Current Angel Investing Landscape

The current early stage funding landscape is much more competitive than it has been in the past. These days there are now more startups, but less money available and a lot of seed capital has started to drift towards larger deals. Since the credit markets dried up over the past two years, small business lending has significantly declined each year since 2008.

Investing in early-stage companies has generally favored later stage companies. The Chicago early-stage investing community is still relatively young. This is because over 70% of VC’s invest in MA and CA and in 2010 only 7% of venture capital has been invested in the Midwest.

There are currently around 330 angel groups in the U.S. and Canada and approximately 260,000 active angels. In the last year, there was over $20bn invested by angels in 61,900 companies with an average angel deal size of $300,000 (although it can vary from $10,000-$2mm). The interesting fact is that VC’s have invested approximately the same aggregate amount ($23 billion), but in a smaller number of deals (1,012 companies for an average of $22mm per company).

The angel investing landscape has gotten tougher, but I’m going to provide some advice in the next two posts about how to best position your company to successfully receive angel funding.