The National Association of Seed and Venture Funds (NASVF) and the Temple University Fox School of Business announced today that the percentage of venture and angel funds focused on investing in seed stage companies has increased 40% from 2009 based on the second annual survey to its members.

“The speed of turnaround in the situation is truly impressive. It shows the overall pick-up in the confidence that fund managers seem to have in seed stage companies” said Raj Chaganti, professor in Entrepreneurship and Strategy at the Fox School of Business.

Sixty-nine percent of the funds in the annual NASVF survey have $20 million or less under management and 85% focus on knowledge-based ventures such as technology, software, web 2.0, science based, communications and media.  Other positive results from the survey were the following:

• 51% of the funds plan to invest more money in companies over last year
• 40% increase in the number of funds able to raise new money in less than a year
• 10% increase in the capital raising climate over last year
• 34% of the funds reported their average investment was between $500,000 - $1,000,000 vs. 18% last year

“This is great news for the companies that have the largest challenge in raising capital,” said Jim Jaffe, president/CEO of the National Association of Seed Venture Funds. “It is good indicator that the economy is taking a positive step forward.  As many studies have shown, startup companies are the best and most economically efficient creator of new employment opportunities.”

The other good news from the survey was that the percentage of portfolio companies able to access commercial bank funding has increased by 10% since last year indicating that bank capital is starting to loosen up.  Professional service providers, accounting firms, law firms, bankers and management firms were also surveyed and over 64% believe the government should provide additional funding for seed and early stage companies to invest in seed and early stage companies.

“A key result in the survey was that 65% of respondents think the government should provide new seed capital to be invested through existing funds,” said Jaffe.  “We have been engaged in continual dialogue with government agencies and have developed a proposal to initiate a new government-based innovation seed fund.  Over 62% of our respondents believe lowering the capital gains tax would increase available funds, which in turn would spur additional economic growth.” 

“Eighty percent of the professional service providers who answered the survey still say it is difficult to obtain bank capital, so even though we are experiencing a slight improvement in the economy, we feel adjustments need to be implemented to improve the access to capital for emerging innovative enterprises.”

Information on the National Association of Seed and Venture Funds - NASVF

The National Association of Seed and Venture Funds (NASVF) is a global non-profit organization with over 650 in the U.S. and international. NASVF promotes investments in seed and early-stage companies by supporting entrepreneurship and job creation through the formation of innovation capital programs. NASVF connects investors, economic development organizations, Federal and university tech transfer professionals in building their local economies through commercializing technologies.

Fox School of Business, Temple University

Established in 1918, the Fox School of Business, Temple University, has a distinguished tradition of preparing business leaders, professionals and entrepreneurs for successful careers. Today, it is the largest, most comprehensive business school in the greater Philadelphia region, and among the largest in the world, with nearly 6,500 students, 159 full-time faculty and more than 52,000 alumni.

Temple’s Fox School of Business has been ranked among the top U.S. programs in entrepreneurship by Entrepreneur magazine and The Princeton Review for seven consecutive years. Fox continues to be recognized for excellence for its graduate programs by The Economist, the Financial Times and Forbes, as well as for its undergraduate and graduate programs in U.S. News & World Report.