Survey: Top Reasons Angels Invest? Management Team, Followed by ROI

I Love Angels as InvestorsA new survey published today provides evidence that Angel investors are “not just in it for the money.” Propel(x), a San Francisco-based online investment platform, collaborated with Peter Thiel’s Breakout Labs, MIT Alumni Angels of Northern California and Innovation Node Los Angeles (part of the National Science Foundation Innovation Corps Program) on the report. According to their correlated information, angels are “independent minded” and do not possess a “follower” tendency. While every investor strives to drive financial gain, the Propel(x) survey quantified the top three reasons investors back a small firm;

  1. 75% of respondents said the management team was their top reason
  2. More than half (52%) pointed to their “ability to understand the technology”
  3. In third place was “potential return on investment” standing at 42%
  4. Less than 25% said they were driven by who else had invested in the early stage company
  5. But the overwhelming majority (94%) of active angels said that it helps to have subject-matter experts weigh in when evaluating a startup investment opportunity

The survey was the result of a survey of over “200 active and aspiring angel investors” in the US.

swati chaturvedi propelSwati Chataverdi, co-founder and CEO of Propel(x), said the results of their survey dispelled a common misconception about angel investors as they did not encounter a herd mentality approach;

“Our data shows that access to both management and independent industry experts is key to facilitating angel investing, especially when it comes to complex science and deep technology startups whose innovations have world-changing potential,” said Chataverdi.

Lisheng Wang, Propel(x) cofounder and Head of Investor Development, said that for angel investors – having impact mattered.

“Science and technology startups especially should take note that when raising capital, they should emphasize the impact of their solution besides potential returns to investors. It’s not only about the ‘what,’ it’s also about the ‘so what?’”

Propel(x) is a science and technology investment crowdfunding platform. Propel(x) points to their numbers that indicate the majority of active angels have invested in a science and tech startup (68%) but that half of respondents noted that they frequently decide not to invest because they don’t believe they understand the technology well enough.

Chataverdi believes that many individuals want to invest in science and tech. But today, less than 0.1% of an estimated $53 trillion in assets under management goes into early stage science and technology-based companies. This number is in contrast to the more than half of their survey respondents who indicated a desire to participate in science and tech companies;

“As this survey shows, many individuals want to invest in science and technology startups” said Chaturvedi. “The easier we make it for angel investors to discover, evaluate and participate in science and technology startups, the more we’ll see money going into these worthy companies and the benefits to humanity accrue.”

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