Tech & Biz

Angel Investors and (Ad)venture Capital: The Funding Bar Has Been Raised.

by Jordan Yerman | October 19, 2008 at 06:45 am

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As the economy founders, venture capital gets thin on the ground- just ask anyone trying to start a new business. Traditionally, venture capitalists are comfortable with a certain amount of risk, but in the current climate, the bar for "acceptable risk" has been raised, and traditional capital favors a more conservative approach.

Angel investors, who accept a higher rate of return in exchange for greater risk (they're usually the first to get on board with a new company; think of them as "adventure capitalists") are now getting pitches from companies which, a few months ago, would be positioned to aim for traditional venture capital

The Atlanta Technology Angels are seeing about 50% more pitches than they did a year ago, says Knox Massey, the group's managing director. James Geshwiler, managing director of CommonAngels in Lexington, Mass., says the number of proposals making it through his first cut jumped 36% in the first half of this year. Other groups are seeing smaller jumps: 10% at Wisconsin Investment Partners in Madison, 7% at Seattle's Alliance of Angels.

Angel investors are individuals who invest in businesses looking for a higher return than they would see from more traditional investments. Many are successful entrepreneurs who want to help other entrepreneurs get their business off the ground. Usually they are the bridge from the self-funded stage of the business to the point that the business needs the level of funding that a venture capitalist would offer. Funding estimates vary, but usually range from $150,000 to $1.5 million.

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