Angel investors building portfolios, not just passively investing: AngelCentral report
Benjamin Cher
A typical angel investor in South-east Asia is aged between 41 and 55 years-old, male, and invests mainly out of his net worth rather than income according to a report by angel investment network, AngelCentral.
The report surveyed 75 angel investors based in South-east Asia, and found that over half (59 per cent) of respondents invested in over 5 startups, with 12 per cent having a portfolio size of over 30 startups. Of the respondents 84.1 per cent were male and the remaining 15.9 per cent female. Age-wise, the majority (55.6 per cent) aged between 41 and 55 years-old, followed by 33.3 per cent aged between 31 and 40 years-old.
The usual first cheque sizes from these respondents are between US$20,000 to US$50,000 (52 per cent), followed by US$50,000 to US$100,000 (16 per cent) and US$10,000 to US$20,000 (13 per cent). A large proportion of these angel investors, 41.3 per cent, expect to see more than 25 per cent internal rate of return (IRR) over 10 years, followed by 34.9 per cent who expect to 15 to 25 per cent IRR. Another 11.1 per cent would expect 5 to 15 per cent IRR, with 9.5 per cent being unsure or did not track and the remaining 3.2 per cent not caring about financial gains.
“As an active angel for 10 years, it is very gratifying to see our angel community growing in maturity such that it is now common to find angels who are methodically building a portfolio of at least 20 startups to achieve the right diversification effect and optimise for risk adjusted returns,” said Huang Shao-Ning, chief angel at AngelCentral.
These angel investors also invest across asset classes with a large majority, 68.2 per cent, allocating less than 10 per cent of their investable assets into angel investments. The remaining 28.6 per cent allocated between 11 to 30 per cent, while 3.2 per cent allocated between 30 to 50 per cent of their investable assets.
“Back in 2012, it was more common for angels to treat startup investing as lottery tickets where they invest in 3-5 startups and hope for the best,” said Huang
These investors also mainly invest out of their personal or family net worth, with 58.7 per cen of respondents doing so. The other backgrounds range from professionals getting involved in angel investing (28.6 per cent), senior executives financing out of their salaries (22.2 per cent), ex-founders (19 per cent), and tech workers who see a lot of potential good businesses.
Angel investors also aren’t just passively investing, with the top response being learning and interacting with founders. But they aren’t becoming too actively hands-on with less than 15 per cent active in their portfolio’s operations, most being involved at the board level, helping with “opening doors” or “support from the side.”
“As an active angel, one of our strongest value add is that we have scaled and sold a tech business before. So we relate well to the emotional journey of founders and share our experience with them,” said Huang.
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