Posts Tagged ‘angel investors’

Is Angel Funding Taking Wing Again?

November 6th, 2012 :: Karen Axelton

By Karen Axelton

Small business owners seeking financing from private investors can take heart from the latest data from the Center for Venture Research at the University of New Hampshire. The quarterly study of angel investors found that, as of the second half of 2012, the angel investor market seems to be on the rebound. The total dollar amount invested, total number of investments, and total number of investors all grew compared to the same period in 2011.

For the first two quarters of 2012, total dollars invested reached $9.2 billion, up by 3.1 percent compared to the same period in 2011. Investments were made in a total of 27,280 entrepreneurial businesses–a 3.7 percent increase from the same period in 2011. And the number of active investors hit 131,145 individuals, up 5 percent from the same period in 2011. In the first half of 2012, the average deal size hit $336,390, holding fairly steady with 2011’s average deal of $338,400.

Jeffrey Sohl, director of the UNH Center for Venture Research at the Whittemore School of Business and Economics, says that while many of the figures are holding steady, the survey shows a “steady recovery” of the angel market since 2008.

While the percentage of investments focused on seed and start-up stage investing held steady at 40 percent (compared to 39 percent last year), there’s good news for existing business owners: Expansion stage financing grew to 22 percent of investments in the first half of 2012, up from 13 percent in the same period of 2011.

What industries are most likely to find angel funding? Healthcare services/medical devices and equipment accounted for 24 percent of investments, followed by software (14 percent), biotech (12 percent), retail (10 percent), IT services (7 percent) and media (6 percent). Interest in the industrial/energy sector, which had been one of the top six sectors since 2009 due to an interest in clean tech, dropped in the first half of 2012. Meanwhile, retail and media have “solidified” their place in the top six sectors, driven primarily by investments in social networking-related businesses.

One interesting trend: The percentage of women angel investors nearly doubled in 2012 from the same period last year (from 11.7 percent of angels to 21.8 percent). Meanwhile, 18.4 percent of companies seeking angel investment were women-owned.

Minority angels are less represented, accounting for just 4 percent of the angel population. Similarly, minority-owned firms accounted for only 7.1 percent of the companies that sought angel capital. Although minority-owned businesses got angel financing at a similar rate to all businesses, the study says the fact that so few are seeking angel capital is cause for concern.

Image by Flickr user GeishaBoy500 (Creative Commons)

Google+

Tags: angel investors, Raising Capital, small business financing
Posted in Capital Access, Raising Capital, Small Business, small business | No Comments »

Angel Investments Are On the Rise

April 26th, 2012 :: Karen Axelton

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)

Google+

Tags: angel investors, Raising Capital, small business
Posted in Capital Access, Raising Capital, Small Business, small business, Uncategorized | No Comments »

Do Women Make Better Angel Investors Than Men?

August 10th, 2011 :: Rieva Lesonsky

By Rieva Lesonsky

If you’re looking for angel capital, what’s the best way to boost your chances of success? Does it depend on your connections? Your business plan? The images you use in your PowerPoint presentation?

No, no and no. Instead, your success could depend on how many women are in the investor group you’re pitching, according to some new research from the University of New Hampshire Center for Venture Research.

The research by Jeffrey Sohl, director of the UNH Center for Venture Research, and John Becker-Blease, of Oregon State University, studied 183 angel investment groups from 2000 About 60% of small-business bank-loan applications have been rejected this year, according to a study by Pepperdine University to 2006. The researchers found that an angel investment groups with only a small percentage of women investors tended to be more cautious about investing. However, as soon as women composed more than 10 percent of the investment group, the group became more active and made increased investments.

“At first the results were counter-intuitive, since previous research on women investing, in general, shows women to be more cautious investors. Since angel investing involves substantial risk, one would assume that this cautious behavior would also be exhibited in angel investors,” Sohl said. “However, our research indicates that when the number of women in an angel group increases, so does their investment activity as angel investors.”

The researchers say this behavior is based on “stereotype threat.” According to this theory, when a stereotype exists about a person, that person will conform with that stereotype when they are in a situation that highlights their status as an outsider. In other words, the fewer women in an angel group, the more women stand out, and the more likely they are to conform to stereotypes that they’re cautious investors. “As the number of women increases, there is less of a stereotype,” Sohl explained, noting that the more women in a group, the more they are recognized for making smart investment decisions as opposed to just for being women.

The Center for Venture Research has been studying the angel market since 1980. While Sohl says the percentage of women angel investors has remained fairly constant at about 15 percent over the last five years, the number of women pitching angel groups has grown from 13 percent in 2006 to 20 percent in 2010.

The current research suggests that forming more women-dominated angel groups would boost investment in all types of startup ventures—not just those that are women-owned—by making the angel groups more likely to make larger investments and more investments. So if you’re considering seeking angel capital, looking for a group that’s got a sizable percentage of women could give you the edge you need.

Image by Flickr user Randy Robertson (Creative Commons)

Google+

Tags: angel investors, small business financing
Posted in Capital Access, Raising Capital, Small Business, small business | No Comments »