Who Are Angel Investors? – and Why It Matters

Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.

Angels are responsible for much of the startup growth in the United States. Because they’re more willing to invest in early-stage companies, angels have a huge impact on high-growth ventures. While they’re helping to power entrepreneurship, little research has been done into the makeup of the angel ranks. This new project is aiming to change that situation:

The American Angel Campaign

The American Angel Campaign is a collaboration between the Angel Capital Association, Wharton Entrepreneurship, and Rev1 Ventures. Envisioned as a means of putting a face on those who function as angel investors, the campaign has completed an important study focused on identifying the essential characteristics of more than 200,000 American angels and also serves to indicate just why that information may matter.

The Partners

The Angel Capital Association (ACA) is an angel professional development group which aims to provide angels and prospective angels with the knowledge they need to succeed. The ACA is also involved in lobbying to protect angel rights and interests.

Wharton Entrepreneurship, part of the University of Pennsylvania’s Wharton School of Business, is world-renowned for its programs. Home of the largest entrepreneurial teaching program currently available, the Goergen Entrepreneurial Management Program, Wharton continues to invest in entrepreneurs. Professor Laura Huang, an expert in early-stage investment decisions, is the lead researcher on the American Angel Campaign.

Rev1 Ventures is a development organization for seed-stage ventures which helps entrepreneurs both to determine the viability of their startups and to get their ventures off the ground. Their John Huston Fund for Angel Professionalism aims to support angel research and education, with the American Angel Campaign being their first project.

Together, these groups have worked hard to determine the makeup of America’s angel contingent.

The American Angel Campaign’s Inaugural Study Findings

With over 200,000 angel investors across the nation collectively investing $24 billion in more than 60,000 startups, it behooves angel organizations, the SBA, and aspiring startups to know more about this amazing source of early-stage funding and support. In order to learn more about angels, Professor Laura Huang employed a survey completed by 1,659 accredited angel investors. The following information was culled from survey responses:



Most angels (77.9%), as expected, are men. However, the number of women involved in angel investing is steadily growing. Women comprise about 30% of newer angels (those who’ve begun angel investing activities since 2014). This increase is in sharp contrast to venture capital (VC) where women are a much smaller minority.

There do appear to be gender differences in investment, which may come as a surprise. Women are frequently more concerned with a founder’s gender than are men. While 51% of women stated that gender played a role in their investment strategy, only 6% of men cited the same concern. This may be due to female investors being more interested in supporting women-led businesses.

Women also rate the importance of a business’ social impact more highly than men, with 33% of female investors saying that it was something which they evaluate as opposed to only 16% of male investors.

The differences don’t end there. Women tend to write smaller checks, have fewer companies in their portfolios, and make fewer follow-on investments. Additionally, women appear to have fewer positive exits. To truly see the impact of gender on investment, we may need to wait at least another decade. As women continue to join the ranks of angel investors and as the current female investors age, these numbers may change.


With regard to race, it’s clear that most angels are white, with 87.6% of respondents so identifying. Blacks make up only 1.3% of respondents, Hispanics 2.3%, and Asians 5.7%. Clearly, there’s a possibility that race plays a subconscious role in the selection of which startup founders receive support. As with women paying more attention to a founder’s gender when making an investment, minorities may be more likely to invest in startups led by a minority founder. However, only time will reveal whether this is truly the case. Current research shows that newer angels are more racially diverse, though it may take time for angel demographics to match U.S. national demographics more closely.


The mean age for angel investors is 57.6 years; 70% of respondents noted that they were 50 years of age or older. The mean age for an angel making a first investment is 48. Because investors first need to amass their own wealth, these ages are not likely to change much over time.


When it comes to education, angels certainly differ from the U.S. population as a whole. While only 12.9% of Americans over 25 have earned degrees beyond the Bachelor’s, 72.8% of angel investors have done so. Only 3.2% of angels have failed to earn a Bachelor’s degree vs. 65.8% of Americans.

Angels investors are naturally more likely to have experienced some form of business education; half possess an MBA and 57.3% have studied business at the college level.

