Angels Pull Back on Funding

If you have an early stage startup and you've been praying for a wealthy individual to swoop in with some much needed capital, you might want to pray a little harder this year. Angel investors have not been as forthcoming with their cash in the first half of 2010 as they were a year ago, according to a report (PDF). Angel investors contributed $8.5 billion in financing to startup companies in the first half of the year - a 6.5% drop from the first half of 2009, according to University of New Hampshire's Center for Venture Research. The number of active angels also fell to 125,100, a decline of 11% from the same period a year ago. Funding for seed and startup-stage companies made up 26% of all angel investments in the first half of 2010, but in the first half of 2009, they made up 35%. "Historically angels have been the major source of seed and start-up capital for entrepreneurs, and this declining interest in seed and start-up capital represent a significant change in the angel market," said Center for Venture Research director Jeffrey Sohl in a statement. Even as the total investment capital declined, the number of projects being funded edged upward 3% to 25,200 from a year ago, meaning that entrepreneurs are getting slightly less money on a per-project basis. The change in funding led the study to conclude that angels, while still looking for good investments, are being cautious about where they put their capital. The trend follows a report earlier this month from PricewaterhouseCoopers and the National Venture Capital Association that showed that the total amount of money invested in all companies by venture capital firms between July and September was on the wane, as well.

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Angels Pull Back on Funding

Kenneth Musante

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Kenneth Musante