Angel Capital, VCs, investing

Angel Funding Rivaling Venture Investments By Picking Up Slack in Early-Stage Ventures, But Slowdown is Foreseen

Robert Buderi 10/29/07

A growing body of professional angel investor organizations poured $11.9 billion into 24,000 deals in the first half of 2007, not too far off the 14.5 billion invested by venture firms. A large portion of the angel funds went into early stage ventures, partially filling a hole left by larger venture funds, which have increasingly been investing in later-stage companies.

That’s the take-home message in a nice piece by Rob Weisman in today’s Boston Globe summing up the angel trends, which draws largely on gathered by the Center for Venture Research at the University of New Hampshire’s Whittemore School of Business and Economics. Center director Jeffrey Sohl presented the findings at last week’s Northeast Regional Angel Investor Conference in Portsmouth, NH.

Angel deals typically run under $1 million, compared with somewhere between $2 million and $10 million for venture deals, the article states. “We’re individuals who can be very flexible in seeding deals,” said George McQuilken, who co-founded conference host, the eCoast Angel Network. “We can invest in your pizza parlor if we want to. We can invest in lunatic ideas.” (Xconomy is funded by angel investors, led by Lexington-MA-based CommonAngels, which does not invest in lunatic ideas…right?)

An interesting trend highlighted in the Center for Venture Research data is that angel investments will likely tail off slightly this year. They’re on pace to hit $24 billion, down from $25.6 billion last year. The top area of angel investment was healthcare services/medical devices/equipment, which received 22 percent of angel funds in the year’s first half, according to a center press release. Next up was software (14 percent) and biotechnology (10 percent).

Here’s a link to the Center for Venture Research’s summary data for the first two quarters of 2007.