Angels hone in on biotech, clean tech and web-based software

Australian angel investors will give preference to projects in biotechnology, clean technology and web-based software this year, according to the results of the 2011 National Angel Survey.

The survey, conducted by Bentleys for the Australian Association of Angel Investors, is based on the responses of 88 members of Australia’s angel investment community.

In the 2011 calendar year, survey participants invested $5.4 million in angel capital in more than 90 entrepreneurial businesses, Bentleys associate director Tim Bridges says.

“These same businesses attracted $57 million in total funding, which equates to an angel investment leverage ratio of approximately 10 to one,” Bridges says.

“The angel capital invested by survey participants last year included $1.23 million in clean technology, $470,000 in web-based software and $340,000 in biotechnology.”

“[These industries] are also the three most popular industries for new investments in 2012.”

In 2012, the survey reveals participants plan to allocate on average $278,571 of capital to use in angel investment, up $40,714 on planned individual investment in 2011.

“This year, for the first time in the survey’s four-year history, we were able to collate data on investment exits for the calendar year,” Bridges says.

“Data to hand shows 85.7% of investments had positive returns, with 25% returning between six and 10 times the initial investment.”

AAAI chief executive Ruth Drinkwater says the survey also provides insight into what drives investment choices, and the level of financial support and counsel to businesses.

For example, 2011 results indicate angels are targeting their investments towards the early growth phases of the business cycle.

According to the survey, 25.5% of last year’s investments were made at the seed stage, 35.3% at the start-up stage and 27.5% at the development stage.

“The contribution of intellectual capital is an essential element of the angel investment strategy and philosophy,” Drinkwater says.

“In addition to financial investment, angels contribute their time and expertise to their investments.”

“The average angel spend[s] 50 hours per month on activities like mentoring, attending pitching sessions and post-investment management.”

The survey’s full results will be released at the National Angel Conference, held from February 29 to March 2, at the Melbourne Convention and Exhibition Centre.

The conference will bring together angel investors and entrepreneurs from across the world to discuss topics such as economic stimulation, co-investment and entrepreneur identification.