ASEAN angel investors optimistic despite startup failures: survey

ASEAN flags / Photo credit: aseanbriefing.com

In an annual investment survey by Angel investment network AngelCentral, 80.6% of angel investors said they were optimistic about the startup ecosystem over the next five to 10 years.

This is despite them recognizing major risks such as a lack of liquidity and the high failure rate of startups weighing on the economic environment. Nearly three-quarters of angel investors (74%) indicated that they spread their capital across three to four asset classes to reduce risk.

AngelCentral defines angel investors as individuals who have committed their personal money, time, and network to early-stage companies, which are typically in the first 12 to 36 months of their operations.

The survey this year, which polled more than 70 angel investors in ASEAN, sought to understand their views and investment approaches amid a changing environment.

In 2022, funding in the technology startup landscape began drying up, said AngelCentral, and this drought has extended over the last two years. According to the company, total funding in the first half of 2024 tumbled 58% year on year to about US$1.4 billion.

In response to the current economic climate, 26.4% of those polled said they further reduced their investment sizes in 2024. For 40.3% of the investors, the usual ticket is now in the range of US$10,000 to US$20,000.

For comparison, the most common ticket size in 2023 was US$20,000 to US$50,000.

About 70% of those surveyed kept their angel portfolio at below 10% of their total holdings.

Angel investing, which is considered a risky investment class, can offer significant returns. However, outcomes can often be “binary,” AngelCentral added.

And even though Angel investing is an illiquid investment class and is high-risk, 36.1% of those surveyed said they have not been actively tracking their returns.

Only 11.1% of angel investors achieved returns exceeding 3x their invested capital. Meanwhile, 16.7% of investors realized returns between 1x to 3x their initial investment, and 22% of them ran up overall losses.

“This gels with our findings that many angels invest not primarily for financial return,” AngelCentral noted.

A majority of angel investors (70.8%) said they do not follow an overarching, explicit investment strategy. The remaining 29.2% said they prefer to focus on particular sectors or concentrate on geographical areas such as ASEAN or Singapore-based startups.