Research Report:

Angels &
Angel Investment Trends
Juan Ramirez
FIN 3360

This report will illustrate the background of angel investors as well as the current trend for angel
investing geared towards technology, healthcare, mobile and telecommunications.

History
Throughout the many years of innovation and technology, angel investing has played a major
role in jumpstarting small businesses. Companies like Ford Motors, Apple, and Google were all
funded by angels investing. Without the angel investors that helped fund these companies, they
may have never been able to launch in a meaningful way. Without the help of angel investor
Mike Markkula in Apple, the world may not have ever come to know the iPhone.

Angels
Angel investors come from different backgrounds and industries. Not all angel investors are
entrepreneurs; they can be doctors, lawyers, or former business executives. These high net worth
individuals have to be registered through the Securities and Exchange Commission. Some of the
qualifications they must meet are to have a minimum net worth of $1 million and make at least
$200,000 annually, and $300,000 if married.
Angel inventors are important for small private businesses because they are there to help them
while at the same time helping themselves by taking the risk to earn a profitable return. They
provide the funding needed to assist start-up companies who seek additional capital to take it to

the next level. These small private businesses however, give up stake in the company to the
angel investors in exchange for funding. Though angels may own stake, they are not necessarily
always involved in operations or leadership roles in the company.
Public as well as private companies are always seeking additional funding especially during their
start-up and growth stages. So angels have to be certain that their investment has a viable
business plan, which have to be presented by these small private businesses. Exit strategies are
critical in the decision making process because if for any reason an angel investor feels progress
to go from private to public not looking very promising; they will want to be able to get out of an
agreement with no strings attached.
Angels should always be aware of the risk involved in a venture. There is no blueprint for
success, especially in a competitive market like technology. Strategies for an attempt at success
must be agreed to by the owners of these small businesses and angels or else conflict will present
itself. Many angels realize that if they do lose money in a deal, that they will take their loss as a
cost of doing business.

Trends
According to annual Kauffman Index reports, start-up activity has seen a rise in the past five
years. The rate of new entrepreneurs has fluctuated of late but has shown a steady increase 3%
the past two years. The higher the start-up activity gets, the higher the probability for angel
investment seeking.

2015 Index
2014 Index

31%
28%

According to the 2013 Halo Report, there have been significant increases in angel investment in
technology specifically in internet, healthcare, and mobile and telecommunication startups. As a
group these three have made up more than 70% of angel group deals since 2012. This
information is based off of 884 deals that totaled $1.1 billion. Most recently for 2013, angel
group deals totaled $1.65 billion based on 870 deals. These numbers are found through the
Angel Resource Institute who puts together the HALO Report which records increase or
decrease in angel investments, size of deals made, and angel activity movement.

Internet
Healthcare
Mobile & Telecommunications

+7% over 2012

+36% over 2012
+10% over 2012

According to angel.co there are about 20,079 e-commerce companies that have been funded by
40, 353 angel investors with an average company valuation of $4 million. Companies like
Pinterest and Yelp have been funded by an angel investor. E-Commerce provides the less risk
when it comes to investing because of its low cost model.
Angel investors in the healthcare industry are growing mainly because of the rise in young
companies in their early stages. As of 2015, angel investors have funded over $25 billion, which
is right behind venture capital investments of about $30 billion. This is great for rapidly growing

medical companies because it allows them to have better access to funding which translates to
better quality which in return will provide a better payoff for both the angel and the funded.
Just recently on July 2, 2015, an angel group by the name of Winshine Entertainment & Media
Holding Co., Ltd funded NXP, a telecommunications company, in the amount of $500 million.
The investment will allow NXP to develop, manufacture, and sell radio frequency power
amplifiers. The funding will also provide NXP with the ability to make necessary acquisitions
that will allow it to expand their business.

Angel Resource Institute. N.p., n.d. Web. 21 July 2015.

<www.angelresourceinstitute.org/research/~/link.aspx?
_id=5115FD4EEC854CCD8ECF61BFDECCB9B&_z=z>.
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"Getting Started With Angel Investing." Entrepreneur.com. N.p., n.d. Web. 20 July 2015.
<www.entrepreneur.com/article/52742>.
Marich, Mark. "Angels On The Upswing Still Targeting Tech." Kauffman Foundation. N.p., 31
Mar. 2014. Web. 21 July 2015.
National Index. N.p., 2015. Web. 21 July 2015. <www.kaufmann.org/microsites/kauffmanindex/rankings/national>.
Seper, Chris. "Angel investing in healthcare continues to grow. But can it keep fitting in?."
MedCity News. N.p., 19 Feb. 2015. Web. 21 July 2015.
Sudek, Richard, Allan May, and Robert Wiltbank. Angel Investing: Catalyst for Innovation. N.p.,
Oct. 2011. Web. 21 July 2015.
"What type of funding options are available to a private company?." N.p., 23 June 2015. Web. 21
July 2015. <www.investopedia.com/ask/answers/062315/what-type-of-funding-options-areavailable-private-commpany.asp?partner=mediafed>.
"Winshine Signs a Fund Commitment Letter." Yahoo Business & Finance. N.p., 2 July 2015.
Web. 22 July 2015. <https://nz.finance.yahoo.com/news/winshine-signs-fund-commitment-letter012600430.html>.