Angels Growing Cautious
Laura Palotie

April 4, 2008

Amid economic uncertainties, angel investors are putting less money on the line.

With the economic growth slowing, angel investors are taking a more cautious approach to backing business startups, according to the University of New Hampshire's Center for Venture Research.

Last year, the number of angel investors nationwide grew by 10 percent, and the amount of startup funds they put up rose by only two percent for a total of $26 billion, researchers reported. At the same time, the number of ventures that received angel funding grew 12 percent, suggesting investors were spreading out smaller amounts of capital over more businesses.

Since angel investors rely on their own cash, rather than a venture capital fund, they are more likely to trim their investments during an economic downturn, researchers said.

Software companies received the largest share of angel funding last year, followed by healthcare and medical services, and biotech firms. Over a third of angel investments were in the seed and start-up stage.

This item came from the Inc. Magazine (www.inc.com) web site.

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