What Angel Investors Want Now The second annual Halo Report released today shows where angels are excited to invest, both by sector and geographically, and how much they are commonly investing.

By Catherine Clifford

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Shutterstock

What's hot with angel investors?

U.S. angel investment trends are shifting. The mobile sector is getting ever more attention and the health-care sector is losing dollars, according to the second annual Halo Report, released today from the advocacy organization Angel Resource Institute, entrepreneur-focused Silicon Valley Bank, and the National Science Foundation‐backed data research firm CB Insights. Data from 783 deals totaling $1.1 billion invested was collected both by survey and research of public data by the New York City-based CB Insights. Also, there is an increasing proliferation of angels in the Northwest and Southwest U.S., the report notes.

Related: 3 Things You Must Know Before Pitching Investors

Internet-based and health-care startups often claim the lion's share of the investment dollars from angels, but that's changing. The percentage of dollars that went to health-care startups shrank in 2012 and the percentage of dollars that went to mobile-based startups grew. Here's a look at the breakdown of sectors, by dollar volume, where angels invested in 2012:

  • Internet: 31.9 percent
  • Healthcare: 20.9 percent
  • Mobile and telecom: 13.3 percent
  • Industrial: 6 percent
  • Electronics: 3.8 percent
  • Consumer product and services: 5.3 percent
  • Services: 4.5 percent
  • All industries that don't fit into the aforementioned categories: 14.2 percent

Here are some questions you might have about raising money from an angel investor with answers from the Halo Report.

How much money can I expect to get from an angel? The most common investment size in 2012 was $600,000, down slightly from the median investment of $625,000 in 2011. If you were hoping for a larger investment, however, there is indication that investment sizes are growing. In the final three months of 2012, the most common investment was $690,000.

How big should my company be to seek angel investment? For the past two years, the value of the companies receiving angel investments has held steady at $2.5 million.

Do I need to be making money already to pitch an angel? You don't have to, but it helps: 63 percent of companies that received angel funding had revenue to point to.

Related: 5 Worst Mistakes Entrepreneurs Make When Pitching Angel Investors

What if I have never received investment before? Don't worry. Angel investors typically seek out early-stage startups that aren't big enough for the venture-capital firms. Last year, 56 percent of angel investment deals were with new companies that had never before received funding from an angel investor.

Am I going to be working with a single person? It's possible, but in recent years, the trend has been toward having more than one angel investor in a single fundraising. Almost 70 percent of angel investment deals were co-investments in 2012, up from 64 percent in 2011 and just 41 percent in 2010. When you have more than one angel backing your company, you get more money: the median investment size in a startup with multiple investors was $1.5 million. As co-investing becomes more common, however, the size of a co-investment has been falling, down from $1.63 million in 2011 and $1.92 million in 2010.

Where are these angels? The East and West coasts of the U.S. continue to be primary hubs for angel investing, but activity in the Northwest, and Southwest regions of the U.S. are seeing more activity. Ranked by number of deals completed, here is a look at the most active angel groups:

  1. New York Angels, New York
  2. Tech Coast Angels, Los Angeles
  3. Launchpad Venture Group, Boston
  4. Central Texas Angel Network, Austin
  5. Golden Seeds, New York
  6. Sand Hill Angels, Sunnyvale, Calif.
  7. Investor's Circle, Durham, N.C.
  8. Alliance of Angels, Seattle, Wash.
  9. CommonAngels, Boston
  10. Maine Angels, Bar Harbor, Maine

Have you raised money from an angel investor? If so, share your best tip with fellow entrepreneurs in a note below.

Related: JOBS Act Expected to Increase Diversity in Funding

Wondering If You Are Right for An Angel Investor?
Catherine Clifford

Senior Entrepreneurship Writer at CNBC

Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Related Topics

Starting a Business

This Retiree's Leisurely Side Hustle Makes $66,000 a Year and, 'You Don't Even Need to Go to High School to Do It'

Barbara Hill wanted a flexible, part-time job that would transition well into retirement. Now she mentors younger people who are making over $200,000 a year. Here's her insider's guide to getting started.

Business News

Who Owns The Rights to Your AI-Generated Content? Not, It's Not You. Uncover The Scary Truth That Puts AI Users At Risk.

The realization that copyright laws do not protect AI-generated material might come as a shock to many.

Business News

HP Wants You to 'Never Own A Printer Again,' Launches Rental Subscription

In February, HP's CEO Enrique Lores stated that making printing a subscription service was the company's "long-term objective."

Marketing

The Miley Cyrus Approach To Marketing — Why It's a Radically Different Method For Achieving Brand Impact

In case you missed it, Miley Cyrus recently won her first Grammy. In her acceptance speech, she told a story that is a great learning lesson for business owners and marketers alike, especially those who find themselves burned out and exhausted in this current environment.

Business News

IKEA Price Increases Are Going Viral — Here's How Much Your Favorite Couch Costs Now: 'Inflation Is Crazy'

A video with a customer complaining about "inflation" and "corporate greed" has racked up over 1.3 million views on TikTok.

Business Ideas

How to Start a Travel Service

With diverse options like corporate travel, niche travel and franchising, there are a number of ways you can put your love of travel to work.