Cautious angels: investors scale back in volatile market.

Rather than jumping into the deep end of the venture pool, angel investors exercised cautious growth in the uncertain economy when funding ventures during the first half of 2008, according to a recent study.

According to the University of New Hampshire Center for Venture Research's analysis of angel investing in the first two quarters of 2008, $12.4 billion was invested nationally, an increase of 4.2 percent over the first and second quarter of 2007.

But Jeffrey Sohl, center director, said a total of 23,100 entrepreneurial ventures across the nation received angel funding in the first half of 2008, a decrease of 3.8 percent from the same period last year. The number of active investors was 143,000 individuals, an increase of 2.1 percent over the same period in 2007.

"The modest increase in total dollars and angel investors, coupled with the decrease in investments resulted in a larger deal size for the first half of 2008 (8 percent)," said Sohl. "These data indicate that angels are exhibiting a cautious approach to investing in light of the recent volatility in the economy and reducing their individual risk exposure by including more angels in each deal."

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Deals in the software sector made up most of the investments, some 18 percent of the total angel funding for the first half of 2008. Health-care services/medical devices (17 percent) and equipment and industrial/energy (10 percent) rounded nut the top three categories.

The biotech sector fell from the top three spots for the first time in several years to place fifth in the six most preferred sectors, receiving 8 percent of the total angel investments, tying with retail and media ventures.