Wharton Aims to Shine Light on Angel Investing in the US

The Wharton School’s entrepreneurship center has announced a new research project designed to shine a light on the angel investing scene in the US and its relationship to the world of startup companies.

In 2014, angel investing in the US was worth an estimated US$24 billion across more than 73,000 deals involving startup companies, according to Wharton’s press release accompanying the announcement. Yet, relatively little in-depth analysis has been carried out on who angel investors are and what drives them to make their investments.

Laura Huang, a management professor at the Wharton School said the project’s aim is “to develop a profile of angel investors that will illuminate age, gender and ethnicity; and help pinpoint commonalities such as education or career path, as well as trends regarding how they identify fundable early-stage companies.” Huang, an MBA alumna of INSEAD, teaches the foundation course of the Wharton School’s MBA concentration in entrepreneurial management, which is offered through its center in this respect.  

Wharton School to help unravel mysteries of the angel investor

The school’s entrepreneurship center is conducting this new project in partnership with the Angel Capital Association (ACA), which describes itself as a collective of accredited angel investors numbering over 13,000 individual investors and more than 200 groups and platforms. The ACA will survey accredited angels and then pass this data over to the Wharton School’s entrepreneurship center for analysis:

“The media seems to say that angels are only in Silicon Valley, Boston and New York, and they only invest in companies in those communities. Is that true? I think there will be many surprises when there is real data from thousands of angels,” writes Marianne Hudson, the ACA’s executive director.

Leading source of funding among startup companies in the US

Angel investing has become increasingly important to the US economy because of the centrality of startup companies in today’s business landscape. Angels are also believed to have overtaken venture capitalists as a source of funding for the country’s startup companies – the investment figure of US$24 billion is thought to have risen from around US$18 billion in 2009 and the 2015 Halo Report holds that the average size of angel investing deals has risen from a median of US$510,000 in 2014 to US$850,000 in 2015, with software and healthcare continuing to make up about half of all deals. In addition, recent research coauthored by scholars attached to MIT Sloan, Harvard and the European think tank, Bruegel, has indicated that “angels are beneficial to the growth, performance and survival of startups.”