Angel network acknowledges a “year of change” with new licensing initiatives and chapters
IRVINE, Calif. – May 16, 2023 – Tech Coast Angels (TCA) members invested $15.4 million in a total of 41 companies in 2022, as noted in its 2022 Annual Report released today. The angel network announced a new licensing initiative that welcomed two esteemed angel groups, Pasadena Angels and MEDA Angels, as members of the TCA super angel network. These groups bring their unique wisdom to TCA: MEDA Angels is a specialty investment group comprising medical professionals, academics, and scientists; Pasadena Angels brings expertise in emergent and early-stage technology.
TCA’s total investments have exceeded $10 million for twelve years (from 2011 – 2022), which is the longest sustained level of high investment activity in TCA’s history.
TCA posted 13 exits in 2022, with 11 acquisitions, one buyout, and one IPO (initial public offering). Five exits realized returns to members between 10x and 34x. Of its 525 total number of investments since TCA’s inception in 1997, 53% (279) of the companies are still active. There have been 106 exits, and the overall return on all outcomes (including shutdowns) is 6.4x on the initial investments. While exits were at a record-high in 2022, there were also 10 shutdowns.
Twenty-one of the 41 companies receiving funding were new additions to TCA’s portfolio, representing 72% of investments, compared to 48% in 2021. While the angel network continued to fund a range of industries, life sciences (medical devices, medical diagnostics, pharma, and digital health) was the largest sector of dollars invested in 2022 (41%), followed by software (37%). Seed rounds continue to be the focus of TCA funding, with 68% of deals and 76% of investments in 2022, compared to 2021 respective percentages of 58% and 67%.
While Southern California remained TCA’s geographical focus, representing 49% of 2022 investment dollars and 46% of companies funded, for the first time TCA’s reach into other parts of the country and internationally exceeded the investment in local companies. This was due in part to our new licensees, and the ability of TCA networks to build relationships with other angel and investment groups through syndication through initiatives such as the Angel Syndication Network which TCA launched in 2016 and now includes over 60 leading Angel Groups across the country.
TCA’s diversity initiative is gaining traction: 29% of CEOs received funding in 2022 identified as non-white, up from 23% in 2021, and companies with female CEOs increased to 20% from 15% in 2021. Two of TCA’s network presidents are female. TCA continues to strive for more inclusive investments and membership opportunities.
TCA reported 410 members at year-end. This large base of active, knowledgeable and experienced members enables the angel network to provide 30-day due diligence on most funding decisions. TCA members continue to play an important role in the mentorship of its active portfolio companies and serving on portfolio company boards, while leveraging connections with other investment and operations opportunities.
Three of TCA’s networks have sidecar funds that grew relative to the previous year, and a total of $5.2 million was invested by these funds in 2022; this was in addition to $10.2 million in direct investment by individual TCA members in 2022, comparable to the previous two years. Twenty-six of TCA’s 41 deals in 2022 received investment from at least one network fund. In addition to incremental funding for entrepreneurs, these funds help members achieve the benefits of greater portfolio diversification.
“2022 was a year of significant change, not just for us, but for the entrepreneurial ecosystem and we see that 2023 is proving to be an even more transitional environment,” said TCA chairman David Friedman. “While the high investments in recent years showcase a strong pipeline of opportunities, we recognize that investments will be harder to attain for entrepreneurs and they should be realistic and well-prepared regarding valuations and spending. Seek investors with the experience to navigate through this uncertain time and listen to their counsel. Very good companies with really good ideas will survive and flourish. TCA, with the capital it has through its several funds and its large investor base, can provide the funding and expertise to help our portfolio companies attain success.
“Investors and other smaller angel groups may want to join TCA to access deal flow and gain expertise through other accredited investors’ knowledge and may want to diversify and invest in funds,” Friedman continued. “It’s a good time to connect with and learn from other angels; the Angel Capital Association hosts webinars and learning opportunities that are very beneficial. And I can’t stress enough that patience is vital: best exit returns occur five or more years after funding while failures often happen within the first two-to-five years after investment. Investing through funds and developing a diverse portfolio are keys to long term financial success.”
TCA’s 2022 Annual Report is available at https://tcaventuregroup.com/wp-content/uploads/2023/05/TCA-Annual-Report-2022-final.pdf. The report includes a summary of TCA’s activity in 2022, comprehensive detail about investments and chapter funds, TCA’s portfolio companies and exits, advice going forward for entrepreneurs and investors, and much more thought-provoking information.