Wednesday, March 21, 2007

Touched By An Angel

A few years ago, a polls suggested 79 percent of Americans believed in angels. I guess you can toss me in along with the rest.

What else can we conclude after reading a report put out by the Center for Venture Research at the University of New Hampshire? The center--which says it's been tracking angel investing since 1980--says Angels invested $25.6 billion in companies last year, a 10.8% increase from 2005.

This is a lot of money you're talking about. Any of the major data sources out there suggested venture capitalists--you know the ones with institutional capital?--put roughly $25 billion into companies last year, roughly the same amount.
These angels have some serious clout.

Who got the money? Well, most likely, someone you know. Health care companies--biotechnology, medical device and health care services companies--got a bulk of it or at least accounted for 39% of the 51,000 angel deals completed last year. The report doesn't give a breakdown of the capital committed.

That's nearly 20,000 investments (and $10 billion if the percentage could be applied to dollars, but that's probably not completely accurate. Could be more. Could be less. My guess is biotech, medical device deals get more than your average investment.)

So what's this all mean? For entrepreneurs, this is great news. There's a whole bunch of billions being invested in health care companies year after year, and start-ups appear to be getting a fair share.

But what's this mean for VCs? Well, take some solace in knowing there's someone out there funding the start-ups you no longer have the time nor patience to do yourselves. However, these folks are becoming a force, and they're going to be looking to get paid big time when their companies come to you looking for capital.

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