Angel Investments Are On the Rise

By Karen Axelton

It’s not surprising that the size and number of angel investments shrunk considerably in 2008 and 2009 after the economy crashed. But in 2010, and upward trend began, and in 2011, the growth continued, according to the Center for Venture Research at the University of New Hampshire.

The CVR’s just-released Full Year 2011 Analysis of Angel Market Trends has encouraging news: Angels are more optimistic, have significantly increased their dollar amounts and have also increased their number of investments—all encouraging signs for entrepreneurs.

The report found that total angel investments in 2011 were $22.5 billion, an increase of 12.1 percent over 2010. A total of 66,230 entrepreneurial companies received angel funding in 2011, an increase of 7.3 percent compared to 2010 investments. The number of active investors also grew by 20 percent in 2011, reaching 318,480 individuals. The significant increase in total dollars invested along with the increasing number of investments meant the average deal size increased by 4.7 percent compared to 2011.

Where are angels investing? For 2011, software was the top sector, with 23 percent of total angel investments, followed by healthcare services/medical devices and equipment (19 percent), industrial/energy (13 percent), biotech (13 percent), it services (7 percent) and media (5 percent).

What about women and minority entrepreneurs? In 2011 women-owned businesses accounted for 12 percent of the entrepreneurs seeking angel capital; 20.5 percent of these women entrepreneurs received angel investment. So even though fewer women seek angel money, the percentage that succeeds at getting it is similar to the overall success rate. What’s more, the yield for investors is actually higher than average for women-owned businesses, by 2 percent.

Minority-owned firms were less well represented, accounting for just 7 percent of the entrepreneurs seeking financing from angels. The report states that the small percentage of minorities seeking angel investment is “of concern.” However, when minority entrepreneurs do get funding from angels, their firms’ yield for investors is in line with the average.

If you’re considering approaching angels, it sounds like 2012 could be the year to make your move.

Image by Flickr user Randy Robertson (Creative Commons)

This entry was posted on Thursday, April 26th, 2012 at 6:00 am and is filed under Capital Access, Raising Capital, Small Business, small business, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.


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