Global angel investor survey: preferences, motivations, and advice

A recent survey by Angel Investment Network has unveiled insights into the attitudes, drivers, and counsel of angel investors globally.

The study highlights a significant shift towards prioritising positive impact alongside financial considerations, pinpointing overvaluation as a predominant startup error. Conducted across Angel Investment Network's worldwide base, this survey aimed to gauge the investor sentiment in 2024, unveiling several key insights.

The survey found that the majority of investors had stakes in 10 or fewer companies, with 28% investing in up to five and another 30% in 6-10 companies. The significance of positive impact in investment decisions was substantial, with 72% of participants acknowledging its importance – 24% strongly and 48% to some extent.

For a notable share of investors, the allure of investing transcends mere financial returns; it's about driving societal change and making a durable impact. Leading reasons for venturing into angel investing were the pursuit of high returns (61%), enhancing portfolio diversity (40%), tapping into innovative ventures (39%), direct involvement with nascent firms (34%), and the desire to support others (33%).

Investors identified the hallmarks of successful startup founders as having a distinct value proposition (77%), demonstrating passion and commitment (57%), upholding strong values and mission (57%), and exhibiting robust leadership (46%). On the flip side, the most frequent fundraising blunders by startups were overestimating the company's worth (31%) and performing insufficient market research (18%).

In today's investment environment, the focus is on startups that are well-funded and have proven track records. Investors' advice for startups looking to raise funds includes lowering valuations (49%), anticipating longer fundraising durations (44%), and seeking smaller investment rounds (38%). Their message to startups is to approach fundraising with caution and endurance.

Investors flagged several red flags when evaluating startups, such as teams lacking experience (63%), no defined route to profitability (62%), absence of a validated business model (46%), and poor financial management (44%). Moreover, investors expressed a preference for staying in regular touch with founders, favouring monthly updates or reports (53%).

This survey underscores a nuanced understanding of angel investment dynamics, emphasising the evolving criteria and expectations of investors in the contemporary market.

According to Mike Lebus, Co-Founder of Angel Investment Network commenting on the findings: "With a markedly different fundraising climate in 2024 it is vital for startups to understand the motivations of angel investors who can provide a vital lifeline of early stage funding. Our survey shows investors today are driven not just by financial gain, but by the potential to influence positive change and leave a lasting impact. The emphasis on positive impact is evident in the findings, underscoring the importance of aligning startups with meaningful missions and values.

“Investors are looking to support founders who demonstrate clear value propositions, unwavering passion, and strong leadership. In a competitive environment avoiding common pitfalls like overvaluation and prioritising effective communication are essential for startups navigating today's investment landscape."