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Recent Research: Report Finds Mixed Expectations in the Angel Capital Community

June 03, 2009

The Angel Capital Association's (ACA) latest report on angel group confidence finds little consensus about the state of the industry. While 40 percent believe that their total number of investments and their total investment dollars will decrease in 2009, 30.7 percent believe that their portfolio will increase, 23.1 percent believe it will stay the same.

The results, when compared to findings from a similar survey ACA conducted in November 2008, suggest the angel community is becoming more certain in their outlook on 2009. That might be expected, now that we are five months into the year, but no real trends are appearing other than the number of angels seeing declines is growing at a faster pace than the number expecting growth. In November, only 34.4 percent expected lower deals and yields and only 20.4 percent expected increases.

Irrespective of their own positions, a majority of angel groups (56.2 percent) expect the current economic downturn to continue into 2010. Most, however, expect their own investments to remain stable or increase. Only 42.4 percent reported that the current climate has reduced their appetite for new deals. The other 57.6 percent said that the downturn has either increased their aggressiveness in seeking new deals or not affected it at all.

More telling are the findings that most groups indicated that they plan to make changes in their organizational and funding structure this year, perhaps in response to the changing market for investment capital. While no groups said that they plan to reduce their number of member investors, 29.2 percent said that they plan to seek new investors. Twenty percent said that they plan to establish a sidecar fund for their network and 12.3 percent said that they plan to raise a new fund. A majority (52.8 percent) said that they plan to increase their co-investments with other angel groups and 35.4 percent plan to increase co-investments with other equity investors, including venture funds and individual angels.

The "ACA 2009 Angel Group Confidence Report" is available at: http://www.angelcapitalassociation.org/dir_about/news_detail.aspx?id=196.

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