Angel investors see opportunity in credit crunch

NEW YORK: Make you believe in angels? If
you thought finance had nil to make with angels, believe again. These
high-net-worth individuals, largely unfazed by the downswing in the housing
market and marks of failing in the United States economy, are still out in droves. Yet as
their name implies, angels are not readily seeable and have got to be painstakingly
wooed before they do a fiscal commitment. Once they latch onto
something they believe in, however, they often work harder than George
Bailey’s Clarence to gain their wings. “It’s A mulct clip to
look for angel funding,” states Jeffrey Sohl, manager of the University of
New Hampshire’s Centre for Venture Research, which is tracking increased
angel involvement in recession-proof industries like software, healthcare services,
medical technology, online societal webs and option energy. “What
you necessitate to make is acquire investor-ready. Know what the angels look
for.” It’s difficult to quantify how much angel investment is
taking place; many trades autumn under the radar. According to the
university’s research, the figure of active angel investors rose to
140,000 in the first one-half of 2007, up 8% on the twelvemonth as involvement in seeding
early-stage companies continued. During that time, angels sank some
$11.9 billion into 24,000 entrepreneurial ventures, which is down slightly from
the year-ago period. Angel support became an increasingly outstanding alternative
after the explosion of the stud com bubble as venture working capital houses â€"
traditionally early-stage funders â€" raised the barroom on initial investment
as well as on the measurements of concern viability that they necessitate startups to
meet, according to those in the tight-knit angel
community. “This is absolutely filling a void,” states Les
Trachtman of the Saratoga, New York-based Trachtman Group, which put in
technology companies looking to scale their operations. Venture working capital firms
“upped their average” investment, he said, noting that that their
typical entry point is now around $5 million. Angels often come up in
at the very early phase of a start-up, after so-called friends and household money
has been raised, investing anywhere from $100,000 to $1 million. They may later
come back with an further unit of ammunition before a company seeks a higher degree of
funding. These days, most angels trust on the acquisition of the startup as their
exit strategy, or how they gain their returns, as the initial public offering marketplace has
soured. Angels whiff out trades a assortment of ways. Many â€"
especially those seeking hot new engineerings â€" depend on universities to
feed them a steady supply of ideas. The Venture Lab at the Empire State Of The South Institute of
Technology, for one, have been the launching pad of paper for 19 companies in the past six
years, many which got their start with angel funding. “We have
professors that come up up with interesting idea. We have got got got postgraduate students, we
have undergraduates; typically they don’t have the fiscal wherewithal
to make a batch with it themselves,” states Sir Leslie Stephen Fleming, the lab’s
chief commercialization officer. For angels investing in technology
“having the substructure and the encephalon powerfulness of a large university is not
required but it certainly helps,” helium said. Groups like the
Atlanta Technology Angels crop that knowledge. With business offices on land site at the
lab, thoughts from the university easily flowing to investors. And whether a startup
comes from Empire State Of The South Technical School or elsewhere, ATA takes on respective of import functions that
are typical of angels: mentor, strategical adviser and general sounding board. One of the laboratory ventures funded by ATA became Qcept Technologies, the
largest supplier of engineering used to place defects in the wafers used to
make semi-conductors. “We’ll have got one or two investors work with
them over time,” states John Knox Massey, managing manager of the group, whose
some 60 members include respective current and past CEOs. “We’ve worked
with companies that may not be ready for a year; they may be building
management, they might be trying to acquire that first client or
two.” Qcept chief executive officer Bret Ingrid Bergman remembers that angels were
instrumental in guiding his company and scene up strong management. His board
now includes such as outstanding angels as former exchequer secretary Paul
O’Neil, and Saint David Lam, laminitis of Getaway Research, a top shaper of
semi-conductor processing equipment. “If you can happen one or two people
who have got some connexion or involvement in what you’re doing and acquire them to
step forward with a small spot of money, that’s how you happen other
angels,” Ingrid Bergman says.