Wright, Lori

English

University of New Hampshire

University of New Hampshire
University of New Hampshire Scholars' Repository
Media Relations Administrative Offices
10-7-2005
Companies In Life Sciences, Biotechnology Reap
Rewards Of National Angel Investors Market In
First Half Of 2005
Lori Wright
Follow this and additional works at: https://scholars.unh.edu/news
This News Article is brought to you for free and open access by the Administrative Offices at University of New Hampshire Scholars' Repository. It has
been accepted for inclusion in Media Relations by an authorized administrator of University of New Hampshire Scholars' Repository. For more
information, please contact nicole.hentz@unh.edu.
Recommended Citation
Wright, Lori, "Companies In Life Sciences, Biotechnology Reap Rewards Of National Angel Investors Market In First Half Of 2005"
(2005). UNH Today. 1527.
https://scholars.unh.edu/news/1527
9/29/17, 12(14 PMCompanies In Life Sciences, Biotechnology Reap Rewards Of National Angel Investors Market In First Half Of 2005
Page 1 of 2http://www.unh.edu/delete/news/news_releases/2005/october/lw_051007angels.html
Related Links
Angel Investor Market
Analysis for Q1 and
Q2 2005 
Center for Venture
Research 
Whittemore School of
Business and
Economics
Companies In Life Sciences, Biotechnology Reap Rewards
Of National Angel Investors Market In First Half Of 2005
Contact: Lori Wright
603-862-0574
UNH Media Relations
Oct. 7, 2005
Editors: Jeffrey Sohl, director of the Center for Venture Research, is available to discuss
the Angel Investor Market Analysis for Q1 and Q2 2005 at 603-862-3373 or 603-862-3341
(CVR Main Number) and jeff.sohl@unh.edu. The entire report is available for download
at http://unhinfo.unh.edu/news/docs/Q122005AngelInvestorMarket.pdf.
DURHAM, N.H. – Angel investors put their money behind companies involved in the life
sciences and biotechnology in the first half of 2005, with nearly 40 percent of total angel
investments nationwide backing the two sectors, according to the Angel Investor Market
Analysis for Q1 and Q2 2005 released by Center for Venture Research at the University of New
Hampshire Whittemore School of Business and Economics.
“Life sciences has been attracting a lot of attention because it’s a growing market and is
predicted to get much larger. The difficulties of the high risk of investment and long exit
horizons now are being offset by the potential returns. Investors shied away from the life
sciences and biotech sectors for a while because of the long exit horizons, but the possibility of
high potential returns have helped angels realize that there are more possibilities in making deals
work now,” said Jeffrey Sohl, director of the Center for Venture Research.
Life sciences, which includes health care services, medical devices and equipment, attracted 20
percent of the angel investment in the first half of 2005. Biotechnology attracted 17.5 percent of
angel investments, with software investments close behind at 17 percent and IT services at 13
percent. The remaining investments were approximately equally weighted across high tech
sectors, with each having between 3 percent and 6 percent of the total deals. 
“This market level sector diversification indicates a robust investment pattern and provides a
foundation for reasonable growth in the market. Since the angel market is essentially the
spawning ground for the next wave of high growth investments, this sector diversification
provides an indication of investment opportunities that will be available for later stage
institutional investors,” according to the report authored by Sohl.
Overall, the angel investor market has shown signs of maintaining investment levels in the first
half of 2005, with total investments of $11 billion. Angel investments for the first half of 2005
are slightly less than the first half of 2004 ($12.4 billion) but on track to match 2004 investments
of $22.5 billion, according to the report. A total of 26,000 entrepreneurial ventures received
angel funding in the first half of 2005, a level comparable to the first half of 2004. The number of
9/29/17, 12(14 PMCompanies In Life Sciences, Biotechnology Reap Rewards Of National Angel Investors Market In First Half Of 2005
Page 2 of 2http://www.unh.edu/delete/news/news_releases/2005/october/lw_051007angels.html
active investors in the first two quarters of 2005 was 126,000 individuals, a slight decline from
the same period in 2004. An average of four to five investors joined forces to fund these
entrepreneurial ventures.
“Angels continue to be the largest source of seed and start-up capital, with 48 percent of the first
half of 2005 angel investments in the seed and start-up stage. While this preference for seed and
start-up investing is the largest stage for angel deals, this also represents an 11 percent decline in
this stage from Q1-2, 2004. While angels are not abandoning seed and start-up investing, it
appears that market conditions and the preferences of large formal groups of angels, are resulting
in angels engaging in more later stage and follow-on funding for their investments,” according to
the report. 
“New, first sequence, investments represent 69 percent of Q1-2, 2005 angel activity. This shift in
investment strategies toward post seed investments reduces the proportional amount of seed and
start-up capital. This restructuring of the angel market has in turn resulted in fewer dollars
available for seed investments, thus exacerbating the capital gap for seed and start-up capital in
the United States,” according to the report.
Looking forward, if the angel market is to achieve sustainable growth there needs to be a
reasonable augmentation in active investors, and thus, level of participation is an important
consideration. While the number of individuals who are members of organized angel groups is
increasing, there is a larger percentage of latent angels (individuals who have the necessary net
worth, but have not made an investment), according to the analysis. 
In the first half of 2005, 66 percent of the membership in angel groups was latent angels,
compared to 56 percent in 2004 and 48 percent in 2003. “This increase in latent investors over
time indicates that while many high-net worth individuals may be attracted to the early stage
equity market, they have not converted this interest into direct participation. This lack of active
involvement may be the result of the current trend to rush to form angel groups, rather than
meeting the more basic systemic need for educational programs and research to move the latent
angel to the active investor,” the report said.
The Center for Venture Research (CVR) at the UNH Whittemore School of Business and
Economics has been conducting research on the angel market since 1980. The CVR’s mission is
to provide an understanding of the angel market and the critical role of angels in the early stage
equity financing of high growth entrepreneurial ventures. Through the tenet of academic research
in an applied area of study, the CVR is dedicated to providing reliable and timely information on
the angel market to entrepreneurs, private investors and public policymakers.
The Center for Venture Research also provides consulting services to angels, angel groups and
state and foreign governments. For more information visit http://www.unh.edu/cvr or contact the
CVR at 603-862-3341.


