Italian business angels invested €53 million in startups in 2019
In 2019, Italian business angel investments amounted to $59.6 million (€52.7 million), up 32.7% on 88 transactions. Only $1.47 million (€1.3 million) were invested through equity crowdfunding. The sector that has benefited most from the “angels” investments is ICT (35% of investments in 2019), in particular for the development of e-commerce platforms related to goods and services.
In the annual survey conducted by Italian Business Angels Network (IBAN), there is shown a strong growth in investments made only by Italian Business Angels in 2019, as individuals or in syndication with other Angels, also through BAN (Business Angels Network) or Investors’ Clubs, showing an increase of 32.7% compared to 2018.
This is a further increase that consolidates the growth in direct investment by Italian Angels, which in 2018 was 75%. The figure invested in 2019 thus reached a total of $59.6 million (€52.7 million), divided into 88 transactions.
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Investitions were also made through equity crowdfunding platforms
Alongside operations carried out exclusively by Business Angels (88 operations), there are also interventions in symbiosis with other players in the innovation ecosystem, such as venture capital funds or through equity crowdfunding platforms. In the first case, a total of 51 operations for a total of $260 million (€230 million) invested; in the second case, however, as noted by the Crowd-Investing Observatory of the Polytechnic University of Milan, a total of $1.47 million (€1.3 million) were allocated by Italian Angels through 27 operations. A rather limited amount, both compared to a total of $60 million (€53 million) and, above all, compared to the $158 million (€140 million) collected with equity crowdfunding in 2019.
The sector that has benefited most from the “angels” investments is ICT (35% of investments in 2019), in particular for the development of e-commerce platforms related to goods and services. This sector is followed by the advanced tertiary sector, which accounted for 12% of “angels” investments, with a significant share of financial services and consumer goods (around 11%). Finally, investors are also interested in startups that carry out research and development activities in the healthcare and medical equipment sector (8%).
The average cut in investments made by Italian Angels is growing compared to 2018, with more than 50% of operations exceeding $113,000 (€100,000) and 26% of investments exceeding $566,000 (€500,000). In 2019, Italian Angels invested an average of $249,000 (€220,000) in each target company, continuing to prefer startup companies (66%) over seed companies (34%). However, the IBAN Survey confirmed the reversal of the trend already monitored in 2018 in favor of seed investments, which in 2018 represented 29% of Angels’ investments and in 2017 16%.
Angels’ initiatives are also increasingly being activated through forms of collaboration between investors
In fact, the 2019 IBAN Survey confirmed that investors tend to join forces to increase financial contributions and reduce risk at the same time. A strategy capable of bringing benefits to all the components involved, with companies receiving capital and support to continue on their path and investors increasing their invested capital while also increasing the chances of a positive economic return at the time of exit.
However, investors are unlikely to abandon their operation after a short time. Disinvestment continues to be a rare phenomenon among Business Angels. In 2019, in fact, only 11% of the sample stated that they had made at least one divestment, which occurred on average 9 years after the initial investment.
The IBAN survey also traced an identikit of Italian angels: on average, they are men between 40 and 50 years old with a high or very high level of education, affiliated to IBAN, to one of the territorial BANs, or to an investors’ club, of Northern Italy. The professional past of Italian business angels is mainly in managerial or entrepreneurial roles and they currently work as freelancers (39%) or entrepreneurs (28%).
Finally, among the criteria used to make investment decisions, the most significant are the growth potential of the market (45%), the team (26%) and the exit strategy (11%).
(Featured image by pieroor via Pixabay)
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