The Center for Venture Research (CVR) at the University of New Hampshire recently released its latest report on the effect of angel investments on the job market in 2011. The Center for Venture Research is a non-profit organization that has been conducting quality research on the angel market for over 30 years, with the aim to better understand this market and how it intersects with larger trends in the economy.
CVR research showed that total angel investments in 2011 were up 12.1% (at $22 billion), with a total of 66,230 entrepreneurs receiving funding and 2.5 jobs being created per angel investment. In addition, angels reversed a 2-year decline in seed and start-up investing, with 42% of investments going toward this stage (up from 31% in 2010). Yield rates remained stable from their 2010 levels, while return rates for angel’s exits were quite variable, anywhere from 18% to 28%.
In terms of the small business sector, the results of this research study are mixed. One the one hand, total investments were up 12.1%, with 7.3% more ventures receiving funding and 20% more active investors. Also encouraging was the breakdown of exits, with mergers and acquisitions representing 54% and bankruptcies only 24%. Finally, the CVR’s study showed increasing diversity in industry investments, with software retaining the top sector position but also signs of continued dedication to clean technology.
However, when this year’s metrics are compared side by side with the previous year’s, the numbers aren’t as encouraging. For instance, while the report concluded that angel investments produced 165,600 new jobs in 2011, when compared to their 2010 figures where 370,000 new jobs were created, the job creation numbers aren’t as impressive. The number of jobs created per investment also fell a significant 58%, from 6 to 2.5.
Greene, Patti. “How Many Angels?” Forbes. 4/5/12. (4/9/12.) http://www.forbes.com/sites/babson/2012/04/05/how-many-angels/.
Shane, Scott. “Job Creation by Angel Backed Companies Collapsed in 2011.” Small Business Trends. 4/9/12. (4/9/12.) http://smallbiztrends.com/2012/04/job-creation-angel-backed-companies.html.
Sohl, Jeffrey. “The Angel Investor Market in 2011: The Recovery Continues.” Center for Venture Research. 4/3/12. (4/9/12.) http://wsbe.unh.edu/sites/default/files/2011_analysis_report.pdf.