New research by the Service Corps of Retired Executives (SCORE) shows minority and women-owned enterprises vastly under-represented in angel financing.
A nonprofit dedicated to mentoring small businesses and which is supported by the U.S. Small Business Administration, SCORE reveals in its 2014 Small Business: Angel Investors report how much and how often angel investors provide financing to small businesses, where they invest the most, and the characteristics of the ?typical? angel.
According to the group?s findings, angel investors generally give less funding than venture capitalists, but do so more often. To date, angels invested $23 billion in 67,000 small business deals while venture capitalists invested $27 billion in 3,700 deals, SCORE says.
The group reports that the population of angel investors is made up of 268,000 individuals while venture capital as a whole is made up of 522 active firms. Software receives the most angel funding at 23 percent of the total, followed by healthcare, 14 percent; biotech, 11 percent; media, 11 percent; retail, 7 percent; and financial services, 7 percent.?? Miscellaneous/other industries represent 22 percent of angel funding.
The typical angel investor is a successful entrepreneur investing their personal money in businesses close to home, SCORE says. Angels judge potential investments primarily by return on investment (ROI), with 26 percent ROI the average annual return.
On average, 3 of 10 deals considered by angels are accepted. While 18 percent of angel investors are women and 4 percent are minorities, 16 percent of entrepreneurs seeking capital are women and 7 percent are minorities. Of those entrepreneurs that do receive funding, 18 percent are women and 15 percent are minorities, SCORE says.