$10.9 million in TCA Investment in 2023 shows we continue to fund exciting companies, albeit at a lower pace

Total investment for the year continues the longest sustained level of high investment activity since TCA was founded in 1997 -- 13 years at $10 million or more

From 2011-2023, total TCA investment each year was between $10 - $21 million

Five chapter funds and the target of a decision from the funds within 30 days of screening helped drive a strong pipeline. TCA is working diligently to be the Best Place for the Best Companies to get funded

61% of investment was into new companies in 2023 (vs 48% in 2022)

TCA invested in 32 companies in 2023, including 18 new companies

This total of 32 includes 12 companies in SAAS/Software/Data Analytics, 7 in Pharma, 7 in Medical Devices, 2 in Consumer Products/Services and 1 each in Digital Health, Medical Diagnostics, and Agriculture/Food.

The 18 new companies included 8 in SAAS/Software/Data Analytics, 5 in Pharma, 2 in Medical Devices, and 1 each in Digital Health, Medical Diagnostics and Consumer Products/Services

Annual chapter funds brought significant incremental capital to entrepreneurs and diversification for members

$5.7 million from TCA’s four network funds supplemented $5.2 million in direct investment from members

26 of TCA’s 32 deals in 2023 received investment from at least one network fund

Direct member investment in 2023 declined significantly, reflecting the environment

TCA now targets completing due diligence and making a fund decision within 30 days, after which individual members invest alongside the funds

The addition of the network funds has been a significant factor in bringing more capital to each company and more diversification to our members

TCA’S 2023 Investment of $10.9 million was part of a total of $61 million into those 32 Companies

TCA funding for new companies in 2023 averaged $367k per company and 24% of the total round -- higher than the ACA benchmark of $252k

TCA funding for follow-on companies in 2023 averaged $305k per company and 16% of the total round -- higher than the ACA benchmark of $233k

Syndication was critical, and TCA helps with that through ASN and our relationships

The median total round size in 2023 for new was $1.5 million (down from $1.8 million in 2022) and for follow-on was $1.3 million (down from $2.6 million in 2022)

TCA invested $10.9 million in a total of 32 companies in 2023

Investment was across a diverse mix of industries -- showing that TCA continues to invest in both tech and non-tech companies

Life Sciences was the largest sector (51% of amount) and exceeded half for the first time. Within Life Sciences, Pharma was largest with 29%. SAAS/Software/Data Analytics was largest single vertical with 32% of the amount invested

18 of these companies were new additions to the portfolio and 61% of the dollar investment went to these new companies (up from 48% in 2022)

Our members, with their extensive and broad industry experience, helped TCA invest with confidence in this diverse range of industries

Combining new and follow-on investment, Life Sciences and SAAS/Software/Data Analytics continue to lead with 51% and 32% of the dollars invested

Relative to ACA benchmarks, TCA VG invested more in Pharma, SAAS/Software/Data Analytics and Consumer internet, and less in Industrials/BTB, Consumer Products & Services, Financial, IT Hardware and Energy & CleanTech

Our members, with their extensive and broad industry experience, helped TCA invest with confidence in this diverse range of industries, which has always been part of TCA’s DNA

Of new companies added to the portfolio in 2023, Life Sciences and SAAS/Software/ Data Analytics continue to lead with 50% and 44% of the companies

Within Life Sciences, the largest categories among new companies are Pharma (28%), followed by Medical Devices (11%), Medical Diagnostics (6%), and Digital Health (6%)

Life Sciences has grown to 64% of dollars invested and SAAS/Software/Data Analytics

3 In 2023 TCA VG had five networks:

Tech Coast Angels Los Angeles is our largest network, with 136 members. TCA Los Angeles invests in a wide range of businesses in the US primarily with emphasis on technology, adtech, healthtech, media, entertainment, and SaaS. For leadership & member profiles, click here.

Tech Coast Angels Orange County is where TCA began in 1997 and is comprised of 94 members. TCA Orange County invests in a wide range of businesses in the US and Canada with an emphasis on medical devices, technology, fintech, edtech, healthtech, software, cyber, SaaS, AI, iOT, and some CPG. For leadership & member profiles, click here.

