Possibly the most exciting trend for entrepreneurs is the explosion of activity by angel investors – those investing their own money rather than so-called super-angels that are effectively venture capital firms with commitments from third-parties.
And this week’s Big Deal analysis on Yodo1, a China-based publisher of games for local iPhone and Android smartphones, picks up how they are increasingly connecting to the corporate venturing units as potentially ideal partners.
Yodo1 raised $5m in its series A round from a consortium led by SingTel Innov8, the corporate venturing unit of the eponymous Singapore-based phone operator.
The other named investor in the round was Chang You Fund, which had seeded the company and is angel fund of Zhi Tan the former chief executive of Focus Media, a Nasdaq-listed company expected to go private at its extraordinary general meeting this week.
William Bao Bean, managing director of SingTel Innov8, led the deal for the corporate venturing unit but has long been tapped into the angel scene in China through his work with angelvestgroup.com.
In an email exchange, Bao Bean said AngelVest Group had been going for six years and “stepped things up since December 2010” with more angels joining and deals being done. And while he said AngelVest members were awaiting their first exits, he said valuations had increased for a handful of portfolio companies.
There has been an explosion of wealthy entrepreneurs in China and across Asia and emerging markets as some of its largest economies have turned increasingly towards capitalism since the early 1990s, often fuelled by people returning from the US or through America-based networks, such as The Indus Entrepreneurs (TiE) or Endeavor.
But there has also been a resurgence in angel activity in Europe (from its Victorian heyday) and the US (see this week’s comment for Gerald Brady’s figures on American angels). Alex Farcet, the entrepreneur behind the StartupBootcamp series that has heavy corporate backing, is creating a pilot Angelsbootcamp event in Berlin, Germany, in June. The objective? “Help motivate and educate 1,000 new angels in Europe by 2015,” he said by email.
But for there to be longevity in angel activity, whether investing through networks, individually or through crowdfunding platforms, requires the entrepreneurs to succeed. And their success in turn requires them to compete or collaborate effectively with the incumbent corporations as part of asearch for “step up” in valuations or profitable exits.
In an AngelPool*, an alliance of 200 angel networks around the world, advisory board meeting ahead of the Angel Capital Association’s annual summit last week the talk was how these personal investors were gaining increasing confidence and looking towards corporations as potential partners.
This partnership could encompass the range of options from commercial to equity investment or acquisition. And while the group talked under Chatham House rules, the general impression was how open both sets of corporate professionals and angels were to collaborating further.
As corporations become increasingly open to external innovation and many of their own executives become angel investors themselves, there is a great opportunity to help nascent start-ups.
* Michael Price, chief executive of AngelPool, will be discussing this topic more at our Symposium next month.