Angel investing seems to be recovering along with the economy in the US, according to the Center for Venture Research at the University of New Hampshire.
Angel investors are usually individuals that invest in companies when they first start out. They are often more patient than venture capital firms and invest for a longer time. Venture capital firms come in later with larger investments. So, it’s Angels that usually give a start-up company their first investment – that’s why they’re called "angels."
2008 and 2009 were tough years, resulting in much less angel investor activity. It began recovering in 2010, and rose 12.1% in 2011 to $22.5 billion.
In 2011, angel investments rose on all counts – the number of active investors, the size of investments, and the number of companies that received investments.
The number of active angel investors grew substantially in 2011 – by 20% – to 318,480 individuals in the US.
And 66,230 entrepreneurs received funding, a rise of 7.3%.
Deal size also grew 4.7%.
"It appears that optimism in angel investing is taking hold," says Jeffrey Sohl, director of the UNH Center for Venture Research at the Whittemore School of Business and Economics.
Cleantech is one of the top areas for angel investors, accounting for 13% of investments. Software is the top sector (23%), followed by healthcare/medical devices (19%), and biotech (13%).
Significantly, 42% of investments were in seed and start-up capital 2011, reversing the decline from 2008-2009, and rising from 2010, when 31% went to the earliest stage companies.
Angel investments continue to be a significant contributor to job growth with the creation of 165,600 US jobs in 2011, or 2.5 jobs per angel investment.
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