Role of angel investors growing

The national angel investment market increased by some 3 percent during 2005, with more than $23 billion in total investments, according to the Center for Venture Research at the University of New Hampshire Whittemore School of Business and Economics.

“A total of 49,500 entrepreneurial ventures received angel funding in 2005, a 3.1 percent increase from 2004,” said Jeff Sohl, director of the UNH Center for Venture Research and professor of entrepreneurship and decisions sciences. “This continued modest, and sustainable, rise in total investments is encouraging.”

The number of active investors grew to 227,000 with an average of four or five investors taking part to fund an individual start-up, he said.

Health-care service — including medical devices and equipment — accounted for 20 percent of angel investment funds. Software ventures received 18 percent, biotech companies received 12 percent, electronics and hardware-related firms received 8 percent, and media, industrial and energy and IT ventures each received 6 percent of angel investment funds, according to the center.

“This market level sector diversification indicates a robust investment pattern,” Sohl said. “Since the angel market is essentially the spawning grounds for the next wave of high growth investments, this sector diversification provides an indication of investment opportunities that will be available for later stage institutional investors.”

Nationally, nearly 198,000 new jobs were created through angel ventures in 2005. This number is likely to increase as each new venture grows according to Sohl.

Angel investors continue to be the largest source of seed and start-up capital accounting for 55 percent of last year’s investments.

Women-owned ventures accounted for 8.7 percent of the entrepreneurs seeking angel capital and 33 percent of these women received angel funds in 2005.

Minority-owned ventures, however, represented 14.2 percent of the proposed projects, but only 7.6 percent of these venture received angel funding indicating that “more minority-owned firms need to attract the attention of angel investors and increase their investor readiness,” Sohl said.

Angel investment data specific to New Hampshire has not yet been compiled, he said. – TRACIE STONE