Angel investing in the US has been remarkably resilient during COVID-19 as angels have adjusted to remote operations and actively sought new opportunities, as well as loyally supported their portfolio investments.

Angel investing showed the greatest growth in the number of deals done in the Fourth Quarter of 2020, according to On Grid Ventures analysis of Pitchbook/NCVA quarterly data.

Angel investing deals done grew 9% in the Fourth Quarter, while Seed and Early Stage, activity contracted -35% and -26%, respectively, and Late Stage increased 6%.

What’s going on?  I suspect Angels think like entrepreneurs, and see opportunity in times of extreme change.  Since they are basically accountable just to themselves (and, as some angels are quick to point out, their spouses!), they are freer to take risks as they seek opportunities. 

VC’s may have similar instincts, but are more heavily influenced by fund investment considerations and LPs.  Fundraising for some has been severely limited, and available funds were diverted to support troubled portfolio companies.  LP’s also tend to be far more conservative, and many lobbied their VC funds to cut back investing, and not make planned capital calls.

This is nothing new. It repeats the pattern from the Global Financial Crisis in 2009 when Angel investing grew 45%, while Early Stage and Later Stage VC contracted -35% and -21%, respectively.