Sohl: Healthy market but rough times
CHICAGO (Reuters.com) -- Jeffrey Sohl is the director of the Center for Venture Research at the University of New Hampshire and a professor of entrepreneurship at the university's Whittemore School of Business and Economics. Sohl recently took time out to go over the numbers from the center's recent report on angel investing for the first half of 2008.
Q: What do the numbers tell you overall?
A: The dollars were pretty much the same. The number of deals went down, but on the other hand, the number of angels per deal went up. So what this is telling us is that angels are spreading out their risk a little more. These are going to be some rough times.
Q: Which sectors appear to be hot right now?
A: We're picking up on industrial energy -- that's been kind of going up over the last several years, a nice sweet spot for them. Some new green technologies, new ways and new processes to deal with biodiesel. It could be new ways to keep coal emissions down. And some applications where you see solar and stuff like that - new ways to make those applications a little more cost effective. Media too, which usually isn't up there, has been up for a while; I think we're picking up some social networking.
Q: What are the angels avoiding?
A: They tend not to deal with service companies. Telecommunications is pretty low, financial and business products … semiconductors, electronics and communication. Those kind of fell out of the top.
Q: Any predictions for how angels will behave in the second half?
A: I wouldn't be surprised if we're flat again or even down. Angels are out there investing out of their own pockets. Your net worth and my net worth got hit. I think we're in for a good strong 12 to 24 month recession.
Q: So how would you characterize the angel market right now?
A: The market is healthy. When we look at different metrics, for example yield rate, they're still investing in about 10 to 12 percent of the companies they examine - that's really a good yield rate. I think staying flat is remarkable in these times.
