Angel Groups Pull Back in 2008

12/11/08

It would have been a surprise—at least to me—to see any group of investors seek more deals in this turbulent economy. So it wasn’t shocking to see that many angel groups reported less deal activity in the Angel Capital Association’s (ACA) latest nationwide Angel Group Confidence Report.

The Lenexa, KS-based angel association says it tapped some 109 of its angel groups in the U.S. and Canada between November 6 and November 18 for the report, which details their deal activities during 2008 and expectations for next year.

For years, angel groups have joined forces with each other to form stronger investment syndicates. With the recession upon us, angel groups tell the ACA that they plan to continue co-investing with fellow angel outfits and other equity investors such as venture firms. So 90.3 percent of the surveyed angel groups say they plan to co-invest with other angel groups for the balance of 2008 and in 2009. A whole 79.6 percent of the angel groups plan to join early-stage venture groups during the same time period.

Still, 2008 didn’t turn out like many angel groups had expected on the investment front, with 47.9 percent of groups seeing less deal activity than anticipated and only 16 percent reporting more deals than expected. (Bob wrote about those very expectations for 2008 in the first quarter of this year.)

Drum roll… The numbers aren’t final just yet, but the average total amount that each group invested in 2008 is $1.72 million—down more than 10 percent from the average total of $1.94 million that angel groups invested last year. On the bright side, sort of, the average amount invested in each deal climbed to $280,936, up 6 percent from 2007. The total number of deals per group is estimated at 6.1 this year, and that’s down 16 percent from last year, according to the report.

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