Thoughts on startups by investors that
fund them & entrepreneurs that run them

Average Round Size in Angel Deals

The Center for Venture Research at the University of New Hampshire has been publishing statistics on angel investing for decades.  Over the past several years, the numbers of US companies funded by angel investors has increased from about 50,000 per year to over 60,000 annually.  Mark Boslet of senior editor with Venture Capital Journal posted the following chart on peHUB, based on CVR reports.  As you can see, in the past eight years, the average angel round has decreased from nearly $500,000 to under $350,000.


Why have we seen a drop in the size of angel rounds of investment?  Several possibilities come to mind:

  • The softness of financial markets has had a negative impact on the willingness of angels to fund larger rounds.  Shallow pocketbooks have led to smaller rounds.
  • The costs to startup companies, at least technology ventures, has decreased.  Consequently, entrepreneurs need to raise less money
  • Entrepreneurs have been willing to bootstrap companies (lower salaries, etc.), raising less money for early stage rounds, and enabling them to keep more ownership in their firms.

Two factors fly in the face of this trend:

1.   The seed/startup marketplace is rather hot, especially in Boston, NYC and the Valley.  Valuations of early stage deals are up significantly in these markets.  I suspect the round size has increased as well.

2.   Since 2007, Super Angels have really become active and, as a group, have been investing several hundred million dollars per year in early stage ventures.  Their pockets are deep, with plenty of capital to invest at the seed/startup stage.  My guess is that Super Angels are driving early stage round size up, not down.


In the sum, I see no definitive explanation for the decreasing average size of angel rounds.  What do you think?


All opinions expressed are those of the author,  and do not necessarily represent those of Gust.

Written by Bill Payne

user Bill Payne Angel Investor ,
Frontier Angel Fund

Bill Payne has been actively involved in angel investing since 1980. He has funded over 50 companies and mentored over 100. He is a founding member of four angel organizations: Aztec Venture Network, Tech Coast Angels, Vegas Valley Angels, and Frontier Angel Fund.

prev next

You might also be interested in

How to Give Women the Wings of an Angel

Canada has not tapped its female angel investor potential – yet.

The female angel investor conversation has been discussed inside and out. From TechCrunch, BetaKit to the Financial Post, there have been more than a few arguments made about the lack of female representation in Canada’s early-stage investment community and the benefits of tapping into this financial resource.

For example,

Read more >

Challenges and Rewards for Angel Investors

One of the most common questions we get is: What are the biggest challenges and rewards of angel investing? High net worth individuals become angel investors for a number of reasons, but the opportunity to work with entrepreneurs and provide guidance to founders is typically high on the list. In this video, angel investor Chenoa Farnsworth explains why, interestingly, both the biggest

Read more >

Why Does Startup Pricing Vary by Location?

Entrepreneurs seem genuinely surprised to find that investors in Peoria or Little Rock are not willing to invest in startup companies at Silicon Valley prices.  After all, they just read in TechCrunch that investors funded a company similar to theirs at an $8 million pre-money valuation!

The valuation of startup companies shouldn’t be impacted by location, should they?  Guess again! 

Read more >

Where would I go to invest in startups or emerging companies?

The first question you need to ask is “What country are you in?” and the second is “Are you an Accredited Investor by that country’s standards?”

If we’re talking about the US and you are NOT at the Accredited level ($1 million in investable assets, or $200,000 annual income), then for the moment you are actually not allowed to invest in privately held startups

Read more >

Crowdfunding: KickStarter, Indiegogo, AngelList, Gust: How to choose?

First, it’s important to understand that the four platforms you list fall into two very distinct groups.

Kickstarter and IndieGoGo are project-based crowdfunding platforms through which anyone can contribute money, either as a donation or with the promise that they will receive a tangible ‘reward’ of some kind if the project is successful.

Gust and AngelList are equity-based platforms, used by Accredited Investors  to facilitate the investment of money for an ownership interest in

Read more >


8 thoughts on “Average Round Size in Angel Deals”

  1. Bill, that is intriguing.  It does sound counterintuitive, with all the media chatter about a “frothy” market and about ever-larger angel rounds closing in the past couple years.  It would be interesting to see the full distribution of round sizes.  If I had to guess, my hunch is that a small number of large angel deals (say $1MM+) are getting done, but they are still outliers, and for each of those there are ten $250K seed rounds.

    Of course everyone’s anecdotal experience is unique; in my practice, working mostly with early stage consumer Web and mobile startups, the most common approach is initially to raise an angel seed round of $100K to $400K or so on convertible notes and stretch that funding far enough to develop a proof-of-concept/minimum viable product before going back to the well for a larger Series A priced equity round (or the equivalent).  That would have been out of the question even a few years ago, but with cloud computing and storage platforms like Amazon AWS, open-source stacks, and other innovations, I agree with your second point in particular that founders can do more with less these days.

  2. Tim Berry says:

    Nice post Bill, interesting data … I took it as an instant reflection of your middle bullet point suggestion, that the cost from zero to revenue on web-based companies especially, but also some other kinds of companies, has decreased enormously. What took a few million dollars in the late 90s takes a few hundred thousand now. 

  3. Joshua Scott says:

    Good article! Forgive me if I’m missing something obvious, but my first question was if the number of start-ups has increased by 20% in a few years, has the capital pool been able to catch up? Has the number of active angels changed to match? That would be interesting to know because the drop closely matches the percentage difference in average funding. I would take it to mean there are more quality start-up opportunities available as well as investor interest in diversification in unstable financial markets.