National Association of Seed and Venture Funds
| MoreLIP: The Boom in Angel Investing |
05/13/2008
Preview:
We joined 300-plus attendees at the Angel Capital Association’s Annual Summit in San Diego last week and are awestruck by the growth, not only in numbers, but also in sophistication of what is likely to evolve over the next few years into a fresh asset class of its own:
Article:
We joined 300-plus attendees at the Angel Capital Association’s Annual Summit in San Diego last week and are awestruck by the growth, not only in numbers, but also in sophistication of what is likely to evolveinto an asset class of its own.
At a time of lagging capital for budding entrepreneurs, flagging job opportunity in traditional manufacturing and nagging concerns about the economy, the emergence of a posse of angels is an encouraging sign. The Angel Capital Association has done a great job of rounding up this posse and creating a professional alliance of angels, through clarity of vision, dedication, and hard work.
Only 4 years old, ACA now numbers more than 150 members with nearly 7,000 individual investors. Many recognize that institutional venture capital investors are concentrated geographically and by stage development in investing. Fully 80% of venture capital is invested in later-stage deals. The U.S. states have taken action to cure this ill, and after years of trying a variety of policy-driven experiments to provide start-up capital for home-grown entrepreneurs, angels have become the preferred target. More than a third of the states now encourage and incent angel-group investments with tax credits.
The willingness of experienced angel groups to provide guidance to newly formed groups is also a significant factor in the growth of the angel industry. And they are starting to connect, bysyndicatinglarger deals across geographic regions.
At last week’s meeting, ACA for the first time selected a woman to receive the Hans Severiens Award, its recognition of outstanding achievement in angel investing. The honoree is Stephanie Hanbury-Brown, founder of Golden Seeds, a New York based angel group focused on investments in women entrepreneurs. . Hanbury-Brown founded Golden Seeds LLC in 2005 to identify and invest in women-led ventures with the potential to grow into multi-million dollar businesses. Since its inception, Golden Seeds has invested in 18 companies for approximately $6.7 million. In accepting the accolade of her peers, Hanbury-Brown addressed the important role of women both in angel investing and in creating entrepreneurial activity.
The meeting also marked some bridge building work between angels and venture capitalists. A panel on VC’s offered suggestions on strategies angel groups might use to assure that companies they had initially funded could become viable candidates for venture funds as their future growth required.
Perhaps the most attention grabbing event of the summit was a power-point presentation made of the group's first sponsored study of angel group investing While somewhat limited in the number of responses, the report discloses returns comparable with those of institutional venture capital.