Inc Magazine reports angel money tighter with Angels not only having to worry about less M&A opportunity for investments and a dead IPO market.
On top of that they are being squeezed by the current financial climate and as an angel myself I can see this affecting most people’s daily thinking so that will mean less funding for many for some time until things "calm down" and people can assess the damage to their short and long term finances.
Inc, Andrew Leigh:
As exit options become scarce, angel investors are injecting more cash into fewer startups, a recent report shows.
According to the University of New Hampshire’s Center for Venture Research, a total of 23,100 ventures have received angel funding so far this year, down 3.8 percent from the first half of 2007.
Over the same period, the total value of investments has increased by 4.2 percent to $12.4 billion, the report found.
Software, health-care and energy businesses are attracting the largest share of angel funding, while investments in biopharmaceutical firms are dropping off.
Nearly half of all angel investments this year have gone into seed and start-up stage funding.
So far this year, only six venture-backed companies have filed an initial public offering, the lowest number since the 1970s.
As we all know a great investment and management will always find willing people to help and support them through good and bad but it does mean those companies having to spend even more time finding the money and not focusing on their businesses, as a CEO having had to do this too I found it really painful and it slowed my ventures considerably while we went through the cycles.
But you have to do what you have to do, that’s life so "suck it up" and get on with it…
It may help you to know what Angels will be looking more selectively for in companies.
I am a member of the Band of Angels and Ian Sobieski (Coordinator) indicates the following:
Near term paths to cashflow breakeven will be favored over those that require a leap of faith or al lot of capital; also favored will be those that reward investors with a large multiple on a modest exit (<$40M) versus those that require an IPO or $100M+ exit.
So if you can get to this point by driving sales and cutting costs this will help you to get more funding, as will focusing your efforts at a faster and more modest exit requiring less capital.
So good luck with your search and to speed you along Inc magazine also helpfully have an Angel Investor Directory – it’s a little dated but a good start point.
You can also find lots of resources on this blog for more Angel Sources.