Is a Startup’s Success Determined by Angels?


January 26, 2012

Josh Lerner and a team of researchers are studying the impact on startups by early-stage financiers.  One of their most recent papers was made available by SuperReturn 2012 organizers this week. We read the report and found that it delves deeply into the dealflow, portfolio, and long term results of two US-based angel groups. The data, although limited, was examined in detail and Lerner’s team came to some intriguing conclusions, which we summarized below.

– Ventures that are funded by the two successful angel groups experience superior outcomes to those that were rejected

– They have improved survival, exits, employment levels, patenting, web traffic, and financing.

– Angel financing has a positive effect on most operations of the venture, with qualitative support for a higher likelihood of successful exits.

– There is no difference in access to additional financing, which might suggest that financing is not a central input of angel groups.

– results suggest that some of the softer features about angel investment, such as their mentoring or business contacts, may help new ventures the most.

You can access the complete study here.

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