In Depth Angel Investor Survey Sheds Light On Angel Success

By hban.org
Tuesday, 3rd April 2018
Filed under: Year2018

Who is the American Angel? What makes an angel investor successful?  How do they make investment decisions?  What are the best strategies and best practices to reap positive returns?

From my work with the Angel Capital Association, I’ve met thousands of angels from coast to coast. I had a pretty good idea how to answer these questions based on my conversations and experience. But there was very little data to support any answers. There was a giant gap in economic research given that angel investment activity may total as much as $24 billion each year, contributing to the growth and success of more than 64,000 startups.

Now, we know much more. You’ll find answers to these questions, some guidance for better angel investing and other intriguing data in The American Angel, a report issued in November 2017 based on a comprehensive survey of 1,659 accredited angel investors in the US. The report is collaboration between the Angel Capital Association, Wharton Entrepreneurship, Harvard Business School and Rev 1 Ventures (so to be clear, I am one of the authors).

Here are some of the top-line insights:

Check sizes vary:  The average check written by individual angels is north of $36,000 and the median is $25,000, but we saw quite a range, from $5,000 to $100,000 for the most part.  The report also shows differences in investment sizes by region, length of time investing, by background, and by gender.

More women are becoming angels: Women comprise 22 percent of angel investors in the study. The American Angel results indicate that number is growing. Among respondents who began investing since 2015, 30 percent are women., This is much larger than the VC world, where other studies have shown 5 to 8 percent of venture capitalists are women.

Women investors support women entrepreneurs: 51 percent of women respondents consider gender of business founders to be important when making investment decisions (compared to 6 percent of men). This indicates that women are seeking to support women entrepreneurs.

Positive returns: Angel investing can be risky business. Most prior studies posit that 5-10 percent of investments will be economically profitable. In The American Angel, investors said on average, 11 percent of their total portfolio yielded a positive exit.  After accounting for stagnant portfolio companies (sometimes called “zombies”), 39 percent of portfolio companies that achieve an exit event are positive exits.

This article was first published by Forbes and was written by Marianne Hudson.

"I am an angel investor and Executive Director of the Angel Capital Association (ACA), the world’s leading professional association for angel investors. ACA is focused on fuelling the success of accredited angel investors who support high-growth, early-stage ventures, and has more than 12,000 member angels across North America. I know one thing for sure: there is a method to the madness. In shaping ACA professional development programs and public policy advocacy, I have the opportunity to hear firsthand from experienced angels and the ecosystem at large—what works, what doesn’t work, and strategies to consider for everything from getting started as an investor, to finding great deals, to supporting the companies you invest into growth and exit. I know about trends and impacts of angels and innovative startups too. Earlier in my career I ran the angel initiative at the Kauffman Foundation, which led to ACA and the Angel Resource Institute, and where I also oversaw entrepreneurial education and mentoring progra designed to ensure that more entrepreneurs develop sustainable, innovative businesses. I love entrepreneurship and have worked in supporting fields for more years than I will admit. I am a member of two angel groups in Kansas City and also connect with several accredited platforms."

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