Pre-seed stage investments are particularly difficult to monitor given most angel investments are not tracked until much later in the life of the startup. The European Business Angels Network organisation ('EBAN') estimates that the 'visible' market only represents 10% of the overall angel investments. As such there is an inherent bias in our datasets towards 'super-angels' and/or startups that have already managed to progress through multiple stages of investments. The reporting lag is also much more likely to impact the performance for 2018 and 2019.
Angel investing in Europe has grown significantly from just a handful of investor networks on the continent in the late 90s to a market that today sees more than 450 active communities of angels scattered across the map.
This strong growth is also reflected in the size of the angel market in terms of investments made annually in early stage startups. Nearly €7.5B are estimated to be invested each year by European angels, with approximately forty thousand startups receiving pre-seed, seed and series A funding from this category of private investors. To put this number into perspective, in 2009 the angel investor market in Europe was estimated to be worth approximately €2.6B. EBAN has been monitoring the angel investment market in Europe since 2004 when we first launched our annual 'Statistics Compendium' publication.
Angel investors form a critical part of any successful ecosystem. Looking back a dozen or so years ago, there were very few angel investors in Europe, and even fewer founders turned angels. For TransferWise, it was a huge coup to get the likes of Max Levchin (founder of PayPal) and David Yu (then the CEO of Betfair) to invest in our seed round. Besides the credibility, it gives startup teams lots of experience to tap into for problem solving as you grow. Seed funds like Seedcamp, who often act together with the angels, also have a vital role to play in fulfilling this need.
We are seeing consolidation of angel investment activity in many countries in Western Europe and strong expansion into regions such as Central and Eastern Europe and South Eastern Europe. We're also noticing an increase in diversity within the angel investor population, not just in terms of gender with more female investors participating in angel networks, but also in terms of age and background profile of the individuals beginning their investor careers. What has never changed in these years, though, is the fundamental role played by the angels in getting ideas to the market and scaling up businesses in their early days.