According to the University of New Hampshire’s Center for Venture Research (CVR), Angel investors continue to be the number one source of seed and startup capital for entrepreneurs. A total of 55,480 entrepreneurial ventures received Angel funding in 2008, a modest 2.9% decrease from 2007, and the number of active investors in 2008 was 260,500 individuals, virtually unchanged from 2007. But the dollar volume decreased 26.2% down to $19.2B.
What this means is that angels aren’t doing fewer deals, they’re just investing less money per deal. Maybe this is because they are being more conservative. Maybe it’s due to lower company valuations.
In fact, I recently read that the average angel investment is $10K. I was suprised by that number, in all of the deals I’ve seen, the lowest has been about $25,000, with the top deal being around $100K. There’s a rare investment over $100k, but not often enough to become significant. I don’t know where the author is getting his data from, but I’d sure like to see it.
In 2008, only 10% of companies reviewed by angels received funding – which was also a shocking figure for me. I thought it was closer to 5% or less.
What does all this mean to you, the entrepreneur? Keep your valuations low, don’t expect angels to put in a lot of funding, and you need to get in front of a LOT of angels to find the ones that will be most interested in your deal.
Read the entire center’s report on angels investment analysis here.
