How Do You Compare To Other Angel Investors?

From years of working with angels, I can tell you that no two are the same.  But if you could choose three words that would apply across the board to every accredited angel investor, what would they be?

My choice—powerful, difference-maker and elusive. Of course there is no right or wrong answer, but what I do know for sure is this: precious little is known about the estimated 2300,000 angels in our country—except that they use their wealth to wield immense economic influence in the U.S. startup economy.

We know that in 2015 American angels invested an estimated $24B in more than 71,000 startups. These are powerful numbers and I think we can all agree that it demonstrates that angels are a major force fueling the economic engine of our country.  They make a difference in our economy as they support the very companies that create the most net new jobs – high growth innovative companies that are less than five years old.

Angels are elusive because of how little we really know about them as individuals. Never before has there been a way to know how you or I as angel investors compare to the pack – or parts of the pack.  For example, are there common paths to becoming an angel? How do those paths influence investing activity? What are the demographics of American angels? Are they young, old, male or female? Where do they live and work? And to the point—what might our country and we as angels gain by knowing some of those answers?

The exciting news is that some major groundwork is currently underway to collect these answers so that we can build a baseline of knowledge and comparison. The Angel Capital Association is partnering with Wharton Entrepreneurship  on The American Angel campaign and accredited angel investors can take the survey today. The project should benefit angels as an asset class by bringing more visibility to angels, supporting a stronger early-stage investing environment, and leading to better public policies to support angel investing and innovative startups.  It also just might refute a lot of preconceived notions and assumptions about angel investors.

As individual angels we will also benefit. For the first time in U.S. history we will have an understanding of how we compare to other American angel investors.

Laura Huang, lead researcher for the project and assistant professor at the Wharton School at the University of Pennsylvania, provides a sneak peek at what we’re learning from the nearly 1,000 angels who have already anonymously taken the survey below:

• The median investment size per deal is about $25,000.
• Angels maintain diversified portfolios that represent about 5 percent of their total held assets.
• Angels invest in nearly 16 companies over their portfolio lifetime.
• Angels typically make additional (follow-on) investments in companies, with a median of three follow-on deals over time.
• Angels financed a median of two companies each in 2015.
• The longer angels invest, the more checks they write and the larger their portfolios. Angels who started investing in the 1970s and 1980s have written on average 45.6 checks, compared to 4.4 checks written by individuals who started angel investing in 2014 or later.
• Angel investors remain positive on the early-stage market: 27 percent indicate they will increase angel investments this year, 53 percent expect to maintain their level of investment, and only 20 percent expect to decrease.
• While the majority of angel investors are men more than 20 percent of respondents to date are women.

There is a considerable range in the number of years accredited angels have been investing:  approximately 20% started in the last two years, another 20% began investing prior to 2000, and the remainder fell in between, indicating a rich range of experiences and activities than averages and medians alone might not capture. For the angels as a whole, the average number of years of angel investing is 9.5 and the median is 7.  This likely means the project will provide a lot of information on different types of angels.

This is an exciting time for angel investors. Our industry is changing rapidly and we have much to learn from a bigger set of angels. I encourage you to take 10 minutes to complete the survey, and share it with your angel colleagues.  The more angels who participate, the better the data and the more we will all learn and benefit.

With any luck before the end of the year you may be able to definitively discover some answers to how you compare to other angels and get some benchmarks on different types of angels.