Why do business angels invest? Uncovering angels’ goals

Figures & data

Table 1. Business angels’ demographics

	Sample of this study (REDangels)	Global angel demographics*
Gender	6% female	Predominantly male (<20% females in Europe)
Age (average)	48	Middle-aged
Business experience	90% are business owners or board members	High investing or business experience
Invested amount per angel (average)	$35.000	$25,000–$50,000
Education	95% have a Bachelor’s degree or more	Well educated
Country of residence	Europe (six countries)	Worldwide

Notes: *Based on Tenca et al. (2018) and EBAN (2021).

Table 2. Business angels’ goals categorisation examples (continues)

Economic goals	Goals result from putting money into a startup with an expectation of economic gain within a certain time.
To make money	E.g. To earn money; get more money; obtain extra income; I want to broaden my income; avoid losing money.
To manage risk	E.g. Risk diversification; never rely on just one income; to spread my risk; investment diversification.
To get a high ROI	E.g. I may get a good return on investment; capital growth; maximise investment return; ROI; potential high ROI.
Functional goals	The goals are instrumental and deliver what is expected. The functional goals are based on convenience and efficiency. Examples: to save time and effort.
To invest conveniently	E.g. Lack of time for direct management; more time for other activities; I have time and availability; it is a qualified investment type; greater scrutiny of each business; doing so with limited risk; diversification and collective investment decision; a good business decision.
To reinvest	E.g. I can reinvest some of the capital; continue the investment cycle; reinvest in more startups; increase the invested capital; continue to invest; continue to invest in startups; invest in more ideas; increase the number of investees.
To benefit from public incentives	E.g. To benefit from additional public investments; enjoy tax benefits; minimise tax losses; benefit from public co-investment.
Emotional goals	Goals related to emotions and experiences, playful activities, hedonic sensations, or the excitement and stimulation of investor senses
To live a pleasant life	E.g. To live comfortably; because I want to retire early and enjoy life; playing is an important part of life; allows a comfortable life for my family and me.
To be active	E.g. Keeping alive and aware; the intellectual stimulus, helps keep me mentally alive; prolonging the connection to the business world; gives me a way to remain in the market; keep healthy; to keep the mind working; feel involved; active participant in something positive for society; train the brain; I am retired, I do not expect to retire at 65 and play cards; I hope being an angel investor is a kind of a mental gym for me.
To have challenging experiences	E.g. It is an inspiring experience; participate in new challenges; because I like risk and adrenaline; passion/interest in a particular idea; informal and effervescent business world; dare to interact with different professional worlds with different visions and personalities, to venture through new professional roads.
To have fun	E.g. For the fun of beating the risk/reward matrix; for fun; a playground; a game and it depends on having guts; some play cards, some play video games, BAs play startups; have fun while trying to support someone with money, experience and ideas; because work is very good, but it is not everything.
Symbolic goals	Goals related to personal transformations and social meaning, or gains in social contexts, positive meanings attached to the self, improvement of self-esteem, altruism.
To develop oneself	E.g. Personal and professional growth; continuous evolution and personal growth; personal evolution and continuous learning; improve personal and professional level; develop myself on a personal and professional level; be more efficient; perceive the world better and make better decisions; personal development; enrich me with different but convergent ideas and principles; grow as a person; grow as a business-person; improve my skills in analysing startups; carry on developing know-how; improve my bottom line in the evaluation of investments; allow me to enrich my method of risk analysis; I make better investments; better decisions on future investments; absorb experiences of successful people with a given track record.
To improve one’s self-esteem	E.g. Increase my status; pursue social/emotional wealth; personal recognition; social recognition; be recognised as an expert.
To feel fulfilled	E.g. Personal fulfilment; personal fulfilment and happiness; personal satisfaction; get personal satisfaction; for a greater fulfilment and connection with people; like what I do; makes life more interesting; pleasure to learn and perform; have a better life experience for myself; personal achievement; personal satisfaction; personal fulfilment and satisfaction, life meaning; besides the intellectual stimulus, will also help me become a well-rounded business person; self-fulfilment; to live with a purpose; a sense of purpose.
To be updated	E.g. to be updated on the world evolution; to be updated on the evolution of things; being online; continuous update; stay young with the young; staying young (not getting old); maintain a business vision open to new opportunities and trends; anticipate future developments; get up to date and up to date in technology and innovation; contact with a new reality for me; to know first-hand innovative services and products; be aware of new trends in the market; identify trends to track my customers better; better understand the motivations of the young generations; get contact with new ideas and new people; remain in touch with the most innovative part of business life; because the world changes every day and is always innovating; to be updated on new technologies and business models.
Entrepreneurial goals	Goals directly associated with BA activity related to involvement with entrepreneurs and the ecosystem
To support innovation	E.g. Enjoy innovation and being in the front-runner group; innovation is part of professional life; take part in innovative projects; be involved in an ecosystem of innovation; contribute to an innovative business; being able to test more ideas/innovation; I support innovation, and some ideas will explode; being part of creating solutions for the world; stay connected to innovative projects; strengthen innovation; helping to create innovative projects; opportunity to keep in touch with the innovation ecosystem; take an active role in technological and scientific progress; be curious about technology; contribute to the development of innovative ideas.
To mentor entrepreneurs	E.g. To support new entrepreneurs with my experience; I like to help entrepreneurs to avoid strategic mistakes; advise people from new startups because with good advice entrepreneurs can do better; feel able to make the difference in startups through my experience, it is not like investing in the stock market, as an investment angel I can participate and guide the decisions of the founders; I want to support entrepreneurs because I know how difficult it is; help entrepreneurs to make their dreams come true; interact with entrepreneurial people with a missionary spirit; help entrepreneurs not to repeat the same mistakes I made; opportunity to share experiences and strategic reflection with entrepreneurs; deliver added value to entrepreneurs; my experience in some areas may be helpful; help others grow faster; helping entrepreneurs to succeed.
To have a great exit	E.g. To have a great exit; be a shareholder in a unicorn; what is relevant for me are the exits and not the accounting evaluations; exit is the orgasm of the BA.
To awaken the angel identity	E.g. Because I’m an entrepreneur; a BA is also an entrepreneur; the BA is an entrepreneur and a natural strategist; I have in essence the taste for entrepreneurship; I know what it means to be an entrepreneur; I’ve been there doing that; entrepreneurial nature; my essence of life; I do not want to work for others; I want to be in control of my time resources; I want to be in control of my time and energy; because I have ownership of my destiny.
Entrepreneurial goals	Goals directly associated with BA activity related to involvement with entrepreneurs and the ecosystem
To be part of entrepreneurship	E.g. access to the ecosystem; help entrepreneurship; passion for entrepreneurship; participate in the entrepreneurial community; because I see the future of entrepreneurship; involvement with the entrepreneur community; I believe in entrepreneurship and innovation; contribute to development of the ecosystem; being inside and at the front of new business ideas and new technologies; entrepreneurship represents courage and freedom; join the community of entrepreneurs; contact with entrepreneurs of a new generation; maintain contact with the business world; support entrepreneurship; contribute to entrepreneurship in my country; support local ecosystem.

