In this second video extract from Angel MeetUp 2012 in Dublin, US angel investor Bill Payne talks about trends in pre-money valuations in seed and start-ups in the US in 2010 and 2011.
Payne, who is based in Las Vegas, has been operating in the angel investing space for more than three decades in the US. He was the keynote speaker at Angel MeetUp on Wednesday, a new forum for angel investors on the island of Ireland to connect and share ideas.
It was in 1980 that Payne said he made his first two angel investments. Since then, he has invested in more than 50 start-ups in the US.
Payne told the audience of more than 100 angel investors, plus start-ups, about how he set about to glean data from angel groups in the US in order to build a picture about what the pre-money valuation trends were for pre-revenue start-ups in 2010.
Firstly, he said not to treat that data as anything other than anecdotal, as all of the conclusions were made based on his own research.
"What we’ve discovered in 2010 and 2009 is that the market was actually pretty soft," said Payne.
He said many angel groups had made deals that were less than US$1m in pre-money valuations.
Payne said his first two investments were made in 1980. "The first deal I did at a pre-money valuation of less than a US$1m was in 2009. So valuations have not inflated over the last 30 years."
He also spoke about how valuations varied from region to region in the US between 2009 and 2010. He said this was probably due to more competition in certain regions.
Data from US angel groups – 2011
Then, in the summer of 2011, Payne contacted the leaders in 46 angel groups in North America. He said his data came from 20 states.
Payne also gave some insights into the competitive climate that exists in places such as New York City, Silicon Valley, Seattle and Boston. He said New York is an interesting phenomenon, while he also touched on the very competitive marketplace that exists in Silicon Valley.
He spoke about how in places like Dublin and LA there is an open angel investing community, but that in Silicon Valley it’s more of a closed community. Check out his insights here!