My Two Cents

Risk capital is down

Chris Farrell Oct 8, 2008

This is worrisome. Angel investors–wealthy entrepreneurs that invest in other entrepreneurs–are getting wary. Angel investors are critical to innovation and new business creation.

Here is an excerpt of today’s press release from the Center for Venture Research at the University of New Hampshire.

According to the analysis, “Angel Investors Steady But More Cautious in First Half of 2008,” total investments in the first and second quarters of 2008 were $12.4 billion, an increase of 4.2 percent over the same period last year. A total of 23,100 entrepreneurial ventures received angel funding in the first half of 2008, a slight decrease of 3.8 percent from the same period last year, and the number of active investors was 143,000 individuals, an increase of 2.1 percent over the same period in 2007.

“The modest increase in total dollars and angel investors, coupled with the decrease in investments resulted in a larger deal size for the first half of 2008 (8 percent)., These data indicate that angels are exhibiting a cautious approach to investing in light of the recent volatility in the economy and reducing their individual risk exposure by including more angels in each deal,” said Jeffrey Sohl, director of the UNH Center for Venture Research at the Whittemore School of Business and Economics.

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