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Episode 45: Breaking Down the 2025 Angel Funders Report | ACA Board Member John Harbison on Valuation Compression, Board Seat Decline, and Follow-On Performance
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Today's episode explores three ideas that caught my attention:
- Angel board representation dropped from 34% to 26% - Despite consistently seeing better returns WITH board representation, fewer angel groups are securing board seats.
- Early-stage valuation compression - The gap between median pre-seed ($10M) and Series B ($19M) valuations has shrunk by 3x over the last few years.
- Hybrid angel group models write bigger checks - Groups combining both “pure networks” and funds tend to invest larger amounts than pure models.
I explore these ideas and more with John Harbison, ACA Board Member, Chairman Emeritus of TCA Venture Group, and co-author of the 2025 Angel Funders Report. As a current Angel Capital Association Board member, a contributing author for the comprehensive Angel Funders Report, and a repeat guest of the show, John offers a world-class perspective on angel investing trends and best practices.
During our conversation, John shares:
- A data-driven framework for understanding how follow-on investment rounds often deliver better returns than initial rounds - demonstrating how risk reduction and valuation timing can create superior portfolio outcomes for angel investors.
- Specific evidence that board representation increases company success by 8x - including actionable strategies for smaller angel groups to secure observer seats when full board positions aren't available.
- Practical insights on market cyclicality and capital efficiency during downturns - including strategies for angel investors to adapt their approach when "we're in one of those troughs" of the investing cycle.
Connect with John
Stuff We Reference
- ACA Angel Funders Report
- Dr. Ron Weissman
- Launchpad Ventures
- Central Texas Angel Network
- Y Combinator
- Sequoia Capital
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All opinions are personal and may not reflect the views of The Diligent Observer. Not investment advice.
Chapters
1. Introduction (00:00:00)
2. Overview of the 2025 Angel Funders Report (00:01:31)
3. The Significance of the Angel Funders Report (00:02:49)
4. Data Collection and Verification (00:03:32)
5. Key Insights from the Report (00:05:36)
6. Valuation Trends and Concerns (00:09:45)
7. Follow-On Rounds vs Initial Investments (00:14:34)
8. The Role of Board Representation (00:19:50)
9. Challenges in Angel Investing (00:21:48)
10. Strategies for Effective Angel Investing (00:24:37)
11. Growth and Evolution of Angel Groups (00:27:19)
12. Future Directions and New Surveys (00:34:10)
55 episodes
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