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Angel investment more widespread, still struggles with diversity

November 30, 2017

While venture capital remains heavily concentrated across a select few metropolitan areas, the geographic distribution of angel investors is widespread, according to new research from the Angel Capital Association, The Wharton School at the University of Pennsylvania, and the John Huston Fund for Angel Professionalism at Rev1 Ventures. Stemming from a survey of 1,659 angels, the largest such project to date, The American Angel paints a demographic portrait of that subset of the investment community in the United States. Nearly two-thirds of the angel investors surveyed by the group were located outside of New York, Boston, and the Bay Area. On average, coastal angel investors made smaller investments than those from other regions – $32,000 compared to $37,000 per investment. Texans, on average, made the largest angel investments at $44,000.

The report’s authors, led by researchers from Wharton and Harvard Business School, suggest that although angel investors increasingly fill funding gaps left by the venture capital community, their demographic, geographic, and sector profiles are, for the most part, more diverse.

While the survey finds that angel investors are more diverse than traditional venture capitalists, the industry still struggles with racial and gender diversity. The survey indicates that angel investors are more likely to be female than traditional venture capital investors – 13 percent versus less than 10 percent – and that the number of female angel investors is growing. Roughly 94 percent of angel investors surveyed identified as either white or Asian. The authors suggest that these racial and gender disparities could influence which businesses receive funding, a challenge similar to that faced by the venture capital community.

The average age of the angel investors surveyed was nearly 58 years old, and nearly three-fourths had an advanced education beyond a bachelor’s degree. The authors find that most angel investors (55 percent) had previous entrepreneurship experience. These investors were more likely than non-entrepreneurs to write a larger check, make more investments, and take an advisory role or board seat with a company. Approximately 89 percent of angel investors identify prospective investments through angel groups.

angel, angel capital