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The Angel Investor Market

The Angel Investor Market

The Center for Venture Research has published their 2008 report of angel investor activity in the U.S. The report contains both good news and bad news.

  • The Good News:  The number of active angel investors in 2008 and the number of deals they invested in remained comparable to 2007. In 2008, a total of 55,480 ventures received angel investment, down only 2.9% from the previous year. The number of active individual angel investors remained steady at 260,500.
  • The Bad News:  The total dollars invested in 2008 fell 26.2% to $19.2 billion. This indicates a contraction in average deal size, presumably due to lower valuations.

The six sectors receiving the most angel investment are as follows:

  • Healthcare: 16%
  • Software: 13%
  • Retail: 12%
  • Biotech: 11%
  • Industrial/Energy: 8%
  • Media: 7%

In 2008, 45% of angel investments occurred at the seed or start-up stage. Only 10% of the deals brought to the attention of angel investors succeeded in obtaining an investment.

Note that the study only includes accredited or “sophisticated” angel investors who invest through angel investing groups; the study excludes investment activity by informal “friends and family” investors.

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  1. I have been an angel in the past and whenever I see a blog posting about angels I like to remind readers that angels always come with strings attached. Before taking an angel’s money be sure that you and the angel are on the same page. Like and trust your angel and be certain that your angel likes and trusts you and that he understands his job and that he understands your job.

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