140,000 Angel Investors

Angel investment is down slightly, according to a new study.

I’ve always had trouble describing angel investors because they seem so hard to define. Somewhere between the high-end friends and family investment and the low-end venture capital you have the angel investors. They’re mostly individuals, but they frequently group into venture groups. Back in the early Silicon Valley days we used the phrase “doctors and dentists” before “angel investors” became more popular.

Today’s National Dialogue on Entrepreneurship weekly newsletter reports on the University of New Hampshire angel investor report for the first half of this year. Investments are down slightly, both in number of deals and total money invested.

Both deal size (down 4%) and the number of investors (down 10%) also dropped. Finally, the number of deals (24,000) is also a slight dip (down 2%) from 2006. Angel investors are still America’s largest source of seed and start-up capital, but even angels are beginning to look at later stage deals with more dollars going to post-seed stages. Finally, the study contains some interesting demographic data. Women now account for 13% of angel investors, while minority angels make up 5% of the total.

Where Has All the Money Gone?

Korea is primed to make a startling growth in one sector, the small and medium enterprise (SME) sector. Korean SMEs account for 99.9 percent of all enterprises, 87.5 percent of all employees, and 49.4 percent of production. However, right now, SMEs are not generally growing at a rate that can positively impact the economy. They are missing a few essential ingredients, the differences between being a center of innovation and new ways to make profits, and being a second-string economy based around copying good ideas from outside sources.


There are several factors affecting the growth of SMEs in Korea. The first factor is that most Korean SMEs have only one customer with which they do business. Usually it is Samsung, or LG, or some other Korean conglomerate (chaebol). Most Korean SMEs are locked into a relationship with their chaebol, who almost acts as a patron. It's a good gig if you can get it, as you always have a dependable buyer for goods. However, this limited customer base cripples the SME in the areas of marketing and sales. When the company wants to expand its customer base, it has no idea how to go about doing that.  And if your chaebol client discovers one of your inevitable competitors, they will drop you in an instant for the faster, cheaper alternative. Then you're down to zero customers.