Faced with a lack of data on angel investors in Australia, the country’s largest group of angel investors Sydney Angels has taken matters into its own hands, digging into its data and revealing just how much money the group has invested during its nearly 10 years of existence.
StartupAus’ Crossroads report released earlier this month highlighted the lack of data available on angel investment in Australia, with chief executive Alex McCauley telling InnovationAus it was “notoriously difficult” to collect data on and the available data is “scant”.
Sydney Angels is hoping to shine a bit more light on the sector, having just hit a significant milestone of investing in more than 50 Australian startups since its inception in 2008. The group has also recently ticked over a total of $10 million invested from members since formation.
“This shows that we are Australia’s largest and most active angel investment group, even as more and more angel groups are forming, especially in regional areas,” Sydney Angels committee member Sandrina Postorino told StartupSmart.
“It’s a very exciting space at the moment with more competition in the funding space, a lot more startups coming through, and a lot more different funding sources going to those startups.”
The average investment from the Sydney Angels group is $200,000, with the average startup invested in consisting of two founders, heading up a venture with a pre-money valuation of $2.2 million.
Total investment into the 54 Sydney Angels investees now totals $193 million, with the largest ever investment in a startup being $803,000 as part of a $1 million round. Thirty-eight startups applied for funding through the group in 2009, compared to 220 in 2017.
Also, 25% of funded startups had a female founder. Postorino says there’s “definitely” more women coming through the program and this is increasing each year.
“What we saw in 2017 is that more and more women are leading technology companies,” she says.
“We’re totally agnostic at application stage which is one of the reasons we have so many female founders. When we read the applications we don’t know if the founders are male or female, only when they present do we actually know.”
“I think we don’t have the same sort of biases you might see in government bodies or other organisations.”
The group has seen a shift away from hardware and mobile app-focused startups, which it saw an abundance of in its early days, says Postorino, with a “broader scope” of companies now applying for funding. This includes Software-as-a-Service businesses, business-to-business startups, and even some biotechs.
Despite angel investors taking up a large slice of Australia’s investment landscape, with similar groups to Sydney Angels existing in each state, a widespread data-collection effort has not been undertaken in recent times. One was done by the Department of Industry, Tourism, and Resources back in 2006.
Postorino says she would welcome a deeper dive into the data behind angel investing in Australia, saying it could be done by either an independent or government body. It would be valuable to get an overview of how different angel investing groups connected and compared to each other, she says.
“It would also be interesting to see how we compare to ecosystems such as the US and Israel, as I get the sense they’ve started to pull away from us,” she says.
Last year’s tax initiatives for early-stage investors were “very helpful” for encouraging angel investors, says Postorino, but she perceives there to be a gap between the availability of early-stage and mid-stage funding.
“I can’t see a lot happening in the series A-C funding space in Australia,” she says.
For startups looking to pitch for investment through groups such as Sydney Angels, Postorino warns founders to get on top of the application stage before all else.
“Some founders don’t successfully get the gist of their startup onto a two-page application, and we have no idea what they’re pitching to us. Try to be able to distil what you’re trying to do into a few pages,” she says.
“Clearly formulate what problem you’re solving and why you’re doing it better than anyone else. What are you wanting to do with the funds you raise?”