Are you an angel investor or interested in becoming one? Join Madrona at our office on June 1st to network and hear AI-focused angel investors and operators discuss ways their companies or portfolio companies are taking advantage of generative AI — and machine learning more broadly — and how to evaluate early-stage generative AI companies. We will also cover a broad range of angel investment topics, so if you angel invest in other categories, we would love to have you. The panel includes Yoodli Co-founder Esha Joshi, Charmed founder Jeremy Tryba, Common Room Head of Data Science and ML Neha Gupta, and Essence VC Managing Partner and Co-host of the Open Source Startup Podcast Timothy Chen.
If you’d like to attend, RSVP at this link. Feel free to bring a friend who is also interested in angel investing and the startup ecosystem.
In 2022, a whopping 84% of Madrona’s early-stage investments included angels, up 5% from the previous year. We clearly value including angels in these rounds, and it is for more than just their capital. Angel investors are the foundation of the startup universe. Many of them are local founders, former founders, and operators. They provide advice to founders and access to their networks in the early stages of building a company. Angel investors are often the first non-family members to invest in a company, and they play an essential role in connecting a founder to early employees and the next round of funding. As venture investors, we recognize the value angel investors bring to the companies we invest in and the entire startup ecosystem.
State of U.S. angel investing
We are closely monitoring angel investor activity in the Pacific Northwest and beyond. According to Pitchbook and NVCA, U.S. VC investing activity decreased at all stages and sectors in the first quarter of 2023. This is true for both number of deals and deal value. Average deal value for angel and seed rounds fell by 53% from Q1 2022. This shows that even the most nascent stages of VC are not immune to the broader tech ecosystem’s economic downturn.
Investor interest in AI
Despite the recent industry slowdown, deal counts related to AI remain consistent with pre-pandemic numbers. Generative AI, and the broader category of AI and the infrastructure to support AI, is of keen interest to VC and angel investors alike. Over the past year, both consumer and enterprise adoption of generative AI has been undeniable. We have seen several waves of AI innovation over the past 12 months. Last August, Stable Diffusion was released, and the image generation movement gained momentum. In November, ChatGPT captured massive public attention toward LLMs. AutoGPT surpassed 130 Github stars, and Baby AGI surpassed 14K stars. Despite the shifting economic environment, venture capital and angel investors alike have shown a huge amount of interest in investing in generative AI. According to PitchBook, roughly $1.7B was invested across 46 generative AI deals in Q1 2023, and an additional $10.7B worth of deals were announced in the quarter that have not yet been completed.
As we have had conversations with numerous angel investors in the PNW and beyond, it remains clear that generative AI — and machine learning more broadly — applied to a variety of applications remain top of mind for angel investors and operators.
Open Directory of Angel Investors
As we continue to engage with angel investors, we have noticed a challenge: While organizations like the Alliance of Angels are great for bringing angel investors together, angels and founders often struggle to find each other. To help address this issue, last year we created a directory of angel investors in the Pacific Northwest. We are excited to continue building on this directory by expanding it to include angel investors beyond the PNW. The directory includes areas of interest and contact information, and we hope it is a resource for founders looking for angel investors that fit their needs.
If you are an accredited angel investor and want to be added to Madrona’s directory, please submit your information here.
Improving access to deals for angels
Angel investors have expressed a desire for increased access to deals and education about investing, as reflected in our survey from the past two years. While an increasing number of tech employees are accredited and qualified to invest, they may lack knowledge in conducting proper due diligence or may not have enough deal flow to make quick decisions. We aim to expand our angel directory to help founders reach more angel investors. The top three factors that would encourage angel investors to increase their investments include:
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- More collaboration with institutional VCs
- More opportunities to meet founders
- More access to low-cost funding rounds
Getting in contact with the PNW angel community
There is an increasing number of angel investor communities and resources in the PNW and beyond. This list is not exhaustive, and if there’s a group we should add, please let us know.
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- Alliance of Angels: The largest and most active angel group in the PNW. Each year, angels work together to invest in 20+ companies.
- E8: A Seattle-based member organization of angel investors focused on early-stage cleantech companies whose innovation will increase the sustainability and health of our planet.
- Grubstakes: A group of 50+ angel investors in Seattle that fund and mentor startups in the PNW.
- Puget Sound Venture Club: Founded in 1985, PSVC paved the way for many angel investors in the PNW.
- The Seattle Angel Conference: Focuses on growing the startup and angel investor ecosystems in the greater Seattle area through a variety of events that bring angels and founders together.
- TiE Seattle: A network of entrepreneurs and executives with the mission of supporting and promoting entrepreneurship in the Greater Seattle area. The TiE angel group evaluates hundreds of startups each year.
We want to thank all the angel investors in the Pacific Northwest and beyond. Your work is crucial to the technology ecosystem, and we are excited to continue working with you in the future. If you are an angel investor or are interested in becoming one, please join Madrona for a discussion on the evening of June 1st at our office. You can meet other angels and participate in a conversation with a broad range of angels and operators.
Please RSVP with this link to attend the event.
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