What do Business Angels Look Like?

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A business angel is a person who provides capital from his own funds to a private business owned and operated by another person who is neither a friend nor a family member.

The typical angel is often described as a wealthy, retired, former tech entrepreneur who regularly invests in other people’s start-ups. While a few angels look like this, the typical angel does not.

• Most angels aren’t wealthy. Estimates based on data from several sources suggest that the majority of angel investors are unaccredited investors.

• Few angels are retired. About two thirds are still working full or part time.

• The majority of angels live in two earner households.

• Most angels aren’t old. Surveys show that the odds that a person makes an angel investment peaks at between 45 and 54 years of age.

• Angels are more educated than the rest of the U.S. population, but one quarter of them have not graduated from college.

• Angels are no more likely to be experienced entrepreneurs than friends and family investors.

• Angels tend not to make many such investments, with a significant minority making just one angel investment in their careers.

Of course, the most successful angels differ from the typical angels. (I will write about how in another post.) But the typical angel isn’t a retired former hotshot Silicon Valley tech entrepreneur.

You can find out more about angels in Fool’s Gold: The Truth Behind Angel Investing in America

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About the Author: Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool’s Gold: The Truth Behind Angel Investing in America; Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By; Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures; Technology Strategy for Managers and Entrepreneurs; and From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company.

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Scott Shane


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

9 Reactions

  1. Hi Scott – Once again a wonderful, educational and eye opening article. One thing that strikes me is how “young” these investors are. Does this book say anything about where these kinds of people “hang out” – what’s their “natural habitat?” If you wanted to build relationships with them (not necessarily for the sake of investing) where would you find them?

  2. Scott: Thanks for painting a picture of how a business angel looks like.

  3. More interesting tidbits. I had a clear picture painted in my mind of what an angel investor would look like. Your stats painted a completely different picture. It’s nice to hear that an unassuming neighbor down the street could be someone’s business “angel”.

  4. It’s funny but I had a different opinion of an angel investor myself, until I read up on them a tad more. Angel’s can be friends, family or the guy next door. Doesn’t have to be a wealthy businessman in a fancy suit. And most times, it isn’t.

  5. I wonder what types of businesses these Angles “typically” invest in? I’m not at the stage where I would ask for an Angle or any other type of investments into my very small business, but this is a very interesting article!

  6. Thank you for this Scott. I now understand more clearly about Angel investors. I’m excited to learn about venture capitalists in a simpler presentation as well. :)

  7. Here’s a wiki info I got for venture capitalist. –>A venture capitalist (also known as a VC) is a person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments. A venture capital fund refers to a pooled investment vehicle (often an LP or LLC) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. <–

    The way I understand it is, VCs invest to business and are expected to manage a certain role. Contrary to Angels, they fund a certain business but does not operate the business by himself.

    Please correct me or tell me if I get it right. Thanks. :)

  8. Timely article. Money from the traditional lending institutions is drying up fast; some of my clients are challenged to find funding for their growth plans. We’ll looking at a number of non-traditional sources. Thanks.

  9. The Question is: And how to we find them?

    Now I know how they look, but where do we look for?

    Thanks!

    Alex.

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