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European Angels Fund (EAF) publishes the first empirical analysis of its Business Angels portfolio

The EIF has recently published an update of the performances of the European Angels fund using its proprietary database, to shed light on a specific subset of the European business angel (BA) sector, i.e. the 106 BA's who have entered an agreement with EIF. The EAF is an initiative of the European Investment Fund (EIF), which was launched in 2012 as a pilot project with the support of Business Angels Network Germany (BAND). The figures below are a result of a working paper by EIF Research & Market Analysis (RMA).


Compared to the average BA, the average EAF supported Angel financier is likely to be more experienced and wealthier. Therefore, one important caveat of this study is that the results are not indicative of the general BA market as such and need to be interpreted with caution.


The EIF has invested in 438 start-ups so far, of which 12 had to be written off by the end of 2018, while 23 were successfully sold via trade sale. Most sales took place in the last two years, which shows that EAF BA's invest for the long term.



The principle of cooperation between EAF and BA's is that EAF selects the BA's primarily based on their previous investment experience. After the selection, the EAF invests together with the BA's pari-passu, usually one on one. The program provides for a time horizon of ten years, a five-year investment phase and a five-year de-investment phase, which gives the angels time and enables them to pursue a long-term investment strategy.


There is no deal-by-deal review by the EAF; investment decisions are fully delegated to the BA's. Their independence is the most important element of the program because it gives the angels the freedom to make decisions on their own. While the majority of these participating BA's are solo-investors, 12 of the EAF partners have opted into the program as a team.


As of yet, 106 BA's have committed to co-invest with EAF. Today, seven European countries are supporting the fund with a current volume of 700 million euros. These countries are beneath Germany Spain, Ireland, Denmark, Austria, Finland and Belgium. Furthermore, there is a pan-European EAF program that especially supports cross-border investments.


Among other things, the new study has examined the characteristics of the angels associated with the EAF: 97% are male, only 3% female, the average is 50 years old and almost all of them have an academic education. They mainly invest in the early stage- and home market,. Only 35% said they belonged to a network. A total of 167 million euros (EAF + BA's) was invested by the end of 2018, almost two thirds of which in ICT, followed by life science and manufacturing.


The start-ups are predominantly very innovative and very often hold several patents. In the period following the investment, the key figures develop very positively, especially in terms of employment and turnover. The number of start-ups invested amounted to 633 at the end of 2019, which represents an exponential increase compared to 2018 with 438. Precisely because de-investment is now pending in many cases, it is to be hoped that this very informative study can be repeated soon.


Source: EIF Working Paper 2020/062: The Business Angel portfolio under the European Angels Fund: An empirical analysis, Release date: 03 February 2020: www.eif.org/news_centre/research/index.htm . Read the full report: https://www.eif.org/news_centre/publications/eif_working_paper_2020_62.pdf.

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