There is a lot of talk right now that Series A funding has gotten difficult for the tens of thousands of entrepreneurs who have received angel financing over the last 18 months. Some data from PEHub:
According to the University of New Hampshire’s Center for Venture Research, the number of active angel investors topped 300,000 last year, up 20 percent from 2010. The ranks of the matchmaking service AngelList also swelled, with 2,500 investors joining the community last yearalone, most of them in the last six months. (When AngelList got its start in the spring of 2010, it listed 80 accredited investors.) A study from UNH shows that angels put a fresh $9.2 billion to work in the first half of this year, a 3.1 percent increase over the same period in 2011.
Meanwhile, the number of firms that are actually investing is dwindling, despite the best efforts of partners to save face. The NVCA pegs the official number of “active” traditional firms at 500, but according to NVCA President Mark Heesen, this number is misleading, because at least 200 of the firms only do a deal or two a year.
Last year, some 66,230 companies received $22.5 billion through angel investors, up from 36,000 receiving $15.7 billion in 2002, according to the Center for Venture Research at the University of New Hampshire.
If you take into account the fact that less than 1% of those entrepreneurs who look for money actually get funded, you can imagine the kind of frustration plaguing the startups right now! The frustration also oozes into the angels whose hard earned money will be written off as 99% of these businesses fail to raise follow-on funding.
Well, it doesn’t have to be so. There IS such a thing called customers. There IS such a thing called revenue. Those two things, when focused on, instead of a compulsive pursuit of investors, generally serve companies better.
If you are an entrepreneur failing to find follow-on funding, or an angel investor facing a write-off, please come share your business at a FREE 1M/1M roundtable. Or, enter your company for the 1M/1M New Year Challenge 2013.
We’d like to help.
We HATE the idea of infant entrepreneur mortality.
The idea of 60,000 fledgling startups dying prematurely is nauseating.
They don’t HAVE to die.