The 2009 angel investor market exhibited a modest decrease in investment dollars but little change in the number of investments, while significant changes occurred in the critical seed and start-up stages, according to the 2009 Angel Market Analysis by the Center for Venture Research at the University of New Hampshire (UNH). Total investments in 2009 were $17.6 billion, a decrease of 8.3% over 2008, when investments totaled $19.2 billion. However, 57,225 entrepreneurial ventures received angel funding in 2009, a 3.1% increase from 2008, when 55,480 entrepreneurial ventures received angel funding. Active investors in 2009 totaled 259,480 individuals, compared to 260,500 individuals in 2008. The small decline in total dollars, coupled with the increase in investments, resulted in an 11.1% decline in deal size from 2008, according to Jeffrey Sohl, PhD, MBA, professor and director of the Center for Venture Research in UNH’s Whittemore School of Business and Economics.
At 19%, software accounted for the largest share of angel investments in 2009, followed by health care services/medical devices and equipment (17%), industrial/energy (17%), retail (9%), and biotech (8%). “Industrial and energy investing saw a significant increase from 2008, reflecting a growing appetite for green technologies,” Sohl says. Mergers and acquisitions represented 54% of angel exits in 2009, while bankruptcies accounted for 40% of exits. Annual returns for angel exits (mergers and acquisitions and IPOs) varied from 23% to 38%.
Overall, angels decreased their investments of seed and start-up capital. Thirty-five percent of 2009 angel investments occurred during the seed and start-up stage, a 10% decrease percent from 2008. First sequence investments in 2009 also represented a significant decline from the previous two years, at 47% of angel activity. However, angels exhibited increased interest in post-seed/start-up investing, with 62% of investments in the early and expansion stage — an increase over 2008 commitments. “This decrease in seed/start-up stage and first sequence investing is the unfortunate reality of a difficult economy and little or no support for angels — or the companies they invest in — from the various legislative initiatives enacted to stimulate the economy,” Sohl says. To read the report, “The Angel Investor Market in 2009: Holding Steady but Changes in Seed and Startup Investments,” click here.
Source: News Blaze