Study: Angel Investments Drop In 2008

The Angel Capital Association reported this week that investing activity by angel investments groups dropped by nine percent between 2008 and 2007, and 40 percent of angel groups expect overall investment to decrease again this year. The group, which released its ACA Angel Group Confidence Report this week, also found that the average group investment per deal was $276,918 in 2008, with total invested by groups in 2008 averaging at $1.77M. Individual group totals were not broken out. The group attributed the dropping investment levels to loss of individual member wealth and the overall decline of the economy.

However, not all the news from the ACA was negative: the group said that a quarter of the angel groups surveyed said they would be "more aggressive" in seeking new deals, due to the overall decline in company valuations and high quality of investment opportunities. Interestingly enough, among the many data points provided by the group, is that angel investors have a fairly long horizon for liquidity on their deals: a whopping 48.4 percent of angel investors expected that it would take 5-6 years before a liquidity event on their investment, with another 28.1 percent thinking it will be more than six years to liquidity; in fact, none of the groups predicted liquidity in their portfolio for the next two years.