The Deal
Saturday, October 25, 
1:26 pm


[Posted on October 3, 2007 - 5:17 PM]


It shouldn't come as any surprise, given the overhang of professional venture money and the paucity of strong venture-backed IPOs, but researchers at the Center for Venture Research at the University of New Hampshire have come up with figures showing that angel investment in the first half of 2007 has fallen compared to last year.

Investment of $11.9 billion by amateur venture capitalists represents a decrease of 6% from the same period in 2006, while the 24,000 startups that landed funding amounts to a slight decrease from last year. But investor interest remained strong, with 140,000 individual angels closing deals, up 8% from the first half of 2006.

Support for angel-backed startups also has been strong recently, with Intel Capital announcing it would lead the first professional investment round in Punchbowl Software Inc., joining angel group eCoast Angels, and with Microsoft Corp. announcing a new formal program to work with angels.

Jeffrey Sohl, director of the Center for Venture Research and professor of entrepreneurship and decision sciences, attributed the imbalance to a 4% decrease in average deal size and an increase in the number of angels in each deal. Healthcare and software remained the most popular areas of investment, drawing 22% and 14%, respectively, with biotech, computer hardware, IT services, retail and cleantech each attracting about 10%.
 
"This market-level sector diversification indicates a robust investment pattern," Sohl said in a statement announcing the report. "Since the angel market is essentially the spawning grounds for the next wave of high-growth investments, this sector diversification provides an indication of investment opportunities that will be available for later-stage institutional investors."

The report cheers the industry on with claims that angel investors are the largest source of seed capital, but also notes that since the sector began rebounding in 2004 from the venture crash, angels have participated more readily in later-stage rounds. - Clifford Carlsen

See Jeff Noonan's post on backing stupid ideas
See this story from Research Recap on a shift in angel focus
 

 


Comments
From: Zack Lynch,

It's $11.9 Billion, with a B, not million.

From the original press release:

DURHAM, N.H. -- The angel investor market in the first half of 2007 has shown signs of a small retreat from the growth of the past several years, with total investments of $11.9 billion, a decrease of 6 percent over the first half of 2006, according to the latest research from the Center for Venture Research at the University of New Hampshire.


From: Alain Sherter,

Of course you're right, Zack. I'll blame the glare. Thanks for catching that.

Alain


From: donna,

Maybe if everyone on Wall Street would stop expecting 20% returns in six months and multi-million dollar bonuses every quarter, this country could get back to doing research and producing something of value again.

Where are the jobs for the scientists and engineers? I really worry about my kid's future, not to mention the dearth of any computer jobs outside of IT work.

I once thought of starting an educational software company, but as soon as I wrote the business plan, I knew Microsoft had killed any chance of it being successful.

If any venture capitalist out there wants to build an engineering playground in San Diego, let me know. I know dozens of people who would jump to work there, including IT and information security people, Internet gurus, mechanical engineers, and many more who are tired of defense and game companies being our only options for jobs.

How about some real science and engineering research again?


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