ugust 13, 2014

Ranking Angel Investment Groups

We analyzed over 350 angel investment groups with the algorithms we use to assess VC
firms. Here's how the top angel investor groups stack up.
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 NoWaits $10M Series B, as well as Storefronts $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.
Within the Healthcare Sector, Life Science Angels has participated in 4 of the 5 largest
rounds including investments in Zogenix, CoMentis, and PixelOptics. The full breakdown
below.

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.