Table 3. Business angel goals ranked by weighted degree algorithm (transformed into a 0–100 scale)

Economic	Ew(g)	BAw(g)	Functional	Ew(g)	BAw(g)	Emotional	Ew(g)	BAw(g)	Symbolic	Ew(g)	BAw(g)	Entrepreneurial	E(wg)	BAw(g)
to make money	100	85	to benefit from public incentives	0	12	to live a pleasant life	47	68	to develop oneself	47	100	to support innovation	63	94
to manage risk	60	68	to grab the opportunity	27	9	to have challenging experiences	43	56	to improve one’s self-esteem	100	82	to mentor entrepreneurs	30	71
to get a high ROI	73	59	to reinvest	17	9	to be active	20	50	to feel fulfilled	60	79	to invest in new business	70	56
			to plan my career	3	9	to socialise with great people	40	32	to be updated	80	74	to help startups grow	57	47
			to invest conveniently	23	6	to be happy	30	29	to learn	57	68	to be part of entrepreneurship	53	38
			to fit basic needs	13	3	to take care of my family	13	21	to do networking	23	59	to create an entrepreneurial legacy	20	32
						to have fun	20	21	to share knowledge and experience	63	56	to interact with other angels	3	29
						to be part of something extraordinary	10	18	to make a better world	57	41	to awake the angel identity	50	18
						to have a hobby	10	6	to give back to society	30	41	to be involved with startups	23	18
									to support own country	7	35	to have a great EXIT	3	12
									to express benevolence	33	29
									to be successful	67	9

Table 4. Business angel goals ranked by PageRank PR(g) algorithm (transformed into a 0–100.00 scale)