Pasadena Angels is our second largest network, with 100 members. Pasadena Angels invests at the seed to seed plus stage primarily in California and rest of the US and Canada with an emphasis on technology, fintech, edtech, entertainment, media, CPG and SaaS. For leadership & member profiles, click here.

Tech Coast Angels Inland Empire covers the area east of Los Angeles including Riverside and San Bernardino, wtih 11 members. Particular emphasis is on very early seed stage investing, with successful companies then exposed to the other networks within TCA. For leadership & member profiles, click here

MEDA Angels brings strong expertise in Life Sciences, with 55 members most of whom are doctors, PhDs and healthcare executives. MEDA Angels focuses on healthtech and invests broadly across the sector including digital health, SaaS, medical devices, robotics, diagnostics, wellness and therapeutics (limited to repurposed drugs and biosimilars). Emphasis is on mid-seed and A-Round and can be based anywhere in the US and even foreign-based. For leadership & member profiles, click here.

4 2023 was a challenging year of initiatives and change at TCA VG (formerly known as Tech Coast Angels)

Rebranded from Tech Coast Angels to TCA Venture Group to reflect our evolution

- No longer just “tech” but a diverse set of industries - No longer just “coast” (which originally referred to the California coast), but now over 59% of the dollars are invested outside of Southern California - No longer just “angels” with half of the investment through funds

and with the addition of our licensing program and an accelerator

Total funding of $10.9 million was down from $15.4 million in 2022, reflecting the overall downturn in the market (and one $3.2 million deal in 2022 which inflated total in that year)

Took actions to implement strategy changes to position TCA VG for growth: - Active efforts to expand into new geographies through licensing, including a

new TCA-Southeast network that was publicly announced in early 2024 - Created a new Accelerator that was publicly announced in early 2024 - Strengthened Angel Syndication Network pipeline with an additional meeting

each month on pre-due diligence deals - Provided additional support to our portfolio companies with stronger

relationships with VCs

TCA’s Angel Syndication Network (ASN) covers 60+ angel groups

These angel groups nominate their best deals to share with other angel groups for syndication

ASN hosts two monthly “virtual” web presentations -- one where the deals have been funded by another group AND one which shares high potential deals that passed screening or at the beginning of the DD phase. The purpose of these meetings is to help fill a round, expedite a closing, and save the CEO from extended road shows. The screening sessions are open and viewed by accredited investors from these respective groups. So far, 30-50% of those presenting have received additional funding from these investors (totalling $23 million)

Collectively, the angel groups participating in ASN represent over 1,500 angels, and more than $1 billion in direct investment

This greater syndication activity through ASN coupled with virtual screening and remote due diligence has shifted the geographic mix to more companies based outside of Southern California since 2020

Traditionally, the mix has been 85% - 90% in Southern California where TCA’s members can be actively involved in mentoring and governing

Due to Covid-19, the formation of ASN, the shift to virtual screening and due diligence, and the addition of virtual members across the USA, more than 50% of TCA deals are now outside SoCal providing increased geographical diversification

54% of all deals and 59% of all investment were outside SoCal in 2023

In contrast, ACA Benchmarks show a much greater concentration on local funding

Investments in Massachusetts and New York were the largest concentrations outside Southern California

Southern California represented 41% of the investment and 46% of the companies

Massachusetts was 13% of the investment and 9% of the companies

New York was 10% of the investment and 11% of the companies

Northern California was 7% of the investment and 3% of the companies

Other states were 29% of the investment and 31% of the companies

There were no International deals in 2023

The TCA Venture Group’s five networks combined to fund $10.9 million into 32 companies

TCA-OC and Pasadena Angels each led 29% of the deals, followed by TCA-LA (24%) and MEDA Angels (18%)

In terms of funding, Pasadena led deals accounted for 30% of the funding, followed by TCA-OC (28%), TCA-LA (21%) and MEDA Angels (21%)

Regardless of the network leading due diligence, all deals were available to all members for investment, and seven companies received funding from more than one network fund

TCA had 1 “Home Run” and 2 small exits (and 8 shutdowns) in 2023 dropping the cumulative return to 5.8x on all outcomes since 1997

