U.S. Angel Investors Optimistic About the Future, ACA Finds

A majority of angel investment groups report that the quality and quantity of their deal flow increased last year, according to a recent national survey of angel investors. Roughly 54 percent reported an increase in activity in 2006, and almost 58 percent expect even more investments and higher quality deals throughout 2007.

 

The Angel Group Confidence Report, conducted by the Angel Capital Association, is a first-of-its-kind overview of the U.S. angel market. The list of respondents includes angel investment groups of all stripes, from Southern California’s 300-member TechCoast Angels to groups with fewer than 10 accredited investors. The average group invested $1.78 million last year (with a median of $1.06 million). Groups invested an average of $240,000 per round.

 

Much of this newfound optimism appears to be tied to growth within high-tech industries. Almost 60 percent of respondents reported investments in software, biotechnology and medical devices in 2006. Over 75 percent of angel groups expressed an interest in investing in medical devices or software.

 

The vast majority of these groups work alongside other groups in their investments. Although most do not belong to an angel capital network, nearly all angels invest with other angel groups and more than 82 percent invest with early-stage venture capital firms.

 

The survey offers evidence that regions derive some advantage from the presence of local angel groups. Almost 30 percent of groups focus their investments on firms that are located within a two-hour drive from their metropolitan area. Twenty percent invest throughout their home state, and 30 percent pursue firms within their multi-state region of the U.S. Only 13 percent reported no geographic restrictions on their investments. 

 

The Angel Group Confidence Report is available at: http://southeastvc.blogs.com/southeast_vc/files/angel_group_confidence_report_results.pdf

 

Kansas Doubles Angel Tax Credits

In recognition of the growing importance of angel investment, the Kansas Legislature has voted to double the funds available through the state's Angel Investor Tax Credit program for 2007. This program provides a 50 percent tax credit to investors to encourage seed and early-stage investment in high-tech firms, particularly those involved in biosciences or information technology. To provide better support throughout the longer gestation periods required for bioscience companies, the new legislation will also extend the length of time that an investor can claim the credits for investment in a bioscience firm from five years to 10 years. Investments of up to $50,000 are eligible.

 

The Kansas Technology Enterprise Corporate (KTEC) reports that $3.8 million in tax credits have been awarded since the program's creation in 2005. With the recent changes, $4 million will be available this year alone, and $6 million will become available over the next eight years.

 

Find out more about the program at: http://www.ktec.com/sec_news/new/2007angel.htm