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# The Size of Angel Investments

About a week ago, I put out the statistic that the typical, or median, size of an angel investment is \$10,000. Many people have responded that they don’t believe the number because they see companies receiving \$250,000 to \$500,000 from angels. But these numbers aren’t inconsistent.

Data from a survey of a representative sample of the adult age population in 2004 put the median (typical) angel investment made by an American between 2001 and 2003 at \$10,000.

The median, or typical investment, is very different from the mean, or average investment because a few people make very large angel investments. The mean angel investment calculated from the responses to the survey from which I drew the \$10,000 median figure was \$77,000.

The \$10,000 and \$77,000 numbers refer to amounts invested by individual investors in a company, not the amount received by the company in which the investment was made. The respondents to the survey report that the average number of other private investors in the companies they invested was 3.85, making the average total number of private investors per company 4.85. If the other investors were also angel investors who made similarly sized investments, then the average investment received per company was \$372,000.

How do these figures compare to the numbers from investments made by members of angel groups? Angel groups are composed of only accredited angel investors and are thought to be more sophisticated than the average angel. So one would expect them to invest more per company than the average angel investor. In 2006, the average, or mean, size of an angel investment made by angel groups was \$242,000.

But angel groups are made up of several angels who each put in money. So the amount per angel is much smaller than the amount put in by the group. The data from the Angel Capital Association indicates that the average dollar value per round per individual angel group member was \$31,500 in 2006.

Finally, the average company that received money from an angel group in 2006 received more than one investment. Therefore, the average amount of money that a company received from an angel group was \$447,000.

The message from all of this data is simple. The typical angel investment is about \$10,000, but the average is \$77,000. Because, on average, several angels invest together, the average amount of money received by each company receiving an angel investment is close to \$372,000. The amount of money received by companies from angel groups tends to be a bit higher, but not that much larger, and isn’t that larger on a per investor basis.

You can find out more about angels in Fool’s Gold: The Truth Behind Angel Investing in America [1]

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About the Author: Scott Shane [2] 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.