A number of pundits have been claiming that angel investment is waning, and that such funding opportunities will remain few and far between for deserving startups seeking to take their innovations to market.
I beg to differ. In fact, 2013 could very well be the year of the angel investor.
Case in point: Southern California’s Tech Coast Angels, the largest angel investment group in the U.S., plans to inject $15 million into California-based startups this year. That’s an estimated 50 percent increase over last year, and will bring the total capital invested since the group was founded 16 years ago to more than $140 million, split nearly equally between tech and life sciences companies.
San Diego startups can expect to get about a third of that, as more than 100 investors belong to the organization’s San Diego affiliate. With the recession finally waning, many individuals are looking to put more of their money to better use. For many, angel investment deals can provide that opportunity.
What’s more, I’m expecting to see a reinvigoration this year of angel investors who invest their time and expertise in startups, and not just their capital. That’s because many have been entrepreneurs themselves, and we have the battle scars to prove it. It’s not simply money that a good angel investor brings to the table. We also have the experience needed to help a company’s executive team navigate rough waters, as well as the ability to open doors to potential deal opportunities.
The increased investor interest brings about a need for angel groups to become more “entrepreneur friendly.” The traditional months-long application and funding processes must be streamlined so startup founders can get to a “go” or “no go” decision much faster. At The San Diego Tech Coast Angels (SDTCA), we intend to reduce the time between the beginning of the due diligence process and receiving a signed term sheet to 30 days or less. Even for those who don’t get funding, getting declined faster means less time spent dragging along at the expense of finding other sources of capital.
Generating more investment opportunities also will require angels to expand their network in search of deals. Many prospects come from local attorneys, accountants, and other entrepreneurs. At SDTCA, we also plan on holding several, free “Meet-the-Angel” events in 2013 that will enable startup founders to pitch to our members in an informal and social environment. We’re also revamping our on-line application process to make it easier for entrepreneurs to apply.
The bottom line is this: Angel investing is on the rise. This year could be a banner one, but will require a full commitment from those with the purse strings to make it so. If SDTCA is any indication, we’re already on our way!