SAC 25 Final National, Regional & Local Angel Group Investing Insights 2024 0507 1600PDT.pptx

Presentation on the current State of Angel Investing with hot off the press data from PitchBook.

1. May 8, 2024 Elaine Werffeli [email protected] Seattle Angel Conference 25 National, Regional & Local Insights on Angel Group Investing from 2023 & 2022

2. Sharing Investor Insights for 2023

3. Summary of Market Conditions First quarter of 2024 did not start on a high note for the US Venture Capital Community Market Headwinds continue to enforce their will on financial Markets Inflation within the US has been sticky in it last mile descent to the Federal Reserves 2% Target Become increasingly unlikely that rates cuts will occur in the first half of the year Investment Climate is Investor Friendly : Abundance of demand and opportunity Focus with existing portfolios Investors reduction in activity – VCs have become highly selective with deals Investors seem to be circling their wagons and making sure their most promising companies are positioned for success before they make new bets Pre-Seed and Seed rounds are at their lowest relative share than any other time in the last 10 years Too early to tell where 2024 is going Source: PitchBook Q1 2024 Venture Monitor & Platform

4. The US VC-Backed Company count now sits above 55,000 companies – Record Number ! This high number highlights the competition for capital Investors now have more choices Benchmarks for deals have increased Stronger companies are able to compel investment while struggling companies wont Headwinds make it necessary for companies to move significantly toward profitability while maintaining growth Source: PitchBook Q1 2024 Venture Monitor & Platform

5. Capital Invested in Pre-Seed and Seed continued to drop while Deal Count was up slightly in Q1 2024 Source: PitchBook Q1 2024 Venture Monitor & Platform Deal Value slumps to a 14 quarter low in Q1 2024 Deal Count picked up slightly from Q4 2023 but is at levels seen in 2019 Several factors: Startups intentionally delaying raising next round Shift in investor priorities Rounds taking longer to close More thorough DD Higher Benchmarks Startups have: Kept opened latest round Taking bridge financing Many Investors have advised: Reduce burn Extend runway Investors in market downturn tend to focus on helping existing companies and reserving capital for follow-on investments

6. On a annual basis we can see the significant drop YOY in US Pre-seed & Seed Deal Activity YOY Declines from $24.2B to $14.6B for combined value of Pre-seed and seed deals, a 40% decline Partially attributed to pullback of large investors or slowed activity from Seed Stage

7. Despite lower investment pace, the median 2023 Pre-seed and Seed Deal Sizes are comparable to 2022

8. And median Seed Pre-Money Valuations are comparable to 2022 while median Pre-Seed, Pre-Money Valuations dropped some

9. At the Series A level deal value and count dropped significantly in 2023 YOY Declines from $70B to $41B for combined value of Series A deals, a 44% decline While Deal Value even dropped below pre-pandemic levels, Deal Count is higher than 2020 In these leaner times many founders focused on getting to the next milestone before trying to raise so fewer companies have been in the market Also seeing a decline in the outsized rounds Aligns with increasingly popular “raise less, build more” philosophy Source: PitchBook Q1 2024 Venture Monitor & Platform

10. Median Series A Deal Sizes & Valuations both declined YOY

11. Sharing Investor Insights for 2022

12. Data Source: 2022 HALO Report

13. Large Decrease in Seed Deals impacts overall deal number 1,424 Total Deals 29% decrease YOY 1,001 Seed 42% decline YOY 406 Series A 43% increase YOY + + Source: 2022 Halo Report with 1,424 deals

14. Large increase in more proven Series A Deals impacts overall deal Investments while significantly lower amount of capital in Seed $4.3B to $2.3B Seed 46% decline YOY + + $2B to $4.9B Series A 145% increase YOY $6.3B to $7.2B Total Deals 14% increase YOY Source: 2022 Halo Report with 1,424 deals

15. How do the Regions stack up?

16. Follow the Money ..From Where ? California Angel Groups are responsible for 31% of $ Invested and 27% of Deals Seed/Series A Deals and $ invested by investor location Source: 2022 Halo Report with 1,424 deals

17. From Where ? The vast majority of Northwest Angel Groups deals are homegrown while Angel Groups in New York aggressively invest outside 55% of the time, all in region funding down significantly from 2021 Source: 2022 Halo Report with1,424 deals All areas saw an increase in out of region investing

18. To Where : Southeast & California remains a draw for investors for out of home region dollars being invested in companies there. 12% of $ from other regions comes to the Northwest Where Out of Home Region Deals Go - % Deals Where Out of Home Region Deals Go - % $ Invested Source: 2022 Halo Report with 1,424 deals

19. To Where ? California & Southeast are the regions where the largest of all Angel Group backed deals were located. Northwest is now ranked 3rd Source: 2022 Halo Report with 1,424 deals -5% 6% -15% -4% 19% 1% -14% 35% -45% 2%

