Sohl, Jeffrey

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University of New HampshireUniversity of New Hampshire Scholars' RepositoryCenter for Venture Research Research Institutes, Centers and Programs1-1-2005The Angel Investor Market In 2004: The AngelMarket Sustains A Modest RecoveryJeffrey SohlUniversity of New Hampshire, jeff.sohl@unh.eduFollow this and additional works at: https://scholars.unh.edu/cvrThis Report is brought to you for free and open access by the Research Institutes, Centers and Programs at University of New Hampshire Scholars'Repository. It has been accepted for inclusion in Center for Venture Research by an authorized administrator of University of New Hampshire Scholars'Repository. For more information, please contact nicole.hentz@unh.edu.Recommended CitationSohl, Jeffrey, "The Angel Investor Market In 2004: The Angel Market Sustains A Modest Recovery" (2005). Center for Venture Research.3.https://scholars.unh.edu/cvr/3 Center for Venture Research Director, Jeffrey Sohl         www.unh.edu/cvr     (603)862-3341  THE ANGEL INVESTOR MARKET IN 2004: THE ANGEL MARKET SUSTAINS A MODEST RECOVERY   Market Size The angel investor market has shown signs of a sustainable recovery in 2004, with total investments of $22.5 billion (total 2003 investments $18.1 billion), according to the Center for Venture Research at the University of New Hampshire.  A total of 48,000 entrepreneurial ventures received angel funding in 2004, a 24% increase from 2003.  The number of active investors in 2004 was 225,000 individuals, an increase of 2.5% from 2003, with an average of 4-5 investors joining forces to fund an entrepreneurial start-up.  This continued modest rise in total investments is encouraging.  Sector Analysis Software garnered the largest angel investments, with 22% of total angel investments in 2004, followed by healthcare services/medical devices and equipment, with a 16% share of angel investments.  The remaining investments were approximately equally weighted across high tech sectors, with each having about 10% 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 grounds 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.   Sector Software Health Biotech IT Services Financial Services Retail TelecomDeals 22% 16% 10% 8% 8% 7% 6%   Job Growth Angel investments resulted in the creation of 141,200 new jobs in the United States in 2004, or 3 jobs per angel investment.  However, this tracks jobs created at the time of the angel investment, which is often at the seed and start-up stage of the venture.  It is likely that this job creation of 141,200 is the minimum number of jobs created by angels in 2004.  As the angel investment is used by the venture to fuel growth, launch new products and explore new markets, it is highly likely that the number of jobs created by the angel investment will increase as the firm grows. Yield Rates The yield (acceptance) rate is defined as the percentage of investment opportunities that are brought to the attention of investors that result in an investment.  The peak yield rate of 23.3% occurred during the height of the investment bubble in 2000. Since that peak the yield rate has stabilized at around 10%.  In 2004, yields increased to 18.5% from the previous year’s yield rate of 10.3%. A continued departure in yield rates from the historical average could be troubling if this rise can be attributed to an influx of inexperienced angels.    Women and Minority Entrepreneurs and Investors Women angels represent approximately 5% of the angel market and about one quarter of these women angels made an investment in 2004.  Women-owned ventures account for 4.7% of the entrepreneurs that are seeking angel capital.  How well are women entrepreneurs succeeding in their search for angel capital?  The yield rate for women-owned firms is 12.5% in 2004, which lags behind the general angel market by 6%, indicating that women–owned ventures have a slightly less chance of obtaining angel funding than their male counterparts.    Minority angels account for 3.6% of the angel population, and only one in ten of these angels made an investment in 2004.  Minority-owned firms represent 5.4% of the entrepreneurs that presented their business concept to angels.  However, the yield rate for these minority-owned firms was 20%, which is in line with the general yield rate.  These data indicate that to succeed in securing angel capital, more minority-owned firms need to attract the attention of angel investors, since given the chance, a reasonable proportion of minority-owned ventures were considered to be of sufficient quality to make an investment, based on comparable yield rates.  However, for women-owned firms, it appears that not only do more women-owned firms need to attract the attention of angel investors, but women-owned firms, given the low yield rates, need to increase their “investor readiness” through education and networking.   The Center for Venture Research (CVR) 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 reports on state level angel activity.  For more information visit www.unh.edu/cvr or contact the CVR at 603-862-3341. 

