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Angel Investment Grows As Media Sector Surges in 2013
U.S. angel investors returned to their pre-recession level of activity in 2013, according to the latest release from the University of New Hampshire’s Center for Venture Research (UNH CVR). Investment had plummeted during the economic crisis of 2007-09, and grew over the next few years. Last year however, investment dollars jumped by 8.3 percent and deals increased by 5.5 percent over the previous year. Total investments reached $24.8 billion in 2013, near the market high of $26 billion achieved in 2007. Some of this growth is attributable to the rise in media sector investments, which overtook healthcare as the second most important sector.
Previous UNH CVR showed that the angel activity hit a long-time market low in 2009. After an already weak 2008, investment dipped 8.3 percent to $17.6 billion. That year, 57,225 firms received angel support from about 260,000 active investors. In 2010, investment dollars recovered by a healthy 14 percent, followed by a 12.1 percent increase in 2011. In 2012, dollars remained fairly steady, with only 1.8 percent growth.
The current release, however, seems to indicate that growth has not yet leveled off. Dollars, deals and investors all increased by healthy margins last year. Compared to the 2009 low, angel investment has grown by 41 percent. Last year, 70,730 firms received angel funding, a 23.6 percent increase. The number of total investors has grown just over 15 percent.
As also discussed in the Silicon Valley Bank/Angel Resource Institute HALO Report, released earlier this year (see related Digest article), increased activity in the software, Internet and mobile sectors has driven much of the industry’s growth in recent years. Through 2010, the software and healthcare sectors often took turns at the top of the list of sectors for angel capital investment. In 2011, software began opening up a larger lead, and by 2013 represented 23 percent of all deals. Meanwhile, healthcare fell to 14 percent. The media sector, which includes mobile and social media applications, did not rank among the top six sectors until 2011, but has since risen to second place with 16 percent of the market. Though the HALO report numbers and industry definitions differ, the authors also noted a consistent three-year rise in Internet and mobile sector activity.
Angels also appear to be increasing their focus on very early stage deals. Seed stage investments grew from 9 percent of all deals in 2012 to 21 percent last year. Early stage deals also grew, from 33 percent to 41 percent in 2013. Expansion stage deals declined.