What do the results of the survey say about Business Angels in the Czech Republic?
Although angel investing is not yet widespread in the Czech Republic, Czechs are still among the most skilled investors in startups. Their strategies have generally been successful so far. Almost nine out of ten investors were able to make a profit on their investment, with nearly 12% making more than ten times their investment. Two-fifths of investors consider investing in startups more profitable than other forms of investment. These are the findings of a survey conducted by investment group DEPO Ventures, which is building a unique syndicate of angel investors in addition to angel funds. The survey was also conducted in partnership with the law firm Havel & Partners and the agency CzechInvest. The aim of this fourth annual survey was to map the environment of angel investing in the Czech Republic.
Czech Angel Investors See High Success Rate in Startups
Contrary to the widely accepted rule that a large percentage of startups fail, the survey suggests that investments have mostly been successful so far. About two-fifths of investors (41%) consider the performance of their investments in startups to be higher or equivalent to other asset classes. Exit has already been achieved in some of their investments by about 40% of investors, with the number of investors who sold their investments increasing by more than 10 percentage points compared to last year. Almost 86% of them sold their share at a profit. Investments were most commonly evaluated once to five times (51.4%).
Overpriced Valuations Troubled Investors but Expected to Disappear
Overpriced valuations have been troubling investors, but they will disappear this year. On average, each investor has about eight investments in startups, with each of them adding an average of 2.6 investments last year. This is despite the fact that almost half of the investors said they were troubled by high startup valuations last year. However, they generally rated 2022 as better than average in terms of the quality and quantity of startups, investment environment quality, and portfolio performance. Venture capital investments are expected to continue this year, although investment appetite is 12% lower than in 2022. About two-thirds of the surveyed investors said they plan to invest at the same level this year (38%), with 16% planning to invest significantly more and 13% planning to invest less than last year.
Investment Environment Improving in 2023, Opportunities Await
According to investment professionals, there may be good investment opportunities this year. "It doesn't make sense to limit our investment activity now. This year, we want to continue at the same pace and invest in around 15 early-stage startups. The advantage is that some overpriced valuations of some startups, particularly in high-cost countries, have disappeared, which has distorted the entire market," says Petr Šíma, partner at DEPO Ventures.
Angel investing is not for everyone. According to the survey, entrepreneurs typically invest money in early-stage startups (8.9%), while a significant portion of investors is retirees or high-net-worth individuals.