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Trends in Angel Investment Behavior

Mark Marich

Angel investors pulled back in the first half of 2009, according to the newly released analysis by for Venture Research at the University of New Hampshire (UNH). Total investments in first and second quarters of 2009 were $9.1 billion, a decrease of 27 percent over the first half of 2008.

This drop in total investment occurred at the same time that the number of investments increased slightly. A total of 24,500 entrepreneurial ventures received angel funding in first half of this year, representing a 6 percent increase from the first half of 2008. “The significant decline in total dollars, coupled with the small increase in investments, resulted in a smaller deal size for the first and second quarters of 2009. The decline in deal size of 31 percent from the first half of 2008 indicates that while angels have not significantly decreased their investment activity, they are committing less dollars resulting from lower valuations and a cautious approach to investing,” said Jeffrey Sohl, director of the UNH Center for Venture Research.

Other trends in the first half of 2009 include:

•    The number of active investors in the first half of 2009 stayed virtually stable at 140,200 individuals.
•    The top five investment sectors according to their share of total angel investments in the first half of 2009 are: healthcare services/medical devices and equipment (28 percent), software (14 percent), electronics/hardware (14 percent), industrial/energy (13 percent), and retail (8 percent).
•    At the time of the angel investment the average size of the company was eight employees.  
•    Angels have decreased their investments in seed and start-up stage companies, with 27 percent of angel investments in these stages. This represents a decrease of 19 percent over the same period in 2008.

The full analysis, “The Angel Investor Market in Q1Q2 2009: A Halt in the Market Contraction”, is available here.

 

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