bet on a startup led by a woman.
Several sectors are immune to the coronavirus. Indeed, some of them have even gained strength from this health crisis. Two of the clearest examples are biotechnology and pharmaceuticals, presented as the great hope of investors and society to overcome this pandemic. Over the last year, investment in this sector has almost doubled to reach 16% of the total. One out of five business angels has stakes in this sector. The leisure, media, logistics, hardware, energy and environment sectors have also gained strength. However, although there has been a decline in 2020, the lead remains in the software sector, with 27% of investments.
Expectations for the future
According to the business angels surveyed for the report, they predict changes in the system as a result of the coronavirus. The need to digitalize the economy will lead to increased investment in technology companies. Likewise, the startups that work with artificial intelligence will gain strength. Investors also speak of a greater prominence of sustainability criteria in investment decisions.
All in all, COVID-19 has not slowed down the rise of business angels, investors are generally male and with an increasingly older average age, and the most attractive sectors for business angels are those related to health and technology. For the future, a growing interest in sustainability criteria is expected.
Fellow Funders helps many business angels to invest in Spanish startups. To do so, we guarantee that the candidate companies present a viable project, making sure that once the investment has been made, the business angels can actively follow up on it. For this reason, we, Fellow Funders, are happy to know that not even the coronavirus has been able to stop our business angels.
Source: Capital Riesgo