Wednesday, April 1, 2009

Angel Investing in 2008: Numbers Even/Dollars Down

Everyone knows that 2008 was a bad year for public equities and for most sectors of venture capital investment (see my earlier blog post here). But how was 2008 for angel financing?

According to this report from the Center for Venture Research, while the dollar value of angel investments contracted 26.2% in 2008, the total number of investments remained relatively stable with only a 2.9% decrease from 2007.

The net effect of these two trends is that the average deal size for angel investments fell by 24%. Angels were still doing deals in 2008, but they were committing smaller amounts of capital.

The report breaks out angel investments by sector and notes that healthcare/medical devices represented 16% of angel investments in 2008, followed by software at 13%, retail at 12% (including web retail), biotech at 11%, industrial/energy at 8% (including cleantech) and media at 7% (including social media).

The report has lots of other interesting statistics, but one final one that jumped out at me is the following -- angel investors invested in only 10% of all investment opportunities brought to their attention in 2008. This is down from 23% in 2005. Clearly, not only are angels investing less, but they are being more picky. A possible positive spin on this statistic is that, since the number of investments has remained constant, this must mean that many more people are looking for angel capital -- a sure sign that we are experiencing an innovation renaissance.

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Dividends and Preferences by Hank Heyming is licensed under a Creative Commons Attribution 3.0 United States License.