Investments in technology are increasingly attractive
A quarter of angel investors want to increase their venture capital this year, shows a DEPO Ventures survey
20 April 2022, Prague – Angel investors are not losing their appetite for further investment. Roughly a quarter of them intend to significantly increase the amount of venture capital this year. Half want to invest a similar volume of funds into early-stage startups as last year. Furthermore, it appears that they are gradually increasing the frequency of their investments. While last year, one angel investor made an average of 2.3 startup investments, the previous year this figure was 1.7. On average, each investor has six investments, and the number of exits is also gradually increasing. Mostly successful ones, where the investors' money has paid off. This was revealed by a survey conducted by the Czech financial group DEPO Ventures, which is building a unique syndicate of angel investors worldwide. The aim of the survey, which took place at the beginning of 2022, is to explore the current state of the market and identify any shortcomings.
„Two years ago, most investors reacted to the pandemic and its associated uncertainty by halting further investments. However, in the period that followed, we saw a historically unprecedented volume of investment in startups in Europe. European investors seem to have grasped the importance of technological investments. And perhaps they understand it even more now. New technologies are needed not only to save the planet but also to safeguard freedom.“ says Petr Šíma, founder and CEO of DEPO Ventures.
The average investment by a Czech angel investor in an early-stage start-up is 80,000 euros, or just under two million korunas. Twenty-one % respondents invest more than 100,000 euros, whilst 44 % angel investors make do with an amount of up to 25,000 euros. As in the previous two years, the most popular sector remains investment in start-ups focusing on financial technology (49 %), followed by e-commerce (37 %). From a technological perspective, Czech investors are most interested in start-ups specialising in artificial intelligence (AI) and blockchain.
Startups with the potential to change the world for the better
Over 38 % respondents in the survey stated that they do not mind which part of the world they invest in. They either have their sights set on the whole world, or do not care in which region a particular start-up operates. A further 18 % investors focus on Central and Eastern Europe, and 15 % on the entire continent. However, nearly a third of investors concentrate solely on domestic start-ups. A broader scope would enable them to tap into global opportunities and increase their chances of diversifying their portfolio more effectively.
„There is a growing feeling in Europe that we must look after ourselves. That it is better than relying on help from the USA, the state, or large corporations. The startup ecosystem plays a fundamental role in this. We see successful entrepreneurs, new entrepreneurs have role models, and they also have an investor base. And angel investors are the essential breeding ground for the entire ecosystem. For a long time, I have been trying to bring new angel investors into investing. And now is the time when investment needs to be increased. Into technology, into entrepreneurs, into our future. Startups as an investment category are indeed risky, but they are the most profitable in the long term. Excellent protection against inflation. And moreover, they have the potential to change the world for the better.“ says Petr Šíma.
Survey results confirm this as well. When asked what the main impetus for investing in startups is, respondents most frequently cited financial motivation. However, the opportunity to support innovation is in third place, and the need to give something back to society is in fifth. Almost three-quarters of survey respondents dedicate fewer than five hours a week to angel investing. More than ten hours a week are spent on it by 13 percent of investors. The time dedicated to investment activities increases with the total number of investments and the age of the investor. The more they invest, the more time they dedicate to managing their portfolio.
The survey suggests that investment in start-ups has so far proved successful. Almost 30 % investors have already exited some of their investments. And nearly 88 % of them sold their stake at a profit. Their investments most often yielded returns ranging from one to five times the original investment.
Individual investing leads, but investors are missing out on the benefits
Angel investing is usually seen as an individual activity. This was already suggested by last year’s survey and is confirmed by this year’s data. 77 % of respondents invest directly. However, investors combine different approaches. 43 % of respondents invest through a fund, and 42 % have at some point utilised a syndicate with other angel investors. The reluctance of a majority of the investors surveyed to become members of a Czech or international community – such as a club or syndicate – is generally linked to a lack of investment opportunities or co-investors.
Respondents consider the lack of high-quality start-ups to be the biggest problem in the Czech venture capital scene (34 %). Almost a third (31 %) of investors mention that they do not have enough time to search for start-ups, consider start-up valuations to be overvalued, and feel that the legislation is poorly designed. Respondents who have never invested in a technology start-up most frequently cite excessive risk and high capital requirements, alongside a lack of time.
More about the survey
The aim of the research was to map the environment of angel investing in the Czech Republic. To find out how angel investors invest and what problems they face. The report presents the results of a quantitative research survey, which was conducted in the form of an online questionnaire with a sample of 122 respondents. The questionnaire was sent to angel investors in the Czech Republic and further disseminated organically among non-startup investors. Data collection took place during January and February 2022. The survey results, with detailed commentary, are HERE.
More about DEPO Ventures
DEPO Ventures I am an early-stage startup investor in the CEE region, supported by a community of angel investors. I manage two angel funds that allow investors to be actively involved. In total, we have already invested in 18 companies, for example in Tatum, SmartGuide, Mileus, and Oxus.AI.
The investment group also manages the international syndicate DEPO Angels, through which it connects reputable investors with quality startups and simplifies the entire investment process for them. Furthermore, it arranges favourable syndications, which allow for investments even in smaller amounts.
DEPO Ventures' vision is to teach entrepreneurs and high-net-worth individuals that startup investments should be a natural part of every investor's portfolio.
Press release
Jaroslav Průcha, +420 737 672 966
jarda@hustakomunikejsn.cz