Startups may need a lift beyond angel investor funds in 2010

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Senator Dodd recently proposed legislation that might significantly reduce the number of credible angel investors in the United States. Now, a report from the Center for Venture Research at the University of New Hampshire indicates that entrepreneurs may not notice a significant difference as investor funding declined in 2009.

According to the Boston Globe, the study shows that the angel investor market demonstrated a decrease in investment dollars in 2009, even as the number of businesses supported increased. The study shows that 57,225 entrepreneurial ventures got angel funding last year – a 3.1 percent increase from 2008.

Nonetheless, the sums given were less than in previous years. Center director Jeffrey Sohl said angel investors “are committing less dollars resulting from lower valuations and a cautious approach to investing. Significant changes did occur in the critical seed and start-up stage investment landscape.”

In light of the shaky investor market, business owners might consider turning to other lenders – such as community banks – to find startup funds. They may also consider evidence suggesting business formation helps new companies find financiers as it indicates that an entrepreneur means business.