Which may be as well for its long-term health, say researchers. A new report by the Center for Venture Research at the University of New Hampshire’s Whittemore School of Business and Economics says that the “angel investor” market grew modestly in 2005 – apparently a good thing for its long-term sustainability.

Angel investors are individuals who directly fund start-up companies. Angel investments are characterized by high levels of risk and potentially large returns on initial investment.

“A total of 49,500 entrepreneurial ventures received angel funding in 2005, a 3.1% increase from 2004,” says Jeffrey Sohl, director of the Center for Venture Research and a professor of entrepreneurship at the Whittemore School. “The number of active investors in 2005 was 227,000 individuals, with an average of four to five investors joining forces to fund an entrepreneurial start-up. This continued modest, and sustainable, rise in total investments is encouraging.”

The report says that the total amount of angel investing last year was $23.1 billion, up 2.7% over the amount invested in 2004.

By sector, healthcare and medical were the largest beneficiaries of angel investments, followed by software and biotech. Angel investments also continued to be largely a source of start-up capital, with 55% of 2005’s investments being used as seed funding. – FWR

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