Angel Investments Top $25B in 2006

More than 51,000 early-stage ventures took in $25.6 billion of angel investment in 2006, according to the 2006 Angel Market Analysis released Mar. 19 by the Center for Venture Research at the University of New Hampshire. The dollar figure reflects a 10.8 percent increase from the 2005 findings. The number of deals made in 2006 only rose 3 percent over the previous year. As a result, average deal size grew 7.5 percent.

 

As in 2005, healthcare services and medical devices and equipment accounted for the largest share of angel investments, with 21 percent of total angel investments in 2006, followed by software (18 percent) and biotech (18 percent). The remaining investments were approximately equally weighted across retail, financial/business products and industrial/energy sectors.

 

The center found the 51,000 angel investments made in 2006 helped support the creation of 201,400 new jobs in the U.S. during the year, or four jobs per angel investment. These figures, the center notes, only refer to employment at the time of investment and do not reflect anticipated growth as the ventures grow.

 

Angels continue to be the single-largest source of seed and start-up capital, with 46 percent of 2006 angel investments in the seed and start-up stage. This preference for seed and start-up investing is followed closely by post-seed/start-up investments of 40 percent. Given the four-year trend, angel seed and start-up stage investments in the 45 percent-to-55 percent range appears to be the reasonable range for the foreseeable future, the center predicts.

 

In 2006, women angels represented 13.8 percent of the angel market. Women-owned ventures accounted for 12.9 percent of entrepreneurs seeking angel capital, and 21.5 percent of these women entrepreneurs received angel investment in 2006. Minority angels accounted for 3.4 percent of the angel population, and minority-owned firms represented 6.9 percent of entrepreneurs who presented their business concept to angels. Compounding this low participation rate, the center notes, the yield rate for minority-owned firms was 7.1 percent -- close to two-thirds below the general yield rate.

 

The three-page 2006 Angel Market Analysis is available at: http://unhinfo.unh.edu/news/docs/2006angelmarketanalysis.pdf