Economic	E PR(g)	BA PR(g)	Functional	E PR(g)	BA PR(g)	Emotional	E PR(g)	BA PR(g)	Symbolic	E PR(g)	BA PR(g)	Entrepreneurial	E PR(g)	BA PR(g)
to make money	14.32	32.46	to reinvest	9.37	12.28	to be happy	83.75	94.79	to feel fulfilled	100.00	100.00	to mentor entrepreneurs	11.91	26.35
to manage risk	13.32	20.34	to plan my career	6.87	6.78	to have challenging experiences	5.82	58.07	to express benevolence	17.85	88.29	to support innovation	11.04	21.87
to get a high ROI	11.61	16.12	to benefit from public incentives	0.00	5.92	to live a pleasant life	19.07	43.81	to improve one’s self-esteem	48.72	67.64	to awake the angel identity	15.65	17.83
			to fit basic needs	8.95	5.89	to take care of my family	6.77	22.19	to give back to society	21.26	43.32	to invest in new business	8.50	16.19
			to invest conveniently	6.38	5.01	to be active	6.89	18.88	to develop oneself	19.43	33.76	to be part of entrepreneurship	8.64	12.74
			to grab the opportunity	5.63	4.34	to be part of something extraordinary	5.74	17.82	to make a better world	34.90	27.61	to help startups grow	15.51	12.53
						to socialise with great people	12.20	12.90	to be updated	18.17	23.87	to create an entrepreneurial legacy	16.76	9.98
						to have fun	5.02	10.30	to share knowledge and experience	22.17	15.79	to have a great EXIT	2.73	7.26
						to have an hobby	4.09	5.52	to learn	24.65	15.04	to interact with other angels	2.73	5.32
									to support own country	3.34	14.74	to be involved with startups	3.77	3.77
									to do networking	8.85	10.42
									to be successful	28.67	4.83

Table 5. Top 10 angel goals ranked with weighted degree algorithm

Business angel goals by business angels				Business angel goals by entrepreneurs
Ranking	Goal	Weight BAw(g)	Type	Ranking	Goal	Weight Ew(g)	Type
1	to develop oneself	100	Symbolic	1	to make money	100	Economic
2	to support innovation	94	Entrepreneurial	2	to improve one’s self-esteem	100	Symbolic
3	to make money	85	Economic	3	to be updated	80	Symbolic
4	to improve one’s self-esteem	82	Symbolic	4	to get a high ROI	73	Economic
5	to feel fulfilled	79	Symbolic	5	to invest in new business	70	Entrepreneurial
6	to be updated	74	Symbolic	6	to be successful	67	Symbolic
7	to mentor entrepreneurs	71	Entrepreneurial	7	to share knowledge and experience	63	Symbolic
8	to learn	68	Symbolic	8	to support innovation	63	Entrepreneurial
9	to live a pleasant life	68	Emotional	9	to manage risk	60	Economic
10	to manage risk	68	Economic	10	to feel fulfilled	60	Symbolic

Table 6. Top 10 angel goals ranked with page rank algorithm

Business angel goals by business angels				Business angel goals by entrepreneurs
Ranking	Goal	BA PR(g)	Type	Ranking	Goal	E PR(g)	Type
1	to feel fulfilled	100	Symbolic	1	to feel fulfilled	100	Symbolic
2	to be happy	94.79	Emotional	2	to be happy	83.75	Emotional
3	to express benevolence	88.29	Symbolic	3	to improve one’s self-esteem	48.72	Symbolic
4	to improve one’s self-esteem	67.64	Symbolic	4	to make a better world	34.9	Symbolic
5	to have challenging experiences	58.07	Emotional	5	to be successful	28.67	Symbolic
6	to live a pleasant life	43.81	Emotional	6	to learn	24.65	Symbolic
7	to give back to society	43.32	Symbolic	7	to share knowledge and experience	22.17	Symbolic
8	to develop oneself	33.76	Symbolic	8	to give back to society	21.26	Symbolic
9	to make money	32.46	Economic	9	to develop oneself	19.43	Symbolic
10	to make a better world	27.61	Symbolic	10	to live a pleasant life	19.07	Emotional

Figure 1. Angel investors’ goals identified by business angels, using the weighted degree algorithm.

Figure 2. Angel investors’ goals identified by entrepreneurs, using the weighted degree algorithm.

Figure 3. Angel investors’ goals identified by business angels, using the PageRank algorithm.

Figure 4. Angel investors’ goals identified by entrepreneurs, using the PageRank algorithm.

Table

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1^st reason to be an angel investor	2^nd reason to be an angel investor	3^rd reason to be an angel investor	4^th reason to be an angel investor

Tenca, F., Croce, A., & Ughetto, E. (2018). Business Angels research in entrepreneurial finance: A literature review and a research agenda. Journal of Economic Surveys, 32(5), 1384–1413. https://doi.org/10.1111/joes.12224

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EBAN. (2021). EBAN statistics compendium - European early stage market statistics 2020. https://www.eban.org/wp-content/uploads/2021/12/EBAN-Statistics-Compendium-2021-1.pdf

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