Investment by angel groups declined at least ten percent this year, according to the Angel Capital Association's (ACA) annual survey of angel group leaders. In January and February, about 55 percent of these leaders predicted that both their number of deals and total invested dollars would increase in 2008. Half of them now admit that their predictions for the year were overly optimistic.

Even in the venture capital-rich state of California during a boom period for clean energy investment, some clean energy entrepreneurs still have a hard time finding the capital resources they desire. As a result, one non-profit venture capital group, with a unique history of its own, is launching a new effort to support early-stage businesses. The California Clean Energy Fund (CalCEF) is currently helping to raise a $20 million angel fund to bridge a perceived gap in seed and start-up stage capital availability.

Though angel investments dropped considerably in 2008, the total number of deals held steady, according to a year-end analysis released by the University of New Hampshire's Center for Venture Research (CVR).  Total investments fell 26.2 percent from 2007 to $19.2 billion, while deals fell only 2.9 percent. Deal size, however, declined by 24 percent. CVR concludes that although the current economic climate has not reduced angel activity significantly, it has caused investors to scale back the size of their investments.

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.

Gov. Jim Doyle signed the 2009-11 biennial budget last month, providing funding for university-based research and enhancing tax credits for angel and venture investors supporting high-tech R&D.

Finance reform legislation, bound for the Senate floor in April, could have significant repercussions for investors and entrepreneurs. The bill, introduced by Senator Christopher Dodd (D-CT), would create a new consumer protection watchdog within the Federal Reserve, install new regulations and safety valves to prevent another financial meltdown, and provide greater transparency within the financial industry. Two short provisions, however, have caught the attention of the private equity community and could change the rules for investors.

The Minnesota legislature has passed a 25 percent tax credit for individuals and pooled funds that invest in early-stage high-tech businesses as part of a new jobs bill. Up to $17 million in tax credits will be available in FY11, with $12 million a year available in FY12 and afterward. The credits apply to investments in companies with fewer than 25 employees and less than $2 million in private capital.

Nine national organizations, including SSTI, have joined the Angel Capital Association in seeking revisions to the Financial Reform Bill, which will be debated soon in the U.S. Senate. In its current form, the bill could shrink the pool of accredited U.S. investor and complicate cross-state investment (see the March 31, 2010 issue). The petitioning organizations ask that two small sections pertaining to accredited investors be removed or modified to prevent unnecessary obstacles to angel investing and entrepreneurship.

New Jersey lawmakers last week approved several bills as part of the "Back to Work NJ" economic development and jobs plan proposed by Democratic legislative leaders. Among the measures approved is The New Jersey Angel Investor Tax Credit Act (S.2454) providing incentives to taxpayers who invest in emerging technology companies. Gov. Chris Christie has yet to take action on the package of the bills, which could cost the state up to $805 million in business subsidies and lost corporate tax revenue in the coming fiscal year, reports New Jersey Newsroom.

SSTI recently reported on two important bills passed by lawmakers in Michigan late last year and in New Jersey earlier this year that would provide incentives for taxpayers who invest in emerging technology companies. As an update to the Dec. 8, 2010 and Jan. 12, 2011 stories, both former Michigan Gov. Jennifer Granholm and New Jersey Gov. Chris Christie have taken action on the bills with opposing outcomes. Gov.

Providing access to startup capital, promoting biotechnology, and investing in the green economy to create and grow jobs are among the priorities of Gov. Pat Quinn's Illinois Economic Recovery Plan presented during a speech in December. The governor's plan would establish an Angel Investment Tax Credit program to allow investors making an early-stage investment in a technology startup to receive a capped credit against their Illinois tax bill.

Gov. Tim Pawlenty recently unveiled his 2010 supplemental budget recommendations, which includes new tax incentives to boost job creation and spending cuts across state agencies to help eliminate a projected $1.2 billion deficit.

Angel investors continue to move their focus from seed stage startups to later stage deals, according to recent analysis by the University of New Hampshire's Center for Venture Research. During the first half of 2010, 26 percent of angel capital was invested in seed and startup stage companies, down from 35 percent in 2009 and 45 percent in 2008. Meanwhile, overall angel funding fell to $8.5 billion, a 6.5 percent decrease from the first half of 2009.

Angel investors are reducing the average size of their investments, according to the latest report from the University of New Hampshire Center for Venture Research. In the first half of this year, total angel investment dollars fell by 27 percent from the same period in 2008, but the number of angel deals increased by six percent. As a result, the average deal size has fallen by 31 percent since early 2008.

Measuring impact is critical to the success and sustainability of any economic development initiative, and as the national debate over fiscal austerity and taxpayer spending continues, TBED organizations can expect increased scrutiny and accountability for their investments.

Last week, the SSTI Weekly Digest offered an overview of the many TBED-focused tax incentives currently under consideration in a number of state legislatures. Tax credits for research and development and for angel capital investment, in particular, appear to be under consideration in many parts of the country. At the same time, there appears to be a renewed emphasis on transparency in the operation and effectiveness of these kinds of tax credits.

Both venture capital dollars invested and total deals declined in the first quarter of the year, according to the PricewaterhouseCoopers/National Venture Capital Association (NVCA) Moneytree survey. The capital-intensive life science and clean technology sectors were particularly hard hit, along with seed and early stage investments. Within the data, however, a number of bright spots remained for entrepreneurs seeking capital. Seed and early stage investments continue to comprise more than 50 percent of all deals and first-time fundings remain within a healthy range.

Angel investment activity continues to recover from the crash that hit startup capital markets in late 2008, according to the latest report from the University of New Hampshire's Center for Venture Research (UNH CVR). During the first half of 2012, the number of ventures receiving angel funding grew by a modest 3.7 percent over the same period in 2011. Healthcare remains the dominant target of angel investments, comprising about a quarter of angel dollars into the first half of the year.

Building on several of the new programs enacted during the regular legislative session (see the June 15, 2011 issue of the Digest), Gov. Dan Malloy last week signed into law HB 6801, a comprehensive legislative package that authorizes $626 million in bonds to support efforts aimed at job creation. The bill has several components to support high-tech entrepreneurship, workforce development, and incentivize manufacturers and small businesses.

Lawmakers and technology industry leaders in Georgia and Kentucky are hoping to establish capital programs during the 2012 legislative sessions in an effort to support new business creation and remain competitive with states already offering lucrative incentives.