Companies In Life Sciences, Biotechnology Reap Rewards Of National Angel Investors Market In First Half Of 2005

UNH Scholars' Repository

University of New HampshireUniversity of New Hampshire Scholars' RepositoryMedia Relations Administrative Offices10-7-2005Companies In Life Sciences, Biotechnology ReapRewards Of National Angel Investors Market InFirst Half Of 2005Lori WrightFollow this and additional works at: https://scholars.unh.edu/newsThis News Article is brought to you for free and open access by the Administrative Offices at University of New Hampshire Scholars' Repository. It hasbeen accepted for inclusion in Media Relations by an authorized administrator of University of New Hampshire Scholars' Repository. For moreinformation, please contact nicole.hentz@unh.edu.Recommended CitationWright, Lori, "Companies In Life Sciences, Biotechnology Reap Rewards Of National Angel Investors Market In First Half Of 2005"(2005). UNH Today. 1527.https://scholars.unh.edu/news/15279/29/17, 12(14 PMCompanies In Life Sciences, Biotechnology Reap Rewards Of National Angel Investors Market In First Half Of 2005Page 1 of 2http://www.unh.edu/delete/news/news_releases/2005/october/lw_051007angels.htmlRelated LinksAngel Investor MarketAnalysis for Q1 andQ2 2005 Center for VentureResearch Whittemore School ofBusiness andEconomicsCompanies In Life Sciences, Biotechnology Reap RewardsOf National Angel Investors Market In First Half Of 2005Contact: Lori Wright603-862-0574UNH Media RelationsOct. 7, 2005Editors: Jeffrey Sohl, director of the Center for Venture Research, is available to discussthe Angel Investor Market Analysis for Q1 and Q2 2005 at 603-862-3373 or 603-862-3341(CVR Main Number) and jeff.sohl@unh.edu. The entire report is available for downloadat http://unhinfo.unh.edu/news/docs/Q122005AngelInvestorMarket.pdf.DURHAM, N.H. – Angel investors put their money behind companies involved in the lifesciences and biotechnology in the first half of 2005, with nearly 40 percent of total angelinvestments nationwide backing the two sectors, according to the Angel Investor MarketAnalysis for Q1 and Q2 2005 released by Center for Venture Research at the University of NewHampshire Whittemore School of Business and Economics.“Life sciences has been attracting a lot of attention because it’s a growing market and ispredicted to get much larger. The difficulties of the high risk of investment and long exithorizons now are being offset by the potential returns. Investors shied away from the lifesciences and biotech sectors for a while because of the long exit horizons, but the possibility ofhigh potential returns have helped angels realize that there are more possibilities in making dealswork now,” said Jeffrey Sohl, director of the Center for Venture Research.Life sciences, which includes health care services, medical devices and equipment, attracted 20percent of the angel investment in the first half of 2005. Biotechnology attracted 17.5 percent ofangel investments, with software investments close behind at 17 percent and IT services at 13percent. The remaining investments were approximately equally weighted across high techsectors, with each having between 3 percent and 6 percent of the total deals. “This market level sector diversification indicates a robust investment pattern and provides afoundation for reasonable growth in the market. Since the angel market is essentially thespawning ground for the next wave of high growth investments, this sector diversificationprovides an indication of investment opportunities that will be available for later stageinstitutional investors,” according to the report authored by Sohl.Overall, the angel investor market has shown signs of maintaining investment levels in the firsthalf of 2005, with total investments of $11 