A new survey conducted among global investors by Angel Investment Network, the world's largest online angel investment platform, has shed light on the preferences, motivations, and advice from angel investors.
It reveals angel investors are more motivated by positive impact than ever before while financial fundamentals obviously remain crucial, with over-valuations revealed as the biggest startup mistake. Angel Investment Network surveyed investors across our global network to take the temperature of investors in 2024. The key findings include:
Investment patterns
A majority of investors had invested in 10 or fewer businesses, with 28% investing in under 5 and 30% investing in 6-10. Positive impact emerged as a crucial factor influencing investment decisions, with 72% of respondents expressing some degree of agreement with its importance, 24% expressing strong agreement and 48% somewhat agreeing.
For many, investing isn't just about financial gain; it's about catalysing change and leaving a lasting imprint on the world. The primary motivations for becoming an angel investor included the potential for high returns (61%), portfolio diversification (40%), access to innovation (39%), hands-on involvement in early-stage companies (34%) and the opportunity to assist others (33%).
Startup traits and mistakes
The common traits of successful startup founders that investors backed were a clear value proposition (77%), passion and commitment (57%), strong value and mission (57%), and strong leadership (46%). The most common mistakes made by startups during fundraising included overvaluing the company (31%) and inadequate market research (18%).
Current investment climate
In the present investment climate, investors are seeking well-capitalised startups with a strong track record. Advice for startups in fundraising includes reducing valuations (49%), planning for longer fundraising periods (44%), and raising smaller rounds (38%). Their advice is clear: tread cautiously and be prepared for the long haul.
Red flags and communication preferences
Red flags for investors researching startups included inexperienced teams, flagged by 63% of investors, no clear path to profitability (62%), no proven business model (46%) and not having finances in order (44%). Investors also indicated a preference for regular communication with founders, with monthly contact/reports being the most popular choice (53%).
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."
He continues: "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."