As SSTI noted in its recent look at quarterly investment activity, gaining insight into angel investment is difficult because of the challenges of separating angel activity from seed and other early VC transactions. Fortunately, the Angel Capital Association (ACA) recently published a report that provides a deep dive into 2025 angel investment activity and provides more clarity on this important financial partner for regional innovation. The big picture takeaway from the ACA report is that, like VCs, angel groups are making larger investments in fewer companies.
Angels invest in the earliest stages in company formation and often serve as co-investors and ecosystem partners for TBED organizations supporting new and emerging innovation startups. The most valuable angels to regional economies are those who help curate a pipeline of investable companies and reinvest a portion of their returns into more new innovation-driven companies. With angels as cornerstones of healthy innovation ecosystems, understanding how they are approaching investments is important for TBED investors’ ability to align their resources and adjust programs to meet the needs of companies.
ACA uses reports from its members as primary source data. Sixty-six groups from 23 states provided data for the report. While there are limitations to the volume and comprehensiveness of self-reported data, the numbers are detailed and provide important insights into how angels approach their investments, the niche they fill, and where there may be gaps. The groups engaged with ACA and electing to report likely have the infrastructure and deal volume that puts them at the high end of angel group performance.
The following highlights from the report affirm angels’ increasing selectivity and continued focus on the earliest stages of company development. One caveat is that fewer groups reported activity versus previous reports, which makes the increase in investment dollars more interesting.
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Total angel investment increased by 12%.
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The number of deals dropped by 3%.
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Average angel group investment per deal is $267,000.
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78% of angel group investments are under $300,000.
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Median investment per member is $22,000.
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60% of angel dollars are placed in pre-revenue companies.
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49% of dollars are invested at seed stage or earlier.
An important finding in the report is that angel investors are selective and place bets strategically in both early companies with promise and later-stage companies with validation. This pattern follows the larger VC approach of maximizing return on investments by reinvesting in the companies showing the most promise. Reinforcing this idea is the finding that 33% of dollars go to Series A rounds, and participation in deals larger than $5 million is likely to be in follow-on investments.
Investment performance is dependent on high-multiple “home run” exits. Median exit multiples are 2.0x, outpacing median venture distributions. M&A is the dominant form of exit at 85%, and secondaries are 12%, which is in the same range as VC exits of companies with government and nonprofit investment.
One finding that runs contrary to the recent VC trend in AI, is that 47% of angel dollars are invested in life science companies. The support for life sciences is interesting because the capital necessary to move these innovations to market is often well beyond the reach of angels, requiring strong syndication partners with deep pockets and specialized expertise. With angels generally not participating beyond series B rounds, they will be left with increasingly small portions of growing life science companies that may need hundreds of millions of dollars to fund clinical trials before acquisition. The report highlights that angels favor investments with technological and regulatory barriers, so perhaps the challenges of getting these opportunities to market are offset by long-term value and exclusivity that drive returns.
An important finding for TBED investors is that angel groups are still investing locally, but groups within some regions are deploying most of their capital outside their local market. Strong local ecosystems are important for retaining angel capital, particularly those with national networks, a strong sector focus, and the ability to rely on external diligence.
As TBED investors are aware, angels are key contributors to the success of local innovation-driven startups. With the rapid changes in the VC market and broad shifts away from smaller funding rounds, angels fill a key gap by funding the initial milestones that unlock larger investments from venture capital funds. Understanding the experiences of angels is important for TBED investors looking to shape their own programs and effectively deliver resources that work in local, regional, and national contexts. To discuss the nuances of early-stage investment, consider joining our TBED community of practice to connect with peers and practitioners across the country who are driving positive changes and making impacts in their communities.
This page was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.