54 Pages Posted: 19 Mar 2008 Last revised: 29 Oct 2014
Date Written: November 4, 2013
We examine the role of angel investors in early venture financing using a unique sample of 182 Series A preferred stock rounds. Our sample includes deals in which angels invest alone, VCs invest alone, and where both investor types co-invest. We find that deals with more angel investors have weaker cash flow and control rights, and experience longer times to resolution. Among larger deals, those financed by VCs alone are most likely to experience successful liquidation. Our overall results support the conclusion that angel objectives likely align more with entrepreneurs than VCs, and that outcomes may be linked to conflicts of interest.
Keywords: Venture Capital, Angel Investors, Entrepreneurship, Control Rights, Term Sheets
JEL Classification: G20, G24, G32
Suggested Citation: Suggested Citation
Goldfarb, Brent D. and Hoberg, Gerard and Kