In this short episode of Minutes with Marcia (Part 1 of 2), host Marcia Dawood dives into the recent data released by the Angel Capital Association (ACA), the Securities and Exchange Commission, and insights from Dr. Ron Weissman, the current chair of the ACA. The episode reflects on the significant shifts in the venture capital climate over the past two years, highlighting the challenges faced by entrepreneurs in accessing capital and the impact on angel investments. Marcia also emphasizes the importance of angel investors expanding their knowledge of the various funding avenues available to entrepreneurs, particularly regulation crowdfunding which is being utilized by more underrepresented founders. Listeners are immersed in an insightful analysis of the 2021 and 2022 fiscal years in the world of angel investments, revealing the impact of market fluctuations on funding availability and job creation. The episode leaves the audience anticipating part two, where Marcia promises to explore future trends in angel investments for 2024.
In this short episode of Minutes with Marcia (Part 1 of 2), host Marcia Dawood dives into the recent data released by the Angel Capital Association (ACA), the Securities and Exchange Commission, and insights from Dr. Ron Weissman, the current chair of the ACA. The episode reflects on the significant shifts in the venture capital climate over the past two years, highlighting the challenges faced by entrepreneurs in accessing capital and the impact on angel investments. Marcia also emphasizes the importance of angel investors expanding their knowledge of the various funding avenues available to entrepreneurs, particularly regulation crowdfunding which is being utilized by more underrepresented founders.
Listeners are immersed in an insightful analysis of the 2021 and 2022 fiscal years in the world of angel investments, revealing the impact of market fluctuations on funding availability and job creation. The episode leaves the audience anticipating part two, where Marcia promises to explore future trends in angel investments for 2024.
2023 Angel Funders Report - https://www.angelcapitalassociation.org/angel-funders-report-2023/
2023 OASB Annual Report - https://www.sec.gov/files/2023-oasb-annual-report.pdf
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Marcia Dawood:
Hi everyone. In this quick episode of Minutes with Marcia, it's part one of two, taking a look back at what has happened over the last year or two and why. Some interesting data was released in early December of 2023 by the Angel Capital association because they released their Angel Funders report and the securities and Exchange Commission Small Business Advocacy Office also released their 2023 fiscal report. I will highlight data from both of those reports, but I am also armed here with data collected by Dr. Ron Weissman, current chair of the Angel Capital association. He is always a wealth of knowledge about where we have been, where we are now, and where we are going related to Angel World taking a look back, 2021 could arguably be one of the best venture capital climates in 20 plus years with record returns, record valuations, very founder friendly deal terms, and it was really a great time to be an entrepreneur. It was one of the easier times to raise capital. And then 2022 hit it was the end of a twelve year bull market.
Funding became a lot more scarce. There were not nearly as many exits. We did, however, see that series seed one of the earliest times for entrepreneurs to raise and series a deals, and their dollars remained fairly strong. Early stage became the least affected by all of the downturn and the unicorns, or many of the later stage deals were pretty much the most affected. Many of you have heard me say on this show time and again that we need more people to get into the game of backing entrepreneurs, and if we do that, we will start to see more and more change in the world of what we really want. I appreciate the quote that the SEC opened their report with from the Kaufman foundation saying entrepreneurs continue to face a considerable gap in accessing capital through every stage of the business cycle. While there have been some advances in identifying and addressing barriers to accessing capital, there is still much work to do. So it's no surprise that between 2021 and 2022, we saw a decrease in the amount of funding that was put into angel investments, a decrease of almost 25% in the number of dollars that were put into angel investments.
Interestingly, though, the number of active angel investors increased a little bit, which I'll get to in just a minute. While this is a bummer for a number of reasons, one of the reasons highlighted in the report is that the number of jobs that were created per angel investment was 3.4 jobs in 2022, and that was down from 4.4 jobs in 2021. Interestingly, first time ceos constituted 73% of leaders funded by angel deals, and that was up from 70% in 2021. So angels do tend to fund first time ceos, and the number of angel deals and investments that were in the seed, that's the earliest seed C Eed and series A rounds, was 83%. I say all that to give you a little bit of context, because the one thing that I want to highlight in the last part of this episode is about regulation crowdfunding, and several of you have heard me talk about it before. I think it's interesting how much regulation crowdfunding, while it did go down, it did not go down nearly to the level that overall angel investments did. And just to put that into perspective, the private placements that angel investments usually fall under is rule 506 b, like boy. And it's just the way that companies will file with the SEC when they are fundraising.
That represented $2.7 trillion. That is a lot of money. And that is the majority of how angel deals are funded is through that 506 B private placement. Just to put that in perspective, crowdfunding, the amount of money raised through regulation CF, as we call it, or regulation crowdfunding, was 352,000,000. So 2.7 trillion in the regular way or the way that we usually do it. And then Reg CF was only 352,000,000. So very, very small amount. However, I'm interested in some of the statistics around regulation crowdfunding.
For example, the amount of capital commitments was down only about 10% from 2021, as opposed to angel investments overall, as I mentioned earlier, was down close to 25%. I also thought that the average check size in regulation crowdfunding would be something very small, like maybe $300 at most. And it turns out that the average investor check size is almost one, $600. Also interesting is that 70% of the capital is distributed outside of the top ten capital hubs. So people are going to raise money in areas all over the country, not just in the big cities. And of all of the offerings that were made through Reg CF in Q three of 2022, 25% had at least one founder of color and 28.5% had at least one female founder. This is telling me that underrepresented founders are finding some level of success in using equity crowdfunding in order to raise money for their companies. The average raise was also about $428,000, which is telling me that they are raising some significant amount of money in order to move their businesses forward.
This isn't like they're just raising a couple thousand dollars and hoping for the best. So as angels, we need to just keep learning more and more about all of the ways that founders can fundraise. I hope you enjoyed this quick episode highlighting some recent angel data. And in part two, we'll dive into a little more and take a look at what some of the trends could be for 2024. Thanks for listening.