Search

Your Startup Guru

Helping you launch and grow your business

Category

fundraising

What Angel Investors Prefer

At Your Startup Guru, we fundraise for a wide range of clients from a broad spectrum of industries including restaurants, software as a service (SaaS), to fintech and more seeking capital ranging from $10,000 to over $10 million.

We get capital from a wide range of sources including private equity, banks, credit unions, government economic development authorities, angel investors, and more.

However, not all industries get the same attention. For example, according to a recent report based on an analysis of 2,492 transactions across 2,444 companies all completed in 2019, angel investors are more likely to prefer certain industries and deal structure type (e.g. convertible note).

Selected portions from the report below:

Industry

The 2019 data revealed a first-time decline in the information technology/software segment as a percentage of total transactions relative to other investment segments (2019/2018) — 29% of the investments (2019) were in info tech,
compared with 38.6% (2018). Yet Information Technology still remains the dominant segment for angels.

Consumer Products / Services sector saw significant growth, up from 18.2% (2018) to 25.75%.

If Healthcare and Biotech were combined, they would comprise 21% (2019) of transactions versus 18% (2018). We added Biotech as a discreet sector to track in 2019, but for comparison sake, you can observe that even without Biotech, the Healthcare segment continues to be a major category for angels.

We also noted an increase in Financial Services’ Fin Tech in 2019, which was too small in 2018 to warrant its own category. In 2019 companies in this sector participated in 3.55% of all transactions. The Energy sector also rose to over 3% with a few related Environmental companies included.

And for this year, we found enough companies to warrant adding Ag Tech (1.2%) as a separate category and clearly growing. While Info Tech and Software is still the leading category for angel investing, but by a much smaller margin than in the past, we also acknowledge that Info Tech / Software is often a necessary core component of many other sector investments.

Deal Structure Type

While we continue to see the use of SAFE notes they are a minor percentage of all Seed transactions at 4.7%. The primary structures were 51% Convertible Notes and almost 41% Priced Preferred. SAFE’s are not reported in our data as frequently as we hear them discussed amongst early stage entrepreneurs.

Series A transactions were (as expected) Preferred Stock 86% of the time, with 12% standard Convertible Notes associated with a Series A, typically a bridge to Series A, but distinctly beyond Seed stage.

We did find SAFEs were most frequently used in Mid-Atlantic Region at 12%. The Mid-Atlantic use of SAFEs may be heavily influenced by US Federal DOE, NSF, NIH, and other grant money which does not permit debt as a liability while grant funds are in use, hence early stage companies who do not wish to price their round are opting for SAFE notes.

California was #2 in SAFE usage at 10%, influenced by California incubators and possibly by science companies vying for Federal grant funds.


There are considerable pre-money valuation and round size discrepancies when it comes to the various demographics of entrepreneurs that highlights a disturbing flaw in the angle investment community but that goes beyond the scope of this blog post.

Your Startup Guru client – Tutor At Desk

Tutor At Desk is a promising nonprofit that provides free computer programming classes and loaner laptops to anyone that wants to take one (or more) of their many courses including HTML5, JavaScript, Python, app development, and more.

Your Startup Guru created an informational deck and grant proposal which will be used to help raise additional capital for its operations.

Let us help you launch your business. Contact us and let’s get to work!

Another happy client

Osys Naturals logo - Your Startup Guru
Osys Naturals

Osys Naturals offers a fantastic line of skin care solutions for razor burn, razor bumps, ingrown hair, and skin irritations.

Osys Naturals came to Your Startup Guru seeking financing to expand his company. Through our business plan and fundraising services Osys was able to secure the capital necessary to grow.

Contact us today for your startup needs.

Another happy client: Dream Pools and Super 10 Trucking

dream pools super 10 trucking

Your Startup Guru created a business plan that allowed Carlos Robles to request $1.8 million for expansion capital for Dream Pools and his other startup, Super 10 Trucking.

Carlos’ situation required a 1-week delivery period while also mixing in complex financial projections that included the assets of his pool construction business with his trucking business.

In the end, the plan was delivered and Carlos is now able to grow his businesses.

A great episode from a great podcast

Peloton - Your Startup Guru

NPR’s How I Built This is a fantastic podcast that brings the stories behind some of the world’s best-known companies. How I Built This interviews innovators, entrepreneurs and idealists about the movements they built.

Peloton co-founder:  John Foley

In this episode, they interview John Foley, one of the co-founders of Peloton; the fitness and media company that you’ve probably seen commercials for.

In the interview, they greatly undervalued John Foley’s network and experience but nonetheless, this episode touched on several relevant topics my clients often face.  I picked this episode because it was a little more in-depth and enlightening than other episodes in that Foley he talks about:

  • having the discussion with this wife about moving in with her parents if the company fails,
  • how everyone is similarly able including Harvard MBAs,
  • the CEO being the janitor when starting out; something I discussed in a previous post about bootstrapping
  • how VCs are not very adventurous,
  • how Peloton is only recently profitable after 7 years

There are also great questions asked by interviewer that touches on market trends such as arcades no longer thriving due to user experience-to-price dynamics (i.e. video game consoles vs arcades due to quality of experience), penetration/awareness strategy which led to their distribution model given that malls are making an industry correction, and lastly the trademark question: “How much of this was because of your intelligence and hard work, and how much of this was just luck?”

FYI, I always discuss market and industry trends, launch and penetration strategy, as well as bootstrapping in all my business plans.

The entire podcast can be heard here

Another happy client

rs=h_228

PMG Employment Solutions is a full employment service dedicated to finding qualified workers for employers. They specialize in providing potential employees for permanent, part-time, seasonal and temporary positions with companies in manufacturing, service industries, construction, and agriculture.

PMG came to Your Startup Guru for target company corporate valuations  and strategy analyses.

Another happy client

Zion Health

Zion Health makes a wide variety of natural health and beauty products based on clay.

Your Startup Guru created a pitch deck Zion Health used to fundraise for the next stage of operations.

Nearly 400 Investors With $32 Trillion In Assets Step Up Climate Action To Support Paris Agreement

investor-agenda-1

FYI, if you’re a greentech or cleantech company, there may be some capital available for your business.

Read more about the Investor Agenda here.

Guess how much startup capital is needed and where it comes from

 

Startup capital Your Startup Guru
Guess how much startup capital is needed and where it comes from

$50,000? $100,000? Credit Unions? Commercial banks?

An enlightening survey showing well over half the companies started with less than $10k and only 13% received start-up capital from banks.

Up ↑