for Venture Research
Director, Jeffrey Sohl
THE ANGEL INVESTOR MARKET IN 2008:
A DOWN YEAR IN INVESTMENT DOLLARS
BUT NOT IN DEALS
DURHAM, N.H. - Angel
investments dropped in 2008 by 26.2 percent over 2007, but the number of
deals was relatively unchanged, with 55,480 entrepreneurial ventures
receiving funding, according to the 2008 Angel Market Analysis released
by the Center for
Venture Research at the University of New Hampshire.
The angel investor market had
a considerable contraction in investment dollars from last year but
exhibited little change in the number of investments, according to
Jeffrey Sohl, director of the UNH Center for Venture Research at the
Whittemore School of Business and Economics.
Total investments in 2008 were
$19.2 billion, a decrease of 26.2 percent over 2007 when investments
totaled $26 billion. However, 55,480 entrepreneurial ventures received
angel funding in 2008, a modest 2.9 percent decrease from 2007 when
57,120 entrepreneurial ventures received angel funding. The number of
active investors in 2008 was 260,500 individuals, virtually unchanged
from 2007's 258,200 individuals.
"The significant decline in
total dollars, coupled with the small decrease in investments resulted
in a smaller deal size for 2008, a decline in deal size of 24 percent
from 2007. 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. 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," Sohl said.
The six sectors receiving the
most angel investments are as follows:
- Healthcare services/medical
devices and equipment - 16%
- Software - 13%
- Retail - 12%
- Biotech - 11%
- Industrial/energy - 8%
reflecting a continued appetite for green technologies
- Media - 7%.
"Retail and media have
solidified their presence in the top six sectors, mainly due to a
continued interest in social networking ventures," Sohl said.
In 2008, 45% of angel
investments occurred at the seed or start-up stage. Only 10% of the
deals brought to the attention of angel investors succeeded in obtaining
Mergers and acquisitions
represented 70 percent of the angel exits, and IPOs 4 percent, in 2008.
Bankruptcies accounted for 26 percent of the exits. Annual returns for
angel's exits (mergers and acquisitions and IPOs) were 22 percent,
however, these returns were quite variable.
Angels have maintained their
position as the largest source of seed and start-up capital, with 45
percent of 2008 angel investments in the seed and start-up stage, a
slight increase of 6 percent over 2007. Angels also exhibited an
interest in post-seed/start-up investing with 40 percent of investments
in this stage, also an increase from 2007. Expansion stage investing (14
percent) showed the largest decline. New, first sequence, investments
represent 63 percent of 2008 angel activity, unchanged from the last two
years, indicating a continued preference for new, as opposed to
To download a copy of The
University of New Hampshire's Center for Venture Research "Angel
Investor Market in 2008" report click
The Center for Venture
Research has been conducting research on the angel market since 1980.
The center's mission is to provide an understanding of the angel market
and the critical role of angels in the early stage equity financing of
high growth entrepreneurial ventures. Through the tenet of academic
research in an applied area of study, the center is dedicated to
providing reliable and timely information on the angel market to
entrepreneurs, private investors and public policymakers. For more
information visit www.unh.edu/cvr or
contact the center at 603-862-3341.
The University of New
Hampshire, founded in 1866, is a world-class public research university
with the feel of a New England liberal arts college. A land, sea and
space-grant university, UNH is the state's flagship public institution,
enrolling 11,800 undergraduate and 2,400 graduate students.
The Angel Investor
Market For 2006 (Click To View)
The Angel Investor Market
For 2007 (Click To View)