A Wall Street Journal blog piece reports that angel investors while still interested in funding startups are scaling back on their average investment size and demanding lower valuations. In other words, if you should be so lucky as to find a serious angel investor, he will offer you less money for a bigger stake in your company.
Venture_Capital_Entrepreneurs_2009The Center for Venture Research at the University of New Hampshire yesterday released its year-end report of angel investing in 2008, showing that angel investing dollars fell 26.2% over 2007, to $19.2 billion. The total number of angel deals fell only 2.9%, to 55,480.
What this means: Interest among affluent individual investors to invest in small growing companies hasn’t abated much – but those investors are willing to devote fewer dollars to each deal. “They are committing less dollars resulting from lower valuations and a cautious approach to investing,” said Jeffrey Sohl, the Center’s director, in a news release. (source)
What all this means is that entrepreneurs will have to become more sophisticated about how they cobble together their financing. The days of merely writing a business plan and hoping that some kind stranger writes a check are over. For those willing to learn there are sources for more sophisticated financing lessons.