Business angels in Spain invest cautiously in 2023, according to IESE and AEBAN annual report

Report highlights:

  • Despite the challenges, some 89% of business angels in Spain show a willingness to invest by 2024, suggesting confidence in the market’s long-term potential.
  • The gender gap is significant in the investment world as men invest more than twice as much as women and women commit modest amounts of their equity, not exceeding 5%, while men invest more than 10% as business angels.
  • Business angel investors in 2023 have made at least one new addition to their portfolio, have invested on average 49,738 euros, and have mostly between 3 and 8 years of experience.
  • Co-investment as a form of early-stage investment is consolidating in 2023 as an upward trend for business angels.
  • The sectors preferred by business angels in 2023 are healthcare, biotechnology, aerospace and financials.

Amid an unfavorable macroeconomic context for investment that has been in place since 2022, business angel investors in Spain have shown caution in their investment decisions during 2023, according to the report “Business Angels 2024. Investment in startups: activity and trends” (in Spanish) carried out as every year since 2016 by the IESE business school for AEBAN (Spanish Association of Business Angels Network).

However, the investment ecosystem in Spain has proven to be more resilient compared to other European countries. Despite the challenges, expectations are pinned on a possible recovery of activity by the end of 2024.

Declines in early-stage and strong presence in late-stage investments
Investment activity experienced a marked decline in all investment segments during 2023. The largest declines have occurred in the more mature investment stages: early stage (series B), later stage (series C, D) and venture growth (series E and subsequent). The declines are more moderate in the early stages, where business angels have a strong presence. Despite these setbacks, only 9% of the Spanish investors surveyed stated that they would not have made investments in 2023, indicating a remarkable willingness to continue participating in the market.

The quality of the founding team is the first basic criterion used by investors in 2023
Investors acted cautiously and prudently, investing moderately and selectively. The quality of the founding team stood out as the main criterion used by investors in 2023. Less competition for deals resulted in an adjustment of valuations, reflecting a more rigorous approach to investment opportunities.

X-ray of angel investments in 2023
During 2023, business angel investors made at least one new addition to their portfolios, making on average €49,738 invested. Most of them have between 3 and 8 years of experience, and 59% made between 1 and 10 investments during the year, despite the adverse macroeconomic context. Early-stage co-investment was consolidated as an upward trend among business angels in 2023. The preferred sectors for investment were healthcare, biotechnology, aerospace and the financial sector.

Gender gap is significant in the investment world
Data extracted from the report reveals significant differences between men and women in terms of their investment practices. While a considerable percentage of women invest modest amounts of their wealth, mainly up to 5%, men tend to commit a higher proportion of their wealth, with almost a third devoting more than 10% as business angels. In addition, disparities are evident in the total volumes invested, with a majority of men investing figures in excess of €50,000 per year, while the vast majority of women do not exceed €20,000. On average, men invest more than twice as much as women, reflecting a significant gender gap in the investment world.

Medium and long-term trends in the angel investment sector:
Consolidated networks: Online platforms and private networks are key to access funding.
Professionalization: Growing in networks, strengthening credibility and efficiency.
Co-investment: Increasing between business angels and other financial instruments.
Innovation in corporate governance: Emphasis on early stages.
Digital transformation: Driving opportunities in AI and Machine Learning.
Diversity: Increased interest in startups with diverse leadership in terms of gender or ethnicity.
Focus on social impact: Increased investment in responsible projects.
Data and analytics: Sophisticated tools support decisions.