Credit: Angel Investor Image via Shutterstock
Angel investors are looking to become more active in the coming year. New research has found that 50 percent of angel investors plan to increase the number of investments they will make in 2014.
Not only will those angel investors be increasing the number of investments they make, they will also be increasing the total amount they plan on investing. Twenty-four percent of angel investors say they will increase the dollar amount on investments next year.
The rebounding economy has played a large role in swaying the feelings of those investors. Fifty-five percent of angel investors say the economy's return to pre-recession levels has encouraged them continue investing.
"The resounding finding of our report is that angel investment is alive and well in America," said Alan Lobock, co-founder of Worthworm, which conducted the research. "What we're seeing is a trend toward making not only more, but larger investments as we move into 2014. This means entrepreneurs have a better shot at funding their ventures and in growing their startups. As studies have shown that the most job creation comes from young companies – rather than small or large companies – this domino effect should bring both the next wave of innovation as well as additional job creation."
Despite the projected growth of angel investors, the researchers found those investments may not reach all industries. Angel investors say that startups in the health care, mobile and telecom, Internet and energy sectors are some of the most popular industries for investments. On the other hand, retail and industrial startups are some of the least likely sectors for obtaining investments.
The researchers also found that angel investment activity was highest in the Northeast followed closely by the West Coast. Additionally, the researchers found that 40 percent of investors averaged one investment per quarter, while 42 percent of respondents say they make one investment per year.
"There is more national attention on startups than ever before, with TV shows like ‘Shark Tank’ drawing attention to the role angel investors play in funding successful ventures," Lobock said. "With that attention, comes more competition for investment. With many of the investors polled in our report stating they make just one large investment per quarter, it’s critical that entrepreneurs take the time to create a realistic pitch with a credible and defensible pre-money valuation. The old adage certainly rings true – there’s just one chance for a first impression, and entrepreneurs need to take every opportunity to make sure they’re armed and ready with the data investors will be looking for."
The research was based on the responses of 100 angel investors.
Originally published on BusinessNewsDaily.