Angels guarding large investment sums in new startups

Posted Apr 1st 2008 6:13PM by Zack Miller
Filed under: Private Equity

While I spend most of my time looking for the next Google, Inc. (Nasdaq: GOOG) amongst public companies, I have friends who pursue similar goals but at different stages of company growth. They're venture capitalists. They get to bet OPM (Other Peoples' Money) on finding the next Sergei and Larry in a garage.

Don Dodge had an interesting article today on the state of the market for seed-stage investors, called Angels. In Angels Investors put $26 billion in 57,000 companies, Don examines what 2007 had in store for startup investors. One thing that surprised me was that angels are "the largest source of seed stage and early stage start-up capital, with 39% of 2007 angel investments going there." With a lot of money looking for a home for professional Venture Capitalists, I would have thought that smaller, angel-type investors wouldn't be the largest source of funding for startups.

Some other interesting, salient points Dodge drives home:

Angel investors are having exits, though over 25% of all exits are companies filing for bankruptcy. 65% of exits do come in the form of M&A and IPO's account for 4% of liquidity events.
Angels tend to have similar investment criteria as their VC cousins but average rounds are smaller at about $200K to $2M and they do about 15 times as many deals.

So, if you envision yourself as an armchair technology trend expert, head to your nearest angel group and put your money where your angel mouth is. Pump monkeys are welcome to apply.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

Tags: angel investor, AngelInvestor, investing, private equity, PrivateEquity, vc, venture capital, VentureCapital

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Reader Comments (Page 1 of 1)

4-02-2008 @ 12:23AM

Terra Andersen said...

I have noticed that Angels tend to be much more demanding in terms of ownership than VC's are. Many Angels have completely unrealistic expectations as well... which is why so many exit strategies end in bankruptcy.