Year of Publication



Martin School of Public Policy and Administration

Degree Name

Master of Public Administration

Committee Chair

Dr. J. S. Butler

Executive Summary

Angel investors are wealthy individuals who provide capital for business start-ups in return for an ownership stake. The outcomes of angel investments are not high for all angels and not evenly distributed among all investors. I examine what characteristics of angel investors affect the outcome of their investments.

This research is based on a North American survey data set. I use the internal rate of return to measure the performance of angel investments. More specifically, I use three different standards to code it as success or failure: median standard, mean standard, and higher standard. Then, I use OLS and a probit model to regress investment success on five explanatory variables that represent the post-investment involvement of angel investors (interacted time with the company, due diligence, and duration of investment) and the basic characteristics of angel investors (their education level and their experience period in the industry of venture).

The only thing I can predict in low level of success (median and mean standard) is that the later the stage, the more likely success is. However, in the high level of success, angels may positively influence their investment performance with sufficient due diligence and maintaining long-term investment as post-investment involvement. I find that the stage of the venture at the time of their investment, due diligence and duration of investment are the primary determinants of the successful angel investors. Also, this research indicates that the post-investment involvement of angels, rather than their characteristics, is more likely to be related to the improved performance of the angel investors.

Policy makers can set criteria for select which angel investors to support, at least encouraging minimal due diligence, using this research, and with that, policy makers can increase the efficiency of government support, although lessons from one country should not be transferred naively to another.