20. What ? Information Tech was the top industry both Nationally and the Northwest followed by B2C . Northwest invests more in these two areas Source: 2022 Halo Report with 1,424 deals

21. How Much ? Pre-Money Seed Round Valuations grew 20% Nationally to a Median of $9M and Average of $12M while Northwest Median valuation is now at $10M slightly above the National average Source: 2022 Halo Report 20% 6% 43% 105% 0% -2% 62% 94% 10% -24% 80% 1% 35% -7% -6% -9% 8% 11% -47% -37% -43% -56% YOY Growth%

22. How Much ? Pre-Money Series A Round Valuations grew significantly nationally to a Median of $28M and Average of $45M and Northwest Median valuation is also at $28M Source: 2022 Halo Report 72% 64% 219% 268% 73% 69% 49% -6% 144% 128% 75% 221% 36% 72% 51% 64% 11% 10% 100% 180% 65% 86% YOY Growth%

23. How Big ? Seed Round - Northwest Median Actual Investment was 50% of Funding Round Size in line with National numbers for a total actual investment of $500K Round Asking Size Northwest: Median = $1.0M Average = $2.17M National: Median = $930K Average = $2.34M When the Average is larger than the Median value, we have outliers at the high end of the distribution that are pulling up the averages Source: 2022 Halo Report Northwest: Median = $500K Average = $2.2M National: Median = $500K Average = $2.0M Actual Investment 50% 54%

24. How Big ? Series A - At this stage Actual Investment came in very close to the Funding Round Size Round Asking Size Northwest: Median = $6.5M Average = $14.54M National: Median = $7.0M Average = $12.21M When the Average is larger than the Median value, we have outliers at the high end of the distribution that are pulling up the averages Source: 2022 Halo Report Northwest: Median = $6.0M Average = $14.1M National: Median = $7.0M Average = $12.2M Actual Investment 92% 100%

25. National Trends show the stark differences between Seed and Series A Source: 2022 Halo Report with 1,424 deals

26. How Much ? A switch from last year now Follow-on garners more than half of all investment $ in every region Source: 2022 Halo Report with 1,424 deals

27. How ? Preferred Equity is the #1 vehicle for both Seed & Series A followed by Convertible Notes . SAFEs have pulled into the third spot and seen in about 13% of Seed rounds. Source: 2022 Halo Report with 1,424 deals Seed Deal Structure by Region for 2022

28. Companies with Diverse Executive teams are more likely to outperform their peers Source: McKinsey & Company Diversity wins 2020 – How Inclusion Matters

29. More Who ? California has almost a quarter of all Female CEOs and in New York a quarter of CEOs are female. Northwest is just below the National Average for Female CEOs at 16% % of Female CEOs across Regions % of Female CEOs within Region Source: 2022 Halo Report with 1,424 deals

30. More Who ? California has a third of all Minority CEOs and almost a third of California’s CEOs are a Minority. Northwest is below the National Average at 12% % of Minority CEOs across Regions % of Minority CEOs within Region Source: 2022 Halo Report with 1,424 deals

31. Sharing Angel Investor Group Insights

32. There is Strong Female Participation in the majority of Seattle Angel Groups in 2023 Source: Self Reported Angel Groups

33. 18 Startup Funders in Seattle Area have shared data with us Funder Type Stage Focus Avg Investment Size Year Formed APIS Angel Event Fund Preseed & Seed Under $300K 2021 Trans Atlantic Angel Conference (TAAC) Angel Event Fund Preseed & Seed Under $300K 2021 FlyWheel Conference Angel Event Fund Preseed & Seed Under $300K 2017 Seattle Angel Conference Angel Event Fund Preseed & Seed Under $300K 2012 SeaChange Angel Active Fund Preseed, Seed & Series A Under $2M 2015 SWAN Angel Network Preseed & Seed Under $300K 2015 Virtual Angels Network Angel Network Preseed & Seed Under $300K 2021 Puget Sound Venture Club (PSVC) Angel Network Preseed & Seed Under $300K 1985 E8 Angels Angel Network Seed & Series A Under $300K 2006 Alliance of Angels (AOA) Angel Network Preseed, Seed & Series A Under $2M 1997 Keiretsu Forum NW Angel Network Seed & Series A – Post revenue Under $2M 2005 First Row Partners Micro VC Preseed & Seed Under $300K 2019 Startup Haven Micro VC Preseed & Seed Under $300K 2005 Untapped Capital Micro VC Preseed & Seed Under $300K 2020 Graham & Walker (G&W) Venture Builder Preseed & Seed Under $300K 2017 Allen Institute Venture Builder Preseed, Seed & Series A Under $2M 2016 Pioneer Square Labs Venture Builder Preseed, Seed & Series A Under $2M 2015 Madrona – Core Fund VC Preseed, Seed, Series A Under $10M 1995 Madrona – Acceleration Fund VC Series B & Series C Under $10M 1995

34. Thank You and hope you got a few new insights to take away with you today!