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American Angel Investors Have Critical Role in the Startup Economy, Study Details

A study titled The American Angel and released on November 28th constructs a picture of angel investors across the United States and how they support the startup economy in America. The research is the result of a collaborative effort led by Laura Huang, an assistant professor of management and entrepreneurship at the Wharton School of the University of Pennsylvania, the Angel Capital Association and Rev1 Ventures.

Huang talked about this group of investors in a press release, saying that, “Angels are a particularly important group of investors that provide critical early-stage funding, and yet they are understudied compared with venture capitalists and other later-stage investors. We knew little about how angels in the U.S. made their investments and who they are, and our study sheds light on these important questions.”

Some of the study’s findings include: a median investment size of $25,000, angel investors still predominantly male, but 30% of new angels are females, and a 54.8% majority are experienced entrepreneurs. Typical portfolios contain 11 companies, while the companies chosen or the number of companies are affected by how long the angel has invested.  The study surveyed 1,659 accredited angel investors in the U.S.

Gender also plays a role in investment, with 51% of women stating that the gender of a business founder is important, with female angels wanting to give support to female entrepreneurs. Furthering this divide in how men and women angels invest is that only half of men compared to women, 16% versus 33%, consider the social impact a startup may have.   However both agree that the most important factor when investing is the founding team’s quality.