Entrepreneurs eyeing start-up ventures in the coming months were buoyed by some good news coming from the ranks of investors. A recent poll of angel investors signals a climate of increased funding for start-ups next year.
In a story published Sept. 3 by the Washington Post, business writer J.D. Harrison reported that a survey by the consulting form Worthworm showed that angel investors overall intend to increase the number and amount of investments in newer enterprises in 2014.
Worthworm consults with investors on start-up valuations. According to its survey, 25 percent of angel investors queried expected to increase their investment activity next year. Just 3 percent of investors said they would reduce their venture funding.
“Not only are angel investors bullish on the economy, but they’re putting their bets on an even stronger economy in 2014,” Worthworm co-founder Alan Lobock wrote in the survey analysis.
The survey cited several reasons for investor bullishness. Among them — in fact, the chief reason — was cited by Lobock above. Investors perceive an improving economic outlook. More than half of those surveyed believe the economy to be gaining strength and returning to solid footing. Others said they anticipated a strong field of start-ups in the coming year, and still other investors said they will have more investment capital available.
“That means more young companies that will have the chance to flourish with an influx of new investment—bringing new jobs and new opportunities into the marketplace,” Lobock wrote in the survey.
And which sector will see the most activity? Health care start-ups are expected to be the hot investment. Mobile and other tech ventures will also continue to draw interest. However, investment in retail enterprises is expected to wane.
Interestingly, the survey results fly in the face of perceptions floated by more traditional small business lenders. A recent report by Federal Reserve analysts suggests small business lending will continue to lag even after a full economic recovery. Capital is still hard to secure for many small businesses, according to a National Federation of Independent Business index and similar business group indices.
Harrison reported that new Securities and Exchange Commission investment standards and JOBS Act-related federal rules will also pose hoops through which angel investors will have to jump to take equity in new ventures.
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