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Unfollow the Leader: Angel Investors Follow Their Own Investing Path

We hear about the big names, like Sean Parker committing $250M to immunotherapy or Bill Gates investing to find a clean-tech miracle, but here’s a statistic that might surprise you. For all of the talk about innovation, less than 0.1% of the $53 trillion in assets under management goes to early stage science and technology based companies. Given that many of these companies have the potential to change the world with their technology, the statistic is confounding.

How is it that so little money is invested in these potentially world-changing companies, and how can we encourage more investment in true scientific and technological breakthroughs? We decided to get to the heart of the matter by surveying those who are at the vanguard of equity investing — angel investors.

In collaboration with other innovation advocates, including Breakout Labs, the MIT Alumni Angels of Northern California, and Innovation Node – Los Angeles, a national node of the National Science Foundation Innovation Corps (“I-Corps”) Program, we surveyed an array of angels and found surprising results that challenge long held assumptions about the Angel community.

Here are the findings:

Propel(x)_Angel Survey Infographic_V7.0 (1)

 

What’s it Going to Take to Increase Science and Technology Investing?

The good news is that there is a real interest in science and technology startups; it’s just that the knowledge gap gets in the way of translating that interest into investment.  The survey found that the majority of angels (67%) have invested in a science and technology startup before. So, if angel investors are the independent minded, globally conscious individuals our data has shown them to be, why does this gap in funding for science and technology companies still exist? Clarity.

As we’ve pointed out, half of respondents noted that they very frequently (22 percent) or somewhat often (28 percent) decide not to invest because they don’t believe they understand the technology well enough. A key to overcoming this knowledge gap is having subject-matter experts weigh in when evaluating a startup investment opportunity. An overwhelming majority (94 percent) said that it helps to have subject-matter experts, reinforcing the need to help investors understand new innovations.

Providing the tools for angel investors to evaluate these companies is necessary to facilitating investment.

Angel investors are at the vanguard of funding true innovation – they are swooping in and living up to their names. They care about making a difference in the world, but need to understand the companies they are investing in. The more we make it easy for them to find and support in science and technology startups, the more we’ll see money going into these worthy companies and the benefits to humanity accrue. That’s our mission here at Propel(x) where we are actively overcoming obstacles to early stage science investing by helping angel investors discover, evaluate, and participate in breakthrough startups.

To see the full results of our survey, click here

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One Response

  1. On the hurdles to investing slide, I don’t understand something. The first column says that half of the respondents “admit” that they don’t understand the technology and the third column says that 30% of respondents “feel” like they don’t understand the technology…and therefore don’t invest. Aren’t those two columns really saying the same thing and therefore doesn’t that substantially reduce the amount of information contained in the slide? Maybe combining the two columns and saying that 80% of potential investors either don’t understand or feel like they don’t understand… might make for a more striking slide.

    Also, in general, I think that the decision making process involves weighing the various factors you’re asking about. That leads to a gut feel. That gut feel ultimately leads to writing a check or not.

    Just my thoughts, YMMV.

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