Wednesday, November 19, 2008

Impact of the economy on angel investing

Many people have been asking lately if the current economic crisis has affected angel investing. In fact, its what many of us angels have been talking about recently.

At Robin Hood, we've seen the following:

  • We are still actively investing. In fact, we've made three investments since August. CoreEssence Orthopedics, Global Print, and NanoPack, and we've got a few more in the pipeline.
  • Angels are still willing to invest, but the fundamentals must be sound. We are looking for companies that have "must-have" products or solutions, are managing cash appropriately, and have a sound business model.
  • Companies must raise enough money to get them through the next 18 months, because there is no guarantee that someone else will come in for an additional round. Therefore, no angels are investing until it is clear the round will complete, and that is leading to more and more cooperation amongst angel groups. And that cooperation is great for the region and for entrepreneurial companies. Nanopack is a great example. Robin Hood, MAG, Delaware Crossing, and LORE worked together on this deal, and were able to raise a significant round together.
  • Valuations are becoming very reasonable as a result of economic change.
  • This could be a good opportunity for start-ups to find that experienced person that they have been looking for.

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