But who are those French people who invest 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. Of the 200 participants, 130 responses were saved to conduct this survey because of the precise statements about their investments and performance. This corresponds to 3,081 investments in start-ups for a total amount of approximately EUR 544 million.
Business angels multiply the investments as they support more than 15 start-ups on average. 50% of them invest between 14,672 and 80,000 euros per start-up. But the main ticket is 2.5 million euros… Angelsquare notes that some prefer tickets with particularly high amounts. To date, 50% of respondents believe their investments can bring in between two and four times their initial stake.
However, investing in young shoots is a risky gamble and not always very profitable, because 45.3% of the investments actually lead to a partial or total loss capital city. One of the essential points of this research is the visibility of the profitability of the investments made. The topic of “exit” is indeed essential to see what a business angel earns when he sells his shares. “With 37% of the investment, you can at least double and earn up to ten times your stake, and 11.6% suggest a profit of more than ten times your stake”, writes Angelsquare. It should be noted that the average multiple is 5.2, but less than 20% of investment trades give hope for this outcome.
Methodology : Survey conducted by Angelsquare from January 1 to March 31, 2022. To conduct this survey, we surveyed French Business Angels by distributing a full questionnaire within our community about the practice of their activity. Of the more than 200 participants, 130 agreed to carefully declare their investments and performances.
11% go bankrupt
Average, business angels stay involved for three years in a start-up 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 fact brought to light by Angelsquare is the time elapsed between an investment and a positive or negative exit. The median for positive exits is four years, but the latest exit is 15 years. For negative exits, the median is 3 years and the last exit occurred 9 years after the investment.
This issue of profitability at the time of exit brings up another interesting topic: knowing what is happening to start-ups right now. Or 11% of them went bankrupt13% are acquired and 16% are viable SMEs defined by Angelsquare as “a start-up that is still in business and has not made any new capital transactions in the past 48 months.” The majority of them raise money (60%) in seed (22%), Series A (20%), B, C or D. Only 3% of startups have made an IPO at the time of exit.
What is the typical profile?
Business angels are predominantly male (84%) and are 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. However, the majority of business angels (50.7%) say they want to be involved in developing the start-up they inject money into and share their skills and experiences. 47.4% say they are available in case of a request from the founders and only 2% of the business angels do not want to participate.
As with start-up management teams, women are underrepresented among business angels. The fact that they are predominantly male could partly explain why women-led start-ups have more difficulty raising funds.
When investing, business angels mainly look at the quality of the founding team, the possibility for the start-up to deploy internationally and the technology developed. Then comes the social impact and, surprisingly, the turnover, which is therefore not one of the most important criteria to be assessed.
Some areas have more coast than others. Investors particularly prefer the B2B sector (63%). Start-ups in the fintech and SaaS sector are also attracting a lot of interest. Then there are those in the B2C sector, the so-called impact start-ups, those in e-commerce, marketplaces and Food Tech. The IoT, which led the way at the beginning of French Tech, is according to business angels at the end of the most interesting sectors.
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