Angel investing dn 26% to $19.2 bln

Dollar value of deal sizes plunge as number of deals decline modestly

As financial markets crumbled in 2008, angel investors tightened their purse strings. Angel investments plunged 26% to $19.2 billion last year, according to the Center for Venture Research and the University of New Hampshire.

A total of 55,480 entrepreneurial ventures received angel funding last year, down a relatively modest 2.9% from the year earlier. The significant drop in invested capital coupled with a slight decline in the number of deals that received funds resulted in a 24% drop in deal size. 

The number of active investors, however, remained virtually unchanged at 260,500 individuals. About 40% of their investments went toward seed and early-stage companies.

"In contrast to venture capital, in which money must be invested during the life of the fund and is in part based on the size of the fund, angel investing is an individual decision and angels invest from their net worth," according to the report. "These data indicate 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."

Among the sectors that received the most angel funds were healthcare and medical devices, accounting for 16% of total angel investments. Software received 13% of investments, followed by retail at 12%, and biotech at 11%. Industrial and energy accounted for 8% of deals while media ventures accounted for 7% of deals.

Mergers and acquisitions represented 70% of the angel exits, while IPOs accounted for 4%, last year.

Bankruptcies accounted for 26% of exits. 

(image source: /northstargallery.com)