Survey Finds Angel Investors Don't Follow the Leader and Not Just in It for the Money
Interest in Science and Technology High Among Angel Investors
April 25, 2016 (Press Release) - SAN FRANCISCO--Propel(x), an online angel investment platform that helps investors source, evaluate, and fund pioneering science and technology startups, today released a report detailing the results of a survey that revealed the views and motivations of angel investors. The survey was conducted in collaboration with Breakout Labs, the MIT Alumni Angels of Northern California, and Innovation Node - Los Angeles, a national node of the National Science Foundation Innovation Corps ("I-Corps") Program.
"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?'"
The report, based on data collected from a survey of more than 200 active and aspiring angel investors in the US, found that contrary to assumptions in the angel community, angels are independent minded and do not have a 'follower' mentality - less than a quarter of active angel investors (21 percent) cited "who else has invested" among their top three reasons for investing in a specific opportunity. Three-quarters (75 percent) of active angels cited the "management team," over half (52 percent) noted their "ability to understand the technology" and 42 percent claimed the "potential return on investment" as their top reasons for choosing to invest in a specific company.
"The results of our survey dispel a common misconception that angel investors are driven by a follow-the-leader mentality," said Swati Chaturvedi, CEO and Co-Founder of Propel(x). "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."
For Angel Investors, It's Not All about the Money
Survey results found that while nearly half of active angel investors (49 percent) ranked the potential for investment returns as their top motivator for investing in startups, nearly one-third (31 percent) ranked solving some of the world's biggest challenges as their main motivation.
"Angel investors are in the business for more than just financial returns - having an impact matters, especially when it comes to investing in things like curing diseases, feeding a growing global population, fueling the planet with clean energy and even taking us into space," said Lisheng Wang, Propel(x) Co-founder and Head of Investor Development. "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?'"
Increasing Early Stage Investing for Science and Technology Startups
An overwhelming majority (94 percent) of active angels said that it helps to have subject-matter experts weigh in when evaluating a startup investment opportunity, reinforcing the importance of angel investors having the tools and access they need to understand new complex technologies. The survey found that the majority of active angels have invested in a science and technology startup (68%) but that half of respondents noted that they very frequently (21 percent) or somewhat often (29 percent) decide not to invest because they don't believe they understand the technology well enough.
When asked to rank the top three types of science-based companies that are of most interest, the three categories receiving support from more than half of angels were Information Technology & Communications (66 percent), Life Sciences (56 percent) and Energy & Green Technologies (53 percent).
Today, less than 0.1 percent of an estimated $53 trillion in assets under management goes into early stage science and technology-based companies.
"As this survey shows, many individuals want to invest in science and technology startups," said Ms. 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."
About the Research
Propel(x) collaborated with Breakout Labs, the MIT Alumni Angel Investors Group of Northern California, and Innovation Node - Los Angeles, a national node of the National Science Foundation Innovation Corps ("I-Corps") Program, to develop and field this survey to more than 300 individuals between March 15, 2016 and April 7, 2016 to understand the views and motivations for angel investing. The survey was offered to both current and prospective angel investors through the Angel Capital Association, Band of Angels, HBS Alumni Angels (Harvard Angels), the MIT Alumni Angels of Northern California, and Propel(x) members. Of the 300+ respondents, 181 individuals identified themselves as an "Angel Investor" while an additional 49 reported they would "Consider investing." These 230 individuals are collectively referred to as 'active and aspiring angel investors' in our survey.
To request a copy of the results, please click here.
Propel(x) Inc. is an online investment platform that connects science and technology startups with angel investors in order to unleash huge innovations, grow great businesses, and have an impact on the way people live. Founded in 2013 by CEO, Swati Chaturvedi and Lisheng Wang, Propel(x) introduces its members to ground-breaking startups that are developing new forms of clean energy, life-saving drugs, new methods of space exploration, and innovative new materials amongst others. By facilitating private funding for startups based on scientific and technological breakthroughs, Propel(x) seeks to change the world and build the next generation of great companies. For more information, please visit: www.propelx.com.