The American Angel Campaign hypothesizes that those with a business education may be more likely to become angels because they may feel more comfortable with business risks.


Whereas VC tends to be concentrated in California, New York, and Boston, angels are spread throughout the country. The top five regions with the most angels are: California (17%), Great Lakes (16.2%), Southeast (15.4%), New England (12.8%), and Mid-Atlantic (10.7%).

This geographic diversity bodes well for startups regardless of their locations. We learned from the Halo Report that investors are more likely to invest in their own regions. This regional diversity of angels should continue to bolster startup growth across the nation, rather than merely serving any single region.

Professional Background

It may not come as a surprise that many angels have experience as entrepreneurs or business leaders. From the study:

“This observation of ‘founders funding founders’ illustrates how angels are ‘created organically.’ Angels are ‘local’ and familiar with the entrepreneurship ecosystem because, in the past, they themselves were on the other side of the table as the entrepreneur. This entrepreneurial experience leads to a more refined and richer framework to understand value-creating startup firms and, consequently, helps generate better returns.”

Angels with an entrepreneurial background are more likely to write larger checks, invest in a greater number of companies, and to advise the companies in which they invest, all of which can have a substantial impact on a startup. These angels also tend to have more positive returns.

Professional background also affects where angels invest. As discussed earlier, angels are more likely to invest in those industries with which they’re personally familiar. Since many angels come from tech and financial services backgrounds, they tend to fund startups in those industries more heavily than others. After all, it’s much easier for an angel to determine a company’s likelihood of success when analyzing an industry with which they’re well-versed themselves.

Investment Activities

Investing Experience

In this study, investing experience refers to the length of time that angels have been investing. A quarter of the angels surveyed were relatively new, with no more than three years of experience. Half of the angels surveyed began investing after the Great Recession (2008), while 49% were investing prior to that point in time.

Investment Channel

Regarding how angels choose to invest – i.e. where they learn of opportunities – it may come as a surprise that most (89.3%) begin with an angel group. Just over half use referrals from friends and associates, while approximately 58% identify investments following contact with entrepreneurs. This certainly places a lot of emphasis on angel groups, which topic I will be discussing in greater depth in the near future.

This is an important point for startups to consider. While it may work to reach out to individual angels, it’s more frequently effective to deal with angel groups.

Investment Strategy

Many angels maintain a diverse portfolio in order to hedge their bets. Median check size for initial investments is $25,000 – something for startups to bear in mind while seeking investors. This investment size generally enables angels to spread their investment funds between multiple startup opportunities. Three-quarters of angel investors have made follow-on investments, which is positive news for those who know that they’ll need to ask for more money in the future. Almost half of angel investors have written three or more follow-on checks.

Investment Performance

For many angels, performance is important. Investing is a high-risk activity, especially for angels as they’re more likely to invest in early-stage startups. While most angels want to see a return of ~9X their investment, many exits result in no more than 5X profits. Angels are generally expecting to exit after five years.

In good news for both entrepreneurs and investors, approximately 40% of investment exits are positive.

Why the Research Matters

Who angels are – in terms not only of demographics, but also experience – can impact the sort of decisions they make. This is made clear by the twin facts that angels with a history of entrepreneurship write bigger checks and that women pay attention to a range of different factors when making investment decisions. With increased angel diversity, we may begin to see a more diverse field of startups. Future American Angel surveys may help to indicate whether this change is truly taking place. Hopefully, more research will be done on the angel investor population so that we can continue to educate potential angels (as well as entrepreneurs) and keep America’s startup culture thriving.

Takeaways for Entrepreneurs

You will have more success dealing with angels with a background in your industry and who are associated with a group. Angels with an entrepreneurial background will not only be able to recognize the potential for success in your business, they’re also more likely to write a larger check and to offer useful advice.


Please note, these links will open a PDF.

American Angel Campaign Full Report

About the Author

Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).

Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.

Most importantly, he is the incredibly blessed husband of one amazing wife and father of six wonderful children. He resides in Bradenton, Florida. For more information on Dr. Johnson and his work, go to www.JoeJohnson.com.