Wednesday, April 16, 2008

Angel Funding Increases in 2007

The Center for Venture Research just announced that angel investments in 2007 increased slightly in 2007 to $26 billion. The number of deals funded by angels increased by 12 percent over 2006 resulting in an average investment of approximately $455 thousand.

Though the mix changed slightly, software, healthcare and biotech were again the big winners collecting about 58 percent of all angel investments.

Here are two things which caught my eye:
  • Angel investors are getting increasingly picky about their investments. The yield (acceptance) rate is down from 23% in 2005 to 14% in 2007. The yield rate is the percentage of investment opportunities brought to the attention of angel investors resulting in an actual investment.
  • Like most investors, angels are hoping for a big payout at exit. Mergers and acquisitions represented 65% of angel exits. IPOs represented 4% of angel exits. Bankruptcies accounted for 27% of angel exits. Yikes! Could explain why angels are getting pickier about their investments!

Good luck in finding an angel. Check out the Angel Capital Association.

And once you do find your angel, consider using secured debt financing where possible to leverage your investment and minimize the dilution that would result from additional equity raises.

Need help finding the right lender or telling your story the right way? Read "Matchmaking for Business Loans" and give me a call!

Tags : angel investor , venture capital , Center for Venture Research , Angel Capital Association

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