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Angel Investing Stabilizes, Returns to Seed & Startup Stages

Mark Marich

Following turbulent times in 2008 and 2009, the angel investor market has shown signs of stabilization, according to a new study by the Center for Venture Research at the University of New Hampshire. While the total number of active investors during the first two quarters of 2011—124,900—remains virtually unchanged from the same period last year, other numbers are showing a slight increase. Total investments hit $8.9 billion (up 4.7 percent from the same period last year) and the total number of ventures receiving funding was 26,300 (up 4.4 percent).

So where is the money going?

The 2011 Angel Investor Market in Q1Q2 2011 shows seed and startup stage funding increased at a higher rate, up 13 percent over 2010. By industry type, healthcare services/medical devices and equipment accounted for the largest share of investments, with 25 percent of total angel investments in Q1 and Q2 2011. That was followed by industrial/energy (17 percent), biotech (14 percent), software (11 percent), media (8 percent) and retail (8 percent).

“Historically angels have been the major source of seed and start-up capital for entrepreneurs, and this return to seed and start-up investing is an encouraging sign,” stated Jeffrey Sohl, director of the UNH Center for Venture Research. “While there remains a need for seed and start-up capital and a capital gap in this stage, if the return to seed and start-up investing continues, this will signify an improvement in both new venture formation and job creation.”

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