Turning a $100k investment into a $2.3m exit over four years...
Last month I presented the 2019 Australian Angel Awards at an event in Sydney. Female-focused investor network Scale Investors (not to be confused with Scale Partners!) took out the award for Best Angel Exit of the Year, with a $100k investment in TrademarkVision in 2014 returning $2.3m after its acquisition by CompuMark late last year. This resulted in a cash-on-cash return of over 20x for the four angel group members who participated, but this excludes an additional earn-out payment which will likely push the multiple up to closer to 30x.
Commenting on the award, Scale Founding chair Susan Oliver said: “Since commencing our angel network in 2013 Scale Investors has invested in 18 businesses including second and third rounds. The size of that investment is just under $10m. Our focus is to support woman entrepreneurs in diverse leadership teams – a group that is underrepresented in funding receiving maybe 2% to 2.5% of funding in start-up to VC. At any time we have 60 to 80 active angels who back their knowledge, judgement and experience to invest in, support and provide board governance to our investee companies.
“Trademark Vision is a perfect example, where Sandra Mau identified the opportunity for her work in image recognition, applied it disruptively in the trademarking area globally, was funded and supported by Scale Investors and receive guidance and strategic support from leading Scale Investor Lauren Melton who served actively as chair of the Trademark Vision board. “
The return on the deal was significantly up on last year’s winner of the award, Sydney Angels’s 8.4x exit through the ASX listing of transport booking marketplace Jayride (ASX: JAY).
The Best Exit category is one I’m always excited about – as this is really why angels invest in the first place. People talk about angel investing being about supporting the community and giving back, and that’s all true to a certain extent, but the sought-after exit is the real driver. Celebrating these successes may seem unnecessary to some, but the intent is to boost interest in angel investment as an asset class, which in turn benefits everyone in the space. A return of 20x or 30x over four years is a great advertisement for angel investing.
Another interesting aspect of the entries in this category was that the average amount invested was just over $125k per deal, and even then was often split across multiple investors in a syndicate. So this highlights that good returns can be achieved by angels writing smaller cheques too.
I set these awards up last year with Techboard (a data company I co-founded with Peter van Bruchem) and Angels of Australia, to recognise and celebrate those active in the angel investment community and the importance of angel investment to the growth of the Australian startup and tech ecosystem.
This is only the second year we’ve held the awards and it’s a particular challenge to extract the most worthy nominations from angel investors who sometimes prefer to shun the spotlight. But with fantastic support from a collaborative community of angel groups around the country it feels like we’ve managed to.
Jordan Green was awarded Angel of the Year, in recognition of his contribution to angel investment and overall positive impact on the angel community. Green is considered by many as the “godfather” of angel investing in Australia, having been involved in the creation of the Australian Association of Angel Investors.
“In the 14 years since I instigated the organised Angel community in Australia we have seen the Angel groups and the independent Angels grow to become the most significant source of capital for startups in Australia.”
Green is also president of Melbourne Angels, the angel group he founded in 2007. “Last year my group, Melbourne Angels, was the most active startup investor in the country. About two thirds of all Australian unicorns have been initiated with Angel investment. The Angel groups alone have funded more than 2,000 new high-skilled jobs. It is truly satisfying to see the Angel community continuing to grow and prosper, to know that the future of the economy and Australian competitiveness is being driven fundamentally by the men and women with the confidence and commitment to support our rapid value-growth ventures. It is a privilege to be an Angel investor and an honour to receive this award from my peers.”
Also from Melbourne Angels, Bill Grierson was awarded Most Active Angel Investor for the second year running. Despite claiming to be winding down his activity, the Melbourne based investor still made 13 investments over the year (down on last year’s 22).
“Back-to-back Coleman Medals feels pretty cool....we are particularly happy that all of the 13 qualifying investments this year were follow-ons. There is a lot of talk about the lack of angel involvement into second or third rounds and this is something we have been really trying to focus on ourselves - looking away from the “glittering new objects” that are always being placed in front of you in order to concentrate on the real businesses you already have a stake in - and it is also makes portfolio management sense.”
According to Grierson’s tally, these latest deals now form part of a portfolio of 92 separate investments into 49 different companies, accumulated in a little over five years.
Brisbane Angels won the Most Active Angel Group award, with 29 qualifying investments into 24 companies recorded over the 12 months – more investments than the next three most active groups combined.
The judging panel was led by Jordan Green, and included representatives from the seven main angel investor groups in Australia.
You can read press coverage of the awards here. The awards were part of a broder angel event organised by Techboard's CEO Peter van bruchem, you can watch a video of the 'Investing Like An Angel' panel session here for plenty of insights on how to approach angel investors and what they look for.