NM Angels bucking, leading national trends (ABF)

Article published by Albuquerque Business First – April 28, 2015 by Dan Mayfield, Reporter

“New Mexico’s angel investors are seeing many of the same things that the rest of the country is seeing. But not everything.
The recently released Halo Report by the Angel Resource Institute said that, nationally in 2014, deal sizes and valuations went up for the year. Not so much in New Mexico, however, said John Chavez, president of the New Mexico Angels.
“It’s about the same” as last year in New Mexico, Chavez said, “But the quality is going up.”
Overall, Chavez said, the New Mexico Angels didn’t land any more deals in 2014 than it did in 2013, which bucked the national trend. Chavez attributed some of that to the New Mexico Angels being on the cutting edge of the software slowdown in early-round investing. Software firms were the darlings of the angel world in 2013, when 20 percent of all angel dollars were invested in that sector, according to the report. But, in 2014, though, only 15 percent of all angel money was invested in software firms.

Chavez said the New Mexico Angels started seeing “frothy” software companies early, and the private investor group stayed away.

“You see companies that started two weeks ago think they’re worth $10 million with 129 users. You’re seeing that across the country,” Chavez said. “Angels are stepping away from that stuff.”
Instead, Chavez said, the New Mexico Angels are seeing growth in biotech companies and medical device firms. “You’re seeing more, and you’re seeing reasonable evaluations,” he said.

For an Angel investor to make money, the investor has to get a good deal on early shares so they’re investment isn’t diluted if or when the company sells. Many biotech and bio-device companies, Chavez said, understand that and they also appreciate the mentorship a good angel investor can provide.
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