Angel investors plan to increase investments, particularly in healthcare and mobile tech

September 3, 2013

Most early-stage or “angel” investors say they plan to maintain or increase the number of start-up investments they make next year, and many have their sights set on a few booming industries, according to a new poll.

Compared to this year, one in four angel investors expect to increase both the number of deals and the dollar amount they invest in young firms in 2014, according to the survey, which was conducted by Worthworm, a company that helps investors and entrepreneurs determine the value of start-ups. Only 3 percent of investors plan to pull back on both measures.

Of those eyeing an uptick, many said they anticipate having more capital heading into next year, while others said they anticipate a stronger crop of start-ups. The number one reason cited by those boosting their investment was the direction of the economy; more than half said it seems to be strengthening.

It’s a promising sign for entrepreneurs hoping to get new ventures off the ground, said Alan Lobock, Worthworm’s co-founder.

“Not only are angel investors bullish on the economy, but they’re putting their bets on an even stronger economy in 2014,” Lobock wrote in the report. “That means more young companies that will have the chance to flourish with an influx of new investment—bringing new jobs and new opportunities into the marketplace.”

More than 40 percent of respondents said they expect health care start-ups to see a surge in investments, more than any other sector, while upwards of 30 percent have their eyes on mobile and Internet companies. On the other hand, very few investors are looking to invest in retail and industrial firms in 2014.

On the whole, their forecasts stand in sharp contrast to the current sentiment from traditional small business lenders, like banks and credit unions. Federal Reserve analysts recently issued a report suggesting a lending slide to small firms predates the recession and may continue even after the economy fully recovers.

Other lending indices from groups like the National Federation of Independent Business also show that Main Street companies are still struggling to secure capital in the wake of the recession.

Though early investors seem optimistic right now, there are some new hurdles awaiting them in the coming months. In issuing new rules for parts the JOBS Act, for example, Securities and Exchange Commission officials earlier this year announced strict new standards for verifying some accredited investors.

Some fear that may deter potential some early investors from applying for the approval they need to take equity in companies.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he manages the Post's On Small Business blog.
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