Are angel networks different from individual angels?: evidence from an emerging economy

Abstract

Angel investments have been growing in volume and importance as a source of funding for startups in India and elsewhere in the world. The emergence of angel investment networks has released more data on the investment activities of angels. This paper draws on two key strands that have appeared in recent research relating to angel investments. One, the importance of examining angel investments at the country level has been recognized in view of the differences in institutions across countries and their influence on investment outcomes. Second, it is being recognized that angel networks may be different from individual angels. This paper examines the latter proposition with reference to the Indian market. It finds support for the view that angel networks experience different outcomes in their portfolios in terms of time taken to raise venture capital funding and have higher rates of exits from their investments. While the evidence does not support the hypothesis that angel networks are more likely to provide follow-on financing to their portfolio companies or raise more rounds of venture capital funding for their portfolio enterprises or that angel networks fund more developed enterprises the study finds that these may be due to the recent vintage of these portfolios and may be worth following up on in future.