The Angel Investor Market In 2004: The Angel Market Sustains A Modest Recovery

University of New Hampshire

University of New Hampshire
University of New Hampshire Scholars' Repository
Center for Venture Research Research Institutes, Centers and Programs
1-1-2005
The Angel Investor Market In 2004: The Angel
Market Sustains A Modest Recovery
Jeffrey Sohl
University of New Hampshire, jeff.sohl@unh.edu
Follow this and additional works at: https://scholars.unh.edu/cvr
This Report is brought to you for free and open access by the Research Institutes, Centers and Programs at University of New Hampshire Scholars'
Repository. It has been accepted for inclusion in Center for Venture Research by an authorized administrator of University of New Hampshire Scholars'
Repository. For more information, please contact nicole.hentz@unh.edu.
Recommended Citation
Sohl, Jeffrey, "The Angel Investor Market In 2004: The Angel Market Sustains A Modest Recovery" (2005). Center for Venture Research.
3.
https://scholars.unh.edu/cvr/3
 
Center for Venture Research 
Director, Jeffrey Sohl         
www.unh.edu/cvr     (603)862-3341 
 
THE ANGEL INVESTOR MARKET IN 2004: 
THE ANGEL MARKET SUSTAINS A MODEST RECOVERY 
 
 
Market Size 
The angel investor market has shown signs of a sustainable recovery in 2004, with total 
investments of $22.5 billion (total 2003 investments $18.1 billion), according to the Center for 
Venture Research at the University of New Hampshire.  A total of 48,000 entrepreneurial 
ventures received angel funding in 2004, a 24% increase from 2003.  The number of active 
investors in 2004 was 225,000 individuals, an increase of 2.5% from 2003, with an average of 4-
5 investors joining forces to fund an entrepreneurial start-up.  This continued modest rise in total 
investments is encouraging. 
 
Sector Analysis 
Software garnered the largest angel investments, with 22% of total angel investments in 2004, 
followed by healthcare services/medical devices and equipment, with a 16% share of angel 
investments.  The remaining investments were approximately equally weighted across high tech 
sectors, with each having about 10% 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 grounds 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.  
 
Sector Software Health Biotech IT Services Financial Services Retail Telecom
Deals 22% 16% 10% 8% 8% 7% 6% 
 
 
Job Growth 
Angel investments resulted in the creation of 141,200 new jobs in the United States in 2004, or 3 
jobs per angel investment.  However, this tracks jobs created at the time of the angel investment, 
which is often at the seed and start-up stage of the venture.  It is likely that this job creation of 
141,200 is the minimum number of jobs created by angels in 2004.  As the angel investment is 
used by the venture to fuel growth, launch new products and explore new markets, it is highly 
likely that the number of jobs created by the angel investment will increase as the firm grows. 
Yield Rates 
The yield (acceptance) rate is defined as the percentage of investment opportunities that are 
brought to the attention of investors that result in an investment.  The peak yield rate of 23.3% 
occurred during the height of the investment bubble in 2000. Since that peak the yield rate has 
stabilized at around 10%.  In 2004, yields increased to 18.5% from the previous year’s yield rate 
of 10.3%. A continued departure in yield rates from the historical average could be troubling if 
this rise can be attributed to an influx of inexperienced angels.   
 
Women and Minority Entrepreneurs and Investors 
Women angels represent approximately 5% of the angel market and about one quarter of these 
women angels made an investment in 2004.  Women-owned ventures account for 4.7% of the 
entrepreneurs that are seeking angel capital.  How well are women entrepreneurs succeeding in 
their search for angel capital?  The yield rate for women-owned firms is 12.5% in 2004, which 
lags behind the general angel market by 6%, indicating that women–owned ventures have a 
slightly less chance of obtaining angel funding than their male counterparts.   
 
Minority angels account for 3.6% of the angel population, and only one in ten of these angels 
made an investment in 2004.  Minority-owned firms represent 5.4% of the entrepreneurs that 
presented their business concept to angels.  However, the yield rate for these minority-owned 
firms was 20%, which is in line with the general yield rate. 
 
These data indicate that to succeed in securing angel capital, more minority-owned firms need to 
attract the attention of angel investors, since given the chance, a reasonable proportion of 
minority-owned ventures were considered to be of sufficient quality to make an investment, 
based on comparable yield rates.  However, for women-owned firms, it appears that not only do 
more women-owned firms need to attract the attention of angel investors, but women-owned 
firms, given the low yield rates, need to increase their “investor readiness” through education and 
networking. 
 
 
The Center for Venture Research (CVR) 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 reports on state level angel activity.  For more 
information visit www.unh.edu/cvr or contact the CVR at 603-862-3341. 


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The Angel Investor Market In 2004: The Angel Market Sustains A Modest Recovery

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