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Angel Early Stage Investments Gain in First Half of 2011

Angel statue (Louise Docker/Wikimedia Commons)

(Louise Docker/Wikimedia Commons)

Angel investments in very early stage U.S. entrepreneurial companies rose in the first half of 2011 according to a new report from the Center for Venture Research (CVR) at University of New Hampshire. Science-based enterprises, says CVR, accounted for over half of the total dollars invested by angels in that period.

Angel investors are individuals who back start-up companies financially, and also provide mentoring and guidance to get the new enterprises off the ground. The CVR report showed a largely stable, but still growing investment environment in the first six months of the year, with the 124,900 angel investors about the same in number as in the first half of 2010. Likewise, the average angel deal size of $338,400 barely increased from the $337,300 recorded last year at this time.

However, CVR also reports total angel investments in January to June 2011 increased 4.7 percent to $8.9 billion from $8.5 billion last year at that time. And the number of entrepreneurial enterprises receiving funds gained 4.4 percent to 26,300 compared to the same period last year.

More than half (56%) of angel investments in the first half of 2011 went to science-based ventures:

  • Health care services/medical devices and equipment, 25%
  • Industrial/energy, 17%
  • Biotechnology, 14%

These three sectors accounted for about the same percentage (55%) in the same period in 2010. Other sectors with 8 percent or more of the total investments in 2011 were software (11%), media (8%), and retail (8%).

The CVR report indicates angels are more interested than last year in supporting new companies very early in their development, which traditionally has been their main financial role. The percentage of funds for seed and start-up stages — the two earliest developmental periods for new enterprises — increased to 39 percent in January to June 2011, up from 26 percent in the first half of 2010. Later-stage funds dropped to 60 percent from 70 percent last year.

CVR reports as well that angel investments in the first half of 2011 created 134,130 new jobs in the U.S., or about five jobs per angel. Last year’s first-half report from CVR did not report on job creation.

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