A Look At The Angel Market And The Fall In Average Deal Size: Slideshow

Angel and seed investing remain among the most contentious issues in venture.

Debates about style and substance attract strict adherents on both sides. Some claim investments must be made fast and furiously, driven more by volume than considered analysis.

Others argue investors need to play heavy, hands-on roles during gestation, even as the low cost of company formation drives free-run business model experimentation.

The one point of agreement is that not enough seed and Series A money will be available for all promising companies. In fact, 58% of venture capitalists said so in a recent National Venture Capital Association and Dow Jones VentureSource survey (find the survey here).

It is hard to know which side is right. One reason is there is not a lot of public data on the explosion of angel investing. With that in mind, peHUB turned to the Center for Venture Research at the University of New Hampshire, which has been studying the angel market since 1980.

What we found is somewhat unexpected. Despite high seed company valuations, especially in hot spaces such as consumer Internet, overall angel deal size has been trending lower for several years. So have overall dollars invested and the percent of the money targeting the earliest of deals.

What might surprise as well is the strong interest angels have for health care deals – not just the latest mobile or social gaming Web site.

One caution with the data. The center looks broadly at angels and not just at the super angels who operate in places such as Silicon Valley and New York. In 2010, it tracked 61,900 investments by 265,400 angels.

With that caveat, here is a look at the angel market:


[slide title=”Total Angel Investments By Year”]

[slide title=”Total Angel Fundings By Year”]

[slide title=”Average Angel Deal Size”]

[slide title=”Percent Of Investments In Seed And Start Up Stage”]

[slide title=”Percent Of Investments In Health Care”]

[slide title=”Percent Of Investments In Software”]

[slide title=”Percent Of Investments In Energy/Industrial”]