Tuesday, April 12, 2011

UNH report: Angel investments on the rise

By James M. Connolly

Angel investing rebounded with a 14 percent increase during 2010, marking a recovery from a down year in 2009, according to the annual Angel Market Analysis released by the Center for Venture Research at the University of New Hampshire.

The report, released today, said that total angel investment in 2010 was $20.1 billion in 61,900 entrepreneurial ventures. The number of ventures receiving angel funding and the number of angels who were active also grew. The number of ventures receiving funds was up 8.2 percent over 2009, while the number of active angels reached 265,000 – an increase of 2.3 percent.

However, Jeffrey Sohl, director of the Center for Venture Research, also raised a note of caution, pointing out that companies in the seed/startup stage received only 31 percent of the angel investments in 2010, a drop of 4 percent versus 2009. There was increased activity in the post-seed and expansion phases instead, Sohl noted.

“This decrease in seed/start-up stage and first sequence investing is of concern. However, as existing investments move to an exit and thus reduce the need for follow-on investments, it is anticipated that angel capital will become available for new seed stage investments,” Sohl said in a press release.

UNH said that healthcare services/medical devices and equipment represented that busiest sector with 30 percent of total angel investments in 2010, while software (16 percent) and biotech (15 percent) followed in the second and third slots.

In last year’s report, UNH reported that angel investing slipped by 8.2 percent to $17.6 billion compared with 2008.