Boom times ahead for angel financing

Angel investors are expected to see handsome returns on their investments in China this year, thanks to the favorable policies being enacted by the Chinese government, said a report released by ChinaVenture Group on Friday.

About 199 angel investment deals were made in China during the first six months of the year for a cumulative investment of 1.1 billion yuan ($177.3 million). That represents a huge growth, considering that the full-year angel investment in China during 2013 was only 1 billion yuan, the report said.

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Around 60 percent of the deals were small ones with single investment of around 300 million yuan each, while only 5.5 percent of the deals attracted funding of more than 10 million yuan.

The Internet sector attracted the maximum investment from angel investors, and accounted for 43 percent of the deals, followed by the information technology sector with 33 percent.

Mobile Internet, manufacturing and healthcare sectors also caught the fancy of angel investors. "Angel investors favor Internet companies because they are asset-light, require small funds and develop fast," said Li Ling, an analyst with ChinaVenture Group, a research and consultancy firm, and one of the authors of the report.

"There are many startup entrepreneurs in the Internet sector. Since the entry threshold for the sector is comparatively low, entrepreneurs can verify the feasibility of their ideas quickly."

Beijing, Shanghai, Guangdong and Zhejiang provinces were the main destinations for angel investment in China. These regions accounted for 87.9 percent of the deals. Angel investment reached 690 million yuan in Beijing, the highest among all regions.

Angel investment may receive further policy support, said the report.

In May, the National Development and Reform Commission released a statement to support the development of angel investment and venture capital companies.

The report said more and more angel investors would work together to do investment because they can share resources including information and funds.