Increase in funding for bigger deals but less of them.

In October of 2008, The Center for Venture Research released a report about what is happening with “angel investors” in the first half of 2008.  It seems, compared to the first half of 2007 “angels” are investing a bit more money but on less deals resulting in an 8% increase in deal size. 

Where are they putting their money?
 
“Software accounted for the largest share of investments,” said the report, “followed by healthcare with 18% of total angel investments in Q1, 2 2008, followed by Healthcare Services/Medical Devices and Equipment (17%) and Industrial/energy (10%), potentially reflecting an increasing appetite for green technologies. Biotech has dropped from the top three sectors for the first time in several years while Retail and Media have solidified their previous presence in the top six preferred.”

What is the rate of acceptance?

The rate of acceptance or the “yield rate” is the percentage of investment opportunities that are brought to the attention of investors that result in an investment. In the first half of 2008, the overall yield rate was11%.  Continuing on a decline since 2005 when the yield rate was 23%.  For minorities: the yield rate for women was 10% and for other minority-owned firms, 11%.

Getting the “latent angel” to participate

In order for the angel market to grow, participation is necessary.

“While the number of angel organizations, and individuals that are members of organized angel groups, is increasing, there is a significant percentage of latent angels (individuals who have the necessary net worth, but have not made an investment).”

“Many angel groups are now beginning to recognize the more basic systemic need for educational programs and research to move the latent angel to the active investor, in addition to quality deal flow.”

Check out the Center for Venture Research (CVR). CVR is a multidisciplinary research unit of the Whittemore School of Business and Economics at the University of New Hampshire. They have been conducting research on the angel market since 1980. Their mission is to provide an understanding of the angel market through quality research. The CVR is dedicated to providing reliable and timely information on the angel market to entrepreneurs, private investors and public policymakers.

This blog was taken from the “Angel Investors Steady But More Cautious