“The angel investor market in 2012 continued the upward trend started in 2010 in investment dollars and in the number of investments, albeit at a moderate pace. Total investments in 2012 were $22.9 billion, an increase of 1.8% over 2011,” according to the Center for Venture Research at the University of New Hampshire. “A total of 67,030 entrepreneurial ventures received angel funding in 2012, an increase of 1.2% over 2011 investments. The number of active investors in 2012 was 268,160 individuals, a reduction of 15.8% from 2011. The small increase in both total dollars and the number of investments resulted in a deal size for 2012 that was virtually unchanged from 2011 (an increase in deal size of 0.6% from 2011). These data indicate that while fewer angels were active investors in 2012 those that did invest have increased their individual investments substantially, from $70,690 in 2011 to $85,435 in 2012, an increase of 20.9%. It is possible that given the robust returns in the public equity markets, some angels may have reallocated their portfolios and reduced their angel investing activity but those angels that continued to invest remained quite active.”
The official title of this report is: Jeffrey Sohl, “The Angel Investor Market in 2012: A Moderating Recovery Continues”, Center for Venture Research, April 25, 2013, available HERE. The Center for Venture Research (CVR) has been conducting research on the angel market since 1980 and coined the term “angels” to refer to early stage business investors. The CVR’s mission is to provide an understanding of the angel market through quality research. The CVR is dedicated to providing reliable and timely information on the angel market to entrepreneurs, private investors and public policymakers.
Other findings for 2012
Software remained the top sector for investing with 23% of total angel investments in 2012, followed by Healthcare Services/Medical Devices and Equipment (14%), Retail (12%), Biotech (11%), Industrial/Energy (7%) and Media (7%). Industrial/Energy investing has remained a significant sector for angels for the last few years, reflecting a continued appetite for clean tech.
Angel investments were a significant contributor to job growth with the creation of 274,800 new jobs in the United States in 2012, or 4.1 jobs per angel investment.
The average angel deal size in 2012 was $341,800 and the average equity received was 12.7%, resulting in a deal valuation of $2.7 million.
Angels decreased their investments in seed and start-up capital, with 35% of 2012 angel investments in the seed and start-up stage, down from 42% in 2011 and matching seed and startup investing in 2010 (31%). Expansion financing exhibited a significant increase to 29% of deals, up from 15% in 2011. Investment activity was evenly divided between new, first sequence, investments and follow-on investments, the same as in 2011. This decrease in seed/start-up stage is of concern since that is the stage of need for our nation’s entrepreneurs.
In 2012 women angels represented 21.8% of the angel market, a significant increase from 2011 (12.2%). Women-owned ventures accounted for 16% of the entrepreneurs that were seeking angel capital and 25% of these women entrepreneurs received angel investment in 2012. While the number of women seeking angel capital is low, the percentage that received angel investments (25%) is above the market yield rate and these data indicate that when women do seek angel capital they lead the market yield rate by 4%.
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|Jeffrey Sohl, director of the UNH Center for Venture Research|