Angel Investors Cutting Back, Expect Weak 2009
Dow Jones Venture Wire reports that angel groups slowed their investment pace this year and expect a weak 2009 because of the recession.
According to a survey by the Angel Capital Association, conducted from Nov. 6 to Nov. 18, total angel group investments in North America will decrease this year by at least 10% from 2007 to about $1.72 million per angel group.
The average investment rose by about 6%, to nearly $281,000, but the average number of investments was 6.1, about 16% less than 2007.
Angel group leaders had been optimistic about increasing their investments at the beginning of this year in a survey conducted in January and February. But by the November survey, nearly half of the respondents found their activity was less than they had predicted.
General economic issues were cited as the biggest reason for reduced investment activity. More than half of the groups that had lower investments said that uncertainty in the market reduced investment activity. Other significant reasons included a loss in member wealth and the need to reserve additional capital for portfolio companies.
While nearly half the survey respondents believe they will receive more investment requests in 2009, 55.8% said the number of investments and the dollar amount of investments will decrease or stay the same.
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