Tucson, AZ – July 24, 2023. For more than a decade, Desert Angels has remained one of the top ten most active angel groups in the country. “Remarkably, three of the five top ranked groups this year are national networks with multiple chapters. Given the size and regionality of our group, we continue to punch above our weight class when it comes to making investments,” commented Jeffrey Lang, Chairman of Desert Angels.
Report Highlights:
Seed-Stage Investments: National versus Regional
Regarding Seed-Stage investments, the national median pre-money valuation increased to
$9 million (up from $7.5 million in 2021), and the median round size decreased to $930k (down from $1.25 million in 2021). Unlike past years, we now see similar levels reflected at the regional level. In the Southwest region, the median pre-money is $9 million, with round size at $750k. The pandemic had a profound impact on the nature of angel investing. As groups moved towards new online platforms to manage member engagement as well as deal flow communication, geographical boundaries faded. Simultaneously, more groups became engaged in regional and national syndication efforts like the Angel Syndication Network (ASN). Groups can now share the workload of venture assessment and due diligence, while promoting local startups to the national stage.
Seed Stage Platform and Deal Structures
Based on the report, Equity Crowd Funding (ECF) is expected to “become more obviously part of the broader mix of options” in future. Revenue Based Financing (RBF) saw a significant growth, now representing 10% of the Seed Stage investment category. In terms of deal structure, Preferred Equity leads with 42%, followed by the Convertible Note with 40%. 2022 saw a rise in SAFE agreements to 13%. In the Southwest Region, those percentages are 45%, 40%, and 8.5% respectively. Based on the report, California holds 26% of all Seed Stage SAFE agreements. SAFEs remain polarizing, they are not as investor friendly as Convertible Notes and most angel groups tend to avoid these.
Desert Angels – ARI Halo Report, Continued
Looking Forward
Desert Angels continues to be an innovative thought leader in early-stage investment, looking for new ways to collaborate and engage members. 2023 also brings a tighter focus on ROI – Return on Investment. “Strong returns benefit the investors, the companies, and the community,” commented Joann MacMaster, CEO of Desert Angels. The Angel Capital Association reports that an increase in portfolio engagement can increase number of positive exits, and that doubling due diligence efforts, from a median of 20 hours to 40 hours per deal, leads to better preparation and decision, impacting returns by as much as 7x. “To help keep us focused on success, in this past year we welcomed Jeff Koenig as our new Due Diligence Chair to launch a team-based diligence approach; we partnered with Startup Ecosystem to engage DealIQ™ Lite for early assessment; and we are working with our partners, like Arizona Tech Investors, to showcase and support the portfolio companies we have in common.”
About the Desert Angels
Desert Angels is a nonprofit organization of about 100 members who invest in early-stage scalable companies across multiple industries nationwide. We are among the top 10 most active angel groups in the country, now ranked #1 in the Southwest Region and #5 in the Country based on number of investments, per the 2022 ARI Halo report. We are a charter member of the Angel Capital Association (ACA), the trade association of angel investment groups, and a member of the Angel Syndication Network (ASN), a network of roughly 70 angel groups actively engaged in collaboration for deal syndication, with over $1billion in direct investments. Desert Angels provides its members with connections, education, syndication, vetted deal flow, and a team approach to due diligence. Between 2010-2022, Desert Angels members invested $60.2 million into 110 new companies.
Desert Angels Contacts:
Jeffrey Lang, Chairman; chairman@desertangels.org
Joann MacMaster, CEO; ceo@desertangels.org
PO Box 57435, Tucson AZ 85732
To download the full ARI Halo report:
