But who are these French people investing in start-ups? To get to know their profile a little better and get an idea of the performance of their portfolio, Angelsquare interviewed business angels in France. Out of 200 participants, 130 responses were saved to conduct this survey because of the accurate statements about their investments and results. This corresponds to 3,081 investments in start-up companies for a total amount of approximately 544 million euros.
Business angels multiply investments, as they support more than 15 start-ups on average. 50% of them invest between 14,672 and 80,000 euros per startup. But the main ticket amounts to 2.5 million euros… Angelsquare notes that some prefer tickets with particularly high amounts. To date, 50% of respondents believe their investments would allow them to reap between two and four times their initial investment.
But investing in young shoots is a risky venture and not always very profitable, then 45.3% of investments actually lead to a total or partial loss capital. One of the essential points of this study is the visibility of the profitability of the investments made. In fact, the subject of “exit” is essential to see what a business angel earns when he sells his shares. “37% of investments allow you to at least double and reap up to ten times your stake, and 11.6% suggest a gain greater than ten times your stake”, writes Angelsquare. It should be noted that the average multiple is 5.2, but that less than 20% of investment transactions give hope for this result.
Method: Survey carried out by Angelsquare from January 1 to March 31, 2022. To carry out this survey, we surveyed French Business Angels by distributing a complete questionnaire within our community about the exercise of their activity. Out of more than 200 participants, 130 agreed to carefully declare their investments and results.
11% go bankrupt
Average, business angels remain involved for three years in a startup before making an exit. The development of start-ups takes time, and for an exit to be interesting for an investor, the young shoot must have grown sufficiently. Another interesting piece of data presented by Angelsquare is the time that passed between an investment and a positive or negative exit. The median for positive exits is four years, but the most recent exit is 15 years. As for negative exits, the median is 3 years and the most recent exit occurred 9 years after the investment.
This question of profitability at the time of exit brings up another interesting topic: knowing what happens to start-ups at this time. About 11% of them went bankrupt13% have been acquired and 16% are viable SMEs defined by Angelsquare as being “a startup that is still operating and has not completed new capital transactions in the last 48 months.” The majority of them raise money (60%) i seed (22%), Series A (20%), B, C or D. Only 3% of start-ups have made an IPO at the time of exit.
What is the typical profile?
Business angels are predominantly men (84%) and is on average 45 years old. Their experience is relative, as 53% of investors have five years or less of experience as a business angel and 24% have between 6 and 9 years of experience. But the majority of business angels (50.7%) say that they want to get involved in the development of the start-up, where they inject funds and share their skills and experience. 47.4% say they are available in case of a request from the founders, and only 2% of business angels do not want to be involved.
Just as among the management teams of start-ups, women are underrepresented among business angels. The fact that it is predominantly men can partly explain that start-up companies led by women find it more difficult to raise funds.
To invest, business angels look above all at the quality of the founding team, the possibility that the startup can implement internationally and the technology developed. Then comes the social impact and, surprisingly, the revenue, which is therefore not one of the main criteria that is assessed.
Some areas have more coast than others. Investors especially prefer the B2B sector (63%). Startups in the fintech and SaaS sectors are also attracting a lot of interest. Then come those in the B2C sector, the so-called impact start-ups, those in e-commerce, marketplaces and Food Tech. IoT, which at the beginning of French Tech was at the forefront, is at the end of the most interesting sectors according to business angels.