DTx Pharma (2018 TCA investment) reached unicorn status and was acquired by Novartis for $1 billiion ($500 million upfront). Earliest TCA investors received an 18x return (if milestones are achieved) and 63% IRR); TCA ACE Fund-19 San Diego and TCA Ace Fund 3 investors received 14x. TCA invested over $2.5 million in funding in DTx Pharma, an amount exceeded by only 12 of TCA’s 544 portfolio companies in the angel network’s history. The combination of large direct investment by members and investment by two of TCA’s annual funds resulted in a large number of TCA members participating in the outcome. Several TCA members were active in management roles and as advisors, and made additional direct investment. See TCA VG press release here

Trials.ai (2019 TCA investment) was acquired by ZS Associates for a 1x return

Atlazo (2019 TCA investment) was acquired by Nordic Semiconductor (OSL: NOD) for <1x return This brings the total outcomes since TCA’s inception in 1997 to 125 exits, and 156 shutdowns. Of the 544 investments TCA has made since its founding, 263 (48%) are still active. At the highest price achieved after IPOs, TCA’s return (assuming equal weighting) has been 5.8x and the IRR has been 23.7%. This compares to 2.5x and 22% benchmarks for angels per Angel Resource Institute. Tax benefits from the write-offs are not included in TCA returns. 11

TCA’s results make it clear that patience is required -- with largest exits happening after 5 years or more, and most failures occurring in the “Valley of Death” 2 years to 5 years after investment

The number of exits dropped and shutdowns increased in 2023 due to the current market downturn

Exits dropped to 3 (the third lowest year since 1999) from 2022’s 11 exits. Shutdowns were flat at 8

Based on previous stock market peaks in 2000 and 2008, exit activity tends to surge just before peaking, followed by a surge in shutdowns just after the peak

If the stock market continues to rebound, exits should recover

TCA funding continues to be more likely when initial products/services are already developed and there is evidence of customer traction

59% of investments in 2023 were in companies with revenue and those seeking expansion capital, compared to 51% for ACA Benchmarks. This is driven by:

-- Companies are launching products/services earlier with MVPs (Minimum Viable

Products) before seeking investment

-- Investors at this downturn stage of the investment cycle expect companies to be closer to breakeven in order to survive the anticipated downturn

For companies where specific revenue numbers were available, 84% had less than $3 million in revenue in 2023

Investors are seeking safety in developed products and proof there are customers -- there was a dramatic shift from 58% with no revenue in 2022 to 18% in 2023

ACA Benchmarks have also shifted dramatically away from no revenues from 51% with no revenue in 2022 to 30% in 2023

There also was notable growth in companies with revenue over $5 million -- representing 11% of TCA’s funding and 12% of ACA Benchmark funding

TCA’s investment focus continues to be on “seed” deals

66% of deals and 57% of investments in 2023 were Seed -- compared to 68% of deals and 76% of investments in 2022

Some of this bias towards earliest stage deals has been the pursuit of lower valuations associated with Seed activity, since later rounds have been increasingly at less attractive valuations

Series A represented 25% of deals and 25% of investments in 2023

Series B & up represented 9% of deals and 17% of investments in 2023, a change from 9% of deals and 7% of investments in 2022

Most investments in 2023 continue to be either Preferred Equity or Convertible Debt that converts into Preferred Equity

The 30% invested in Preferred Equity is a significant decline from 50% in 2022

SAFEs increased to 22% of deals and investments

However, the prevalence of convertible notes (a combined 60% of the investment total) remains concerning to some because it limits long-term returns due to 1) less initial lift in valuation before Series A and 2) fewer deals will realize QSBS Section 1202/Section 1244 favorable tax treatment

Headcount of funded companies shifted to larger teams

The percentage of funding going to companies with 1 - 4 FTEs dropped from 53% to 33% in 2023, reflecting a higher bar and greater maturity before funding. This parallels the shift to fewer companies without revenue

Funding in companies with 50 - 99 FTEs increased from 0% to 9%

Traction among members deciding to invest directly in the most popular deals increased significantly at TCA VG

Funding of deals with more than 20 TCA VG members participating increased from 6% in 2022 to 26% in 2023

Funding of deals with 1 - 4 TCA VG members participating declined from 58% in 2022 to 37% in 2023

Syndication has become the norm, with 89% of deals involving other funding sources from angel groups

