By Maria Valdez Haubrich
What’s going on with angel financing these days? GigaOm.com recently reported on some key trends that might give entrepreneurs reason for optimism about this sector of small business financing.
The Center for Venture Research at the University of New Hampshire has released a study of the first 6 months of 2010. During that time, the study found, total angel investments declined by 6.5 percent (to $8.5 billion) as compared to the same time frame in 2009. However, while they’re investing less money, they’re investing it in more firms: The number of companies receiving angel investments grew 3 percent to 25,200.
It seems angels are also looking to invest in later-stage companies as opposed to startups. Just 26 percent of angel investments went to seed and startup stage investments. This is down from 35 percent last year and 45 percent in 2008.
Last, but not least, more angels are holding back from investing altogether. “Latent angels” (angel group members who haven’t made an investment) rose to 65 percent, a steep increase from 54 percent last year and 36 percent in 2008.
What does it mean for you? Investors are becoming more cautious and hedging their bets. Instead of investing in riskier startups, they’re more willing to put their money into companies that have shown some staying power and are ready to grow.
Where are angels investing? Here’s the breakdown:
- Healthcare and medical device and equipment: 24 percent
- Biotech: 20 percent
- Software: 12 percent
- Industrial/energy: 11 percent
- Retail: 9 percent
- Media: 5 percent