UNH venture center: Angel investor market shrank in 2015

Total investments were up by 1.9%, but the number of ventures receiving funding declined 3.1%
Jeffrey Sohl|!!| director of the UNH Center for Venture Research|!!| called the decline in the angel investor market 'a discouraging sign for our nation’s startups.'

The angel investor market in 2015 had a slight increase in investment dollars and in deal size, according to the latest angel market analysis released by the Center for Venture Research at the University of New Hampshire.

Total investments in 2015 were $24.6 billion, an increase of 1.9 percent over 2014, but the number of entrepreneurial ventures receiving angel funding declined 3.1 percent over 2014 in investments to 71,110. The number of active investors in 2015 was 304,930 individuals, a decrease of 3.7 percent from 2014.

“The change in both total dollars and the number of investments resulted in a deal size for 2015 that was larger than in 2014 by 5.1 percent,” according to Jeffrey Sohl, director of the UNH Center for Venture Research. “These data, combined with the yield rates and valuations, indicate that angels were selective in their investment behavior in 2015.”

Angel investments continue to be a significant contributor to job growth with the creation of 270,200 new jobs in the United States in 2015, or 3.8 jobs per angel investment.

The center’s analysis found that angel investments in the seed and startup stage were largely unchanged and angels remained a strong factor in early-stage investing with 45 percent of investments in the early stage.
The analysis found that investment activity in new, first sequence, investments was 44 percent in 2015, a decline from 49 percent in 2014.

“This decrease in new investments is a discouraging sign for our nation’s startups,” Sohl said.

In addition, the average angel deal size in 2015 was $345,390, an increase of 5.1 percent from 2014, and the average equity received was 14.9 percent with a deal valuation of $2.32 million, down by 13.1 percent from 2014.

Sohl said the decline “represents a three-year trend and may indicate that a market correction is gaining momentum,” Sohl said.

Software remained the top sector, with 18 percent of total angel investments in 2015, followed by health care services/medical devices and equipment (16 percent), biotech (13 percent), industrial/energy (11 percent), retail (10.6 percent) and media (9 percent).

The full 2015 Angel Market Analysis is available here.

Categories: Technology