Spanish Business Angels remain active despite the COVID-19 pandemic

Published on 20/11/2020
Spain

77% of Spanish Business Angels that invested in 2019 have invested again in 2020, according to AEBAN Business Angels report

Last Wednesday, November 18, the Spanish Business Angels Network AEBAN presented its annual report on the activity of business angels in Spain. Following the trend of previous years, 2019 was a year of high activity for startup investment, beating the record for the number of direct deals:

  • 89% of investors built their portfolios, with an average of 2.6 new deals each.
  • 49% of investors supported portfolio companies with follow-on investments
  • Growing community: 24% of investors did their first investment in the last two years.

Despite the Covid-19 pandemic, the pace of investment in the last quarter of 2020 is expected to continue and the volume of activity will be similar to the previous year.

In fact, between January and September 2020, investors have maintained their commitment and support to startups. 77% of the business angels that made an investment in 2019 have invested again this year.

This is no coincidence, says AEBAN's VP Regina Llopis. "In an environment of accelerated digital transition and low-interest rates, both the creation of new technology-based companies and the funds destined to finance them are exploding."

She also highlights the role of business angels as "quality investors who will be key in part of the much-needed job recovery in the coming years."

The group of investors is gradually expanding, as shown by the fact that 24% have made their first investment in the last two years. On the other hand, 49% of business angels continue to finance startups in which they already had a stake (follow-on). The geographic scope of investor activity is also expanded, consolidating the entire country as an investment area; The local and proximity component loses weight, to which 30% of investors with international activity are added.

DOWNLOAD AEBAN BUSINESS ANGELS 2020 REPORT (English)

DOWNLOAD AEBAN BUSINESS ANGELS 2020 REPORT (Spanish)

Most attractive sectors in times of pandemic 

Biotechnology and pharma are growing sectors during the pandemic. They represent 16% of the investments made in 2020. This means one in five investors already has a stake in this sector. If biotechnology, pharmacology and health are combined, this area is consolidated as the preferred one for investors for 2020.

The leisure and media sectors have increased their attractiveness among investors in this period and have good prospects for the near future as indicated by investors in the expected trends. The sector tends to consider that COVID-19 will not have an excessive impact on the financial capacity of investors. 35% of those surveyed acknowledge that the situation has affected their assets and that they will have fewer funds to invest, while 27% consider that they will not be affected. The rest (38%) have a neutral opinion, perhaps because their equity exposure is very limited or because their sources of income have remained unchanged.

Although the investment capacity seems that it will not be significantly reduced, the COVID-19 will alter the focus of the activity, since 42% of investors consider that they will make fewer investments in startups, while 28% do not expect to reduce them and 30% don't know. On the other hand, the majority of investors (58%) do not expect significant changes in the performance of their portfolios, as a whole, due to the pandemic.

  

Evolution of the portfolio and profile of investors 

Diversification is imposed as an investment strategy at the cost of making lower average tickets, between €10 000 and €25 000. This facilitates portfolio diversification, but forces entrepreneurs to coordinate operations with a greater number of investors. The increasing variation leads most investors to consolidate larger and larger portfolios, starting from ten investments, which also points to the diversification of the sector. 

The average age of Spanish investors continues to increase and is already close to 53 years, which brings it closer to that of other mature countries such as the United Kingdom (55 years) or the United States (57 years). It is significant that 90% of those surveyed are over 44 years old, a higher percentage than in the UK (86%). 

Most investors accumulate considerable experience in this activity. Three-quarters of Spanish investors have at least three years of experience and 32% have more than eight years. However, this is a growing community, and a quarter of Spanish business angels have started in this activity only in the last two years. 

One of the pending subjects of the entrepreneurial ecosystem and particularly of the investment environment is the participation of more women in leadership positions and investment decision-making. In this year's study, 10% of the participants who indicated their gender are women, a figure that has remained stable for three years. In line with the international average, two out of three investors have financed a startup led by a woman. 

AEBAN 2020 Business Angels report has been produced in collaboration with IESE Business School, Caixabank-Day One and ICEX-Invest in Spain. More than 150 Spanish business angels took part in the survey.

DOWNLOAD AEBAN BUSINESS ANGELS 2020 REPORT (English)  

DOWNLOAD AEBAN BUSINESS ANGELS 2020 REPORT (Spanish)