Angel syndication grew from 55% in 2022 to 89% in 2023

This trend is apparent in the ACA Benchmarks, which grew from 48% in 2022 to 59% in 2023

But ACA Benchmarks in 2023 still show 31% involving no syndication compared to only 11% at TCA

While Angel Syndication is increasing, involvement of VC’s and Strategics is decreasing

VC’s and Strategics fell from 73% of the amount invested in 2022 to 37% in 2023

This reflects VC’s scaling back new investments in Series A during the current down turn, as they have done in previous downturns

TCA VG is helping fill in the gap due to the retrenchment of VCs

TCA VG funding was a larger portion of each round, and VC funding was lower

In terms of dollar funding, TCA VG and other angel groups contributed a larger per centage of funding in 2023 -- increasing from 27% in 2022 to 49% in 2023

VC share of investment dropped from 54% to only 10%

This shift is not unusual since VCs tend to cut back more aggressively on funding new companies during a downcycle, focusing instead on sustaining existing portfolio

Funding by Strategics also dropped from 5% to 2%, reflecting the broader phenome non of less M&A activity during the downcycle

TCA members take an active role in governance in 66% of the investments in 2023 -- a dramatic increase from 37% in 2022

For 66% of TCA’s 2023 companies, there is a TCA member serving as either a board member or observer; in 2022 this was only 37%

This is much higher than ACA’s comparable benchmark of 47%

Recent studies from other angel groups show returns tend to be higher with board involvement by members (click here)

We are striving for greater diversity in our members and the background of our portfolio company CEOs

In terms of funding, the percentage going to non-white CEOs has increased steadliy from 18% in 2021 to 21% in 2022 to 30% in 2023

This minority representation is significantly higher than ACA Benchmarks of 14% in 2022 and 12% in 2023

Two of our five network Presidents are non-white

Funding of female CEOs was stable in terms of number of companies, but declined in terms of funding

In terms of funding of non-male CEOs, the amount was flat at 22%, but up from 15% in 2022. In terms of number of companies, the percentage led by non-male CEOs was down slightly to 11% in 2023, compared to 12% in 2022 and 15% in 2021

Compared to ACA Benchmarks, funding percentage was slightly below ACA bench marks of 16% in 2023 and 20% in 2022

Entering 2024, three of TCA’s five network Presidents are female

Mix of CEOs with prior experience as CEO decreased in 2023

36% of funding in 2023 was for companies led by CEOs with previous experience as CEO, down from 53% in 2022

This compares to the ACA Benchmark of 32%

This is concerning, since recent studies by other angel groups have shown higher returns for CEOs with previous experience -- click here

We will be studying this for TCA’s porfolio in the coming year

Valuations at time of TCA investment continue to increase above historical levels -- this hopefully will reverse in 2024

13% of TCA’s investments in 2023 were in companies with valuations below $6 million, continuing a steady decline since 61% in 2016

The long-term “sweet spot” for angel investing has been deals valued at $1-3 million --- this declined to 3% of investment from 18% in 2016

The 2023 valuation mix for TCA VG has less investment above $20 million compared to ACA Benchmarks

More on Valuation Trends ...

The median valuation eased a bit to $8.8 million from $10 million in 2022 but has still not dropped as much as later stage valuations and exits

The spread in valuations remains -- the 80th percentile is 1.8 times the median

New deals moved higher than follow-ons, driven partly by flat or down rounds, and partly because new deals had higher valuation due to more significant revenues

Series B valuations dropped dramatically, reflecting market forces for later stages

More on Valuation Trends ...

The overall medians for TCA VG in the past three years are mostly consistent with ACA Benchmarks

Seed valuations generally track ACA Benchmarks

However, Series B and later valuations for TCA are significantly less than ACA Benchmarks -- perhaps because the ACA deals have been more Series C and later

FOR MORE INFORMATION WEBSITE: https://www.tcaventuregroup.com Apply for funding: https://tcaventuregroup.com/apply-for-funding Apply for membership: https://tcaventuregroup.com/angels Learn about Licensing: David Friedman at dfriedman@prodigy.net Questions about the Annual Report: John Harbison at john_harbison@techspin.com Linked In: https://www.linkedin.com/company/659209 X/Twitter: https://x.com/TCAventuregroup Facebook: https://www.facebook.com/tcaventuregroup