There, I said it.
It appears to me that the Angel Investing drought it over. Angel personal investment accounts are restored. There is confidence in the economy's return and the stock market's floor. Angels are now investing or at least intending to invest. Corporations are acquiring. New money is entering the market.
Local Evidence
At the Angel Lounge this month, I asked each of the attendees to give me the amount they have set aside for startup companies and private equity. The amounts ranged from $25k all the way up to $2mm. So there are a couple of elephants in the market but the average angel investor was seriously looking at $100 to $200k.
When I added all this up, including the elephants, I came to somewhere close to $20 million. Let's say this is wrong by a factor of 50%. That means there was probably somewhere north of $10 million in potential angel investment sitting in the room. That's $10 million that our little group of angel investors are saying they intend to invest in the Atlanta technology startup and early stage private equity market in 2011. That is impressive.
So why did I hold off writing this for almost a month?
First of all, I wanted to be sure this was not about how I feel, how my fellow angel investors feel and what we think we may, kind of-sort of, invest in 2011. So I waited. I waited because I was about to ask a couple of angels to look at a deal I was invested in and see if they had some interest. I think I have a great opportunity to invest in but these two guys committed to $100k each on the spot. They met the team, heard the pitch, saw the product, understood the risks and then said "Send me the paper work. I'll close by the end of next week." And they did it!
And there is more
I also heard from an attendee of the most recent Atlanta Technology Angel (ATA) meeting. He is not an ATA member. He understands angel investing. Invested in deals over the last decade. Now he is telling me, under Mike Eckert's leadership and the general mood of the meeting that he is going to join the ATA and do deals with them. I really respect this guy and this to me is compelling evidence of the thaw being over.
More personal evidence
I also have one of my angel partners (a good friend that I did deals with in the past) chasing me all over with a deal he wants us to invest in. I did not see this guy invest in a deal in the last five years and now he is all-in.
I asked a potential, new, angel investor who is experienced in this industry and business we are evaluating, if he would like to invest along with me and my partner. He said "Yes." You may be saying "He said 'Yes' because you and your partner are leading the deal." I say he said 'yes' because he is feeling positive about the direction of his business and his income. He now recognizes there is some stability in the financial floor he is standing on. Further on this example, I personally am interested in investing and this was not the case as recently as six months ago.
New Money is Hitting the Streets
Lastly, there have been a couple of exits in Atlanta of late. The most recent is Secure Works being acquired by Dell Computer. This deal alone will probably make a few dozen people millionaires for the first time in their lives. These people all live right here in Atlanta and are a part of the Atlanta technology community. In addition, there are local VC's that did real good on this deal. This money will also come back into the community.
My conclusion
Angel investors' personal investment portfolios are back to or beyond 2008 levels. They believe the downside on there net worth is somewhat predictable. They like to invest in entrepreneurs and new companies. As one of my fellow angels told me when he was about to put a second round into one of my companies; "When I tell my wife I am putting this much money into this deal, she will just have to understand this is what I do." In other words, investing is what angel investors do because they are purposed to do it.
We should see more exits in Atlanta. We went through a dry spell as corporations stayed flush with cash waiting to see where the market was headed. These companies also reduced their R&D spending as they pursued increased earnings in a tough economy. We all know, you can't cut your way to growth so now these cash-rich companies need new innovation to push through their distribution channel. They will buy young companies with innovative products. It is all of our jobs to build them.
Angels, VC's and corporations...the cash to invest is there.
It is going to be a great 2011!
Good to hear, Charlie.
Thanks for the post.
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Posted by: Jack Arogeti | 01/30/2011 at 10:35 PM
I am glad to here from an insider that it is looking up for 2011. It's going to be an exciting year.
Posted by: Andy Borgmann | 01/30/2011 at 11:31 PM