Angel Investing, a new reality reaching unprecedented levels
Business angels share a primary motivation to give back to society by sharing knowledge, skills, contacts, and capital with young entrepreneurs.
The lowest interest rates continue to make traditional financial products less profitable and drive investors to look for new sources of income. A really low base rate means investors want more return on their money, and the riskier investments are attractive, so they need to be pushed out of their traditional finance box. At the same time, global challenges with relatively weak response in terms of financial products (climate change, the fourth industrial revolution, impact investment, social disparities, etc.)
Technology has helped with tools and marketplaces to match startups and angel investors. Seedrs.com or Pitchedit.co are just examples of platforms helping people find win-win opportunities.
Organizations like European Business Angel Network (EBAN.org) are growing hubs in which people network and raise capital through both angel investing and providing opportunities for startups to get their projects off the ground without the fear that they will be stuck in debt if it doesn’t work out.
Venture capital, in general, is growing fast, either in the developed or emerging world. According to Factset, over $612 billion in venture capital activity was invested globally in 2021 — a 108% increase from the previous year. On a region-by-region basis, investments rose in every major region compared to 2020. North America and Europe saw investment activity more than double in 2021. In North America, every quarter in 2021 doubled levels in the previous year’s quarter; this resulted in a 131% increase in total VC investment value for the year. At the same time, Europe grew 135% over 2020. According to Crunchbase data, in 2021, numbers are ten times higher than in 2012.
Early-stage startups, meanwhile, raised 2021 $100 billion more than in 2020, collectively raising $201 billion, Crunchbase data shows. Early-stage funding showed the most significant increase, at 100 percent growth year over year. Early-stage funding reached $201 billion invested in 8,000 companies last year, compared to $101…