A new OECD study entitled, Financing High-Growth Firms: The Role of Angel Investors, reveals several important trends and activities in various countries, as well as implications for policymakers.
One trend that caught our eye was that US angel groups and networks are using online tools, such as Gust.com, formerly known as Angelsoft, (The image above is a screenshot from Gust.com) and AngelList. According to the study, the platforms have attracted a number of experienced angel investors.
The platforms provide matching services for both investors and entrepreneurs, but not all such online platforms for angels have been successful, at least in the past, says the report. Danish angels created a marketplace in 2001 to 2004 but closed it because it was too expensive to maintain. (Editor’s note: Those were the days before cloud computing had been widely established.)
The concept of “crowd funding” has also started to catch on. The report says that these online services “can reduce information search costs for investors”, but they “do not replace the necessity for personal contact and face-to-face interactions” or hands-on investment strategies, which are important trust-builders between investors and entrepreneurs.
The online platforms serve as vehicles for increasing the number of financial investments but don’t replace hands-on support from the angel investor to the entrepreneur, concludes the report. (Image Source: Gust.com)