billion. Angel investments for the first half of 2005are slightly less than the first half of 2004 ($12.4 billion) but on track to match 2004 investmentsof $22.5 billion, according to the report. A total of 26,000 entrepreneurial ventures receivedangel funding in the first half of 2005, a level comparable to the first half of 2004. The number of9/29/17, 12(14 PMCompanies In Life Sciences, Biotechnology Reap Rewards Of National Angel Investors Market In First Half Of 2005Page 2 of 2http://www.unh.edu/delete/news/news_releases/2005/october/lw_051007angels.htmlactive investors in the first two quarters of 2005 was 126,000 individuals, a slight decline fromthe same period in 2004. An average of four to five investors joined forces to fund theseentrepreneurial ventures.“Angels continue to be the largest source of seed and start-up capital, with 48 percent of the firsthalf of 2005 angel investments in the seed and start-up stage. While this preference for seed andstart-up investing is the largest stage for angel deals, this also represents an 11 percent decline inthis stage from Q1-2, 2004. While angels are not abandoning seed and start-up investing, itappears that market conditions and the preferences of large formal groups of angels, are resultingin angels engaging in more later stage and follow-on funding for their investments,” according tothe report. “New, first sequence, investments represent 69 percent of Q1-2, 2005 angel activity. This shift ininvestment strategies toward post seed investments reduces the proportional amount of seed andstart-up capital. This restructuring of the angel market has in turn resulted in fewer dollarsavailable for seed investments, thus exacerbating the capital gap for seed and start-up capital inthe United States,” according to the report.Looking forward, if the angel market is to achieve sustainable growth there needs to be areasonable augmentation in active investors, and thus, level of participation is an importantconsideration. While the number of individuals who are members of organized angel groups isincreasing, there is a larger percentage of latent angels (individuals who have the necessary networth, but have not made an investment), according to the analysis. In the first half of 2005, 66 percent of the membership in angel groups was latent angels,compared to 56 percent in 2004 and 48 percent in 2003. “This increase in latent investors overtime indicates that while many high-net worth individuals may be attracted to the early stageequity market, they have not converted this interest into direct participation. This lack of activeinvolvement may be the result of the current trend to rush to form angel groups, rather thanmeeting the more basic systemic need for educational programs and research to move the latentangel to the active investor,” the report said.The Center for Venture Research (CVR) at the UNH Whittemore School of Business andEconomics has been conducting research on the angel market since 1980. The CVR’s mission isto provide an understanding of the angel market and the critical role of angels in the early stageequity financing of high growth entrepreneurial ventures. Through the tenet of academic researchin an applied area of study, the CVR is dedicated to providing reliable and timely information onthe angel market to entrepreneurs, private investors and public policymakers.The Center for Venture Research also provides consulting services to angels, angel groups andstate and foreign governments. For more information visit http://www.unh.edu/cvr or contact theCVR at 603-862-3341.

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Companies In Life Sciences, Biotechnology Reap Rewards Of National Angel Investors Market In First Half Of 2005

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