Five Angel Investing Trends for 2007

The landscape for start-up financing has changed considerably over the past few years as both the availability of financing and the cost of various options were affected by various trends in the industry. And those trends will continue to wield influence in the financing arena during the coming year. To help you stay up to date, here's a look at some of those trends and how they can help you get money to fund your business.

1. Angel investing will continue to grow. In the late 1990s, angel investing came out of the funding closet and entered the financing mainstream when technology companies appeared to provide supernatural returns on investment. It seemed as if everyone knew someone who knew someone who was an early investor in an Internet start-up that cashed out just in time. Today, there are about 250,000 angel investors in the U.S. investing in approximately 50,000 small companies each year. Next year, you should expect that angel investing will continue to grow in popularity.

This growth may be fueled in part by tax incentives and behavioral attitudes related to how investing patterns are changing. In 2007, Congress will debate a bill recently introduced by Senators John Kerry (D-Mass.) and Olympia Snowe (R-Maine) that will provide a tax credit for high net-worth individuals who make private investments.

Regardless of whether these tax incentives make it into law, I believe that the investment behavior of high net-worth individuals has fundamentally evolved to the point where they regard start-up investments as a viable part of most investment portfolios -- financial advisors and attorneys now frequently screen and recommend start-up deals for their clients. The bottom line is that angel investing is here to stay. ...