2011 Shaping Up as the Year of the Angel Investors and a Much Needed Kickstart to the US Economy
(News4us.com) December 29, 2010
Could 2011 be the year that business angels kick start the economy? According to recent research by the University of New Hampshire, about 65 percent of business angels in the U.S. are considered “latent angels” – wealthy individuals that are part of an organized angel group, but have yet to make an investment move.
Experts are saying that these latent angels have been browsing investment opportunities, waiting for the economy to shape up, and now that the recession has indeed receded, they’re getting ready to jump in.
Mike Lebus, co-founder of Angel Investment Network, explained “a lot of investors have approached us after becoming fed up with the poor returns offered by the stock market over the past couple of years. Angel investing can obviously be high-risk as angel investors tend to invest in very early stage companies, but the returns can be excellent if you pick the right one. Some of them like to spend a few months browsing the investment proposals on our network to get an idea of what opportunities are out there before deciding to actually start making investments.”
In 2009, 57,225 U.S. companies received $ 17.6 billion from 359,480 individuals, according to the University of New Hampshire data. By comparison, only 728 companies, about 13 percent as many, raised money from venture capitalist firms in the same year, according to the National Venture Capital Association.
Lebus believes that angel investments will continue to outpace venture capital as the greatest source of first-round funding for small businesses. “Business entrepreneurs seem to have realized that seed funding is hard to come by at the moment, so they’re being more realistic with their projections rather than just sticking a pre-money valuation of $ 1 million on any idea. This obviously means the offers are more attractive for angels, and companies are more likely to get the vital funding they need to get their business off the ground.”
It seems that the time is good for angel investing at the moment, which also means 2011 should be a good year for entrepreneurs looking to raise capital.
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