Great Lakes

In mid-April, I attended the 10th annual ACA Summit hosted by Angel Capital Association in San Diego. With about 600 people in attendance from dozens of countries, it was an excellent chance to get tuned into the latest trends happening in angel world at large.

And since Angel Investing is now a global phenomenon, it is interesting to note that ACA Summit can have two faces. On one hand, it is a very international gathering of Angel investors and yet sometimes the content reflects the fact that ACA is primarily an association of US Angel investors, for example by showing trends without regard that Canadian angels are just across the border.

The international range of attendees was striking, with many delegations from various European countries; Latin American countries like Mexico, Chile and Barbados; India; a particular concentration from Australia and New Zealand and of course Canada. Regarding this antipodean concentration, one attendee found it odd that there were more of participants from halfway around the world than from Canada.

I am a member of the program committee for Canada’s own 2015 NACO Summit which is being held October 6-8 in Niagara-on-the-Lake, Ontario, right on the US frontier. I see a huge opportunity to learn and connect with more US and global angels.

Each year, the Angel Resource Institute publishes statistical information and trends in US Angel investing and at ACA released their 2014 Halo Report.

I’ve chosen some personally curated highlights both of that report and the overall conference:

• Overall US Angel investment was about US$25 billion in 2014, surpassing venture capital investments. This represents over 300,000 investors in over 70,000 deals. We continue to have less comprehensive data for Canada, but we still lag on a per capita basis, but the gap is narrowing.
• Although Crowdfunding was a major topic of discussion, it is still less than 2% of the above $25 billion figure, definitely lagging places like the UK where it is already at 5%.
• Median deal size grew over 10% to $2 million in 2014, when co-investment is included. Median pre-money valuation grew 20% to $3 million.
• The largest region for  deal dollars (17.2%) was the Great Lakes Region (from Wisconsin to Ohio), surprising to those who thought most deals happen in California. Further, almost 50% of all deals are in states on the Canadian border, clearly presenting cross-border syndication opportunities.
• Perhaps because of high valuations in the tech “hot spots”, such as New York City and California, more syndication across greater distances was reported, which goes against the traditional notion of investors focusing within a one-hour drive. Again, while the studies of greater cross-country syndication didn’t extend into Canada, it is easy to extend this trend cross-border. A drive could be to focus on those sectors requiring specialized skills such as medical technologies and life sciences.
• There were a lot of great sessions on emerging, and ongoing, issues, such as crowdfunding, the new SEC Regulation A+ (mandated by the JOBS Act to simplify raises up to $20 million even from non-accredited investors), an ever increasing push to build new and innovative Angel Funds and even post investment Board governance.
• In that vein, I ran an open panel on “Best Practices to Build a Private Equity Portfolio – Tools and Strategies”.  What was notable was how primitive such angel portfolio management really was. One participant suggested angels portfolio management was comparable to that of public company portfolios 100 years ago. As Angels learn that a passive approach with little portfolio management is sub-optimal, leading Superangels, the advanced Angel groups and the trend to angel funds are all pushing for more professional portfolio management. Although historically they have worked separately, the increased involvement of Family Offices in the world of angels is also starting to drive greater portfolio discipline. New software tools are emerging to help here as well, such as Seraf – Portfolio Management for Angel Investors which was built by angels unable to find a way to automate their portfolio management.

In summary, ACA Summit 2015 was a fabulous opportunity to meet, network and learn from some of the best global angels and understand about emerging models and best practices. Many side bar conversations, dinners and drinks in the garden were packed with wisdom from around the world.

In October, our own NACO Summit will be a great opportunity for Canadians to similarly share and learn and to connect with a more global perspective as our Angel ecosystem continues to grow from strength to strength.