Start-up funding by angel investors reached $9.2 billion in the first half year of the year, climbing 3.1 percent compared with the same period in 2011, according to the Center for Venture Research at the University of New Hampshire.
The amount of money flowing from wealthy individual investors into early-stage companies still fell short of levels prior to the 2008 economic collapse when angel investments hit $12.4 billion in the first half of that year.
But the sector is recovering, and more angels around the country and in the Boston area are investing, said Jeffrey Sohl, director of the Center for Venture Research at UNH, which puts out the semiannual report on angel spending. The sector is undergoing “steady and sustainable growth,” he said, as individual investors “enter the game cautiously.”
Angel investors funded 27,280 ventures in the first half of 2012, a 3.7 jump compared with the same period last year, at an average deal size of $336,390. The bulk of investments were made in health care, software, and biotech. The center said that angel investors have helped create 106,400 new jobs this year.
Angels are high net-worth individuals who fund start-up businesses often in return for stock. Membership at the Angel Capital Association an Overland Park, Kan., industry group with about 8,000 members, has grown recently, and this year it added several new angel groups in the Boston area such as Fort Point Angels and TiE Angels Boston.
‘Boston has a really high quality angel community,’ and would benefit from having more.
Still, in a survey released last week by the New England Venture Capital Association , entrepreneurs said the Boston area is lagging behind both New York and California in terms of the number active angel investors.
Neither the Center for Venture Research nor the Angel Capital Association keep a regional listing of angel groups, but Sohl at UNH said Silicon Valley is far and away the epicenter of the angel investing.
“Boston has a really high quality angel community, and it will only benefit this ecosystem to have more angels,” said C.A. Webb, executive director of the New England Venture Capital Association. “Part of how that will happen will be having really successful entrepreneurs who have money in their pockets to go invest in rising stars.”
That’s starting to happen more often in the Boston area, said Michael Greeley, general partner of the Boston venture capital firm Flybridge Capital Partners. Some of the recent initial public offerings by technology companies have spun out new angel investors who are funding local start-ups.
“People who have created wealth in any industry can become angels,” said Greeley. “Many do it to make money, many do it to give back.”
Bob Mason decided to focus on angel investing after Brightcove Inc., a company that he cofounded in 2004, went public earlier this year. So far, he has funded six local start-ups.
The attraction for angels such as Mason is investing in companies they can help grow into the next local success through mentorship and connections. “When we started Brightcove in 2004, it was a very lonely experience,” he said. “It wasn’t like we were connected into this broad community.”
The growth in angels follows the area’s rising tech economy in which many young companies are looking for funding, said longtime angel investor Ham Lord, managing director Launchpad Venture Group. His group of 90 angels who meet regularly to consider investments has a waiting list for new members.
Collectively, the group made about 20 investments worth $4.5 million last year, he said. “The Boston and Cambridge areas are seeing an explosion of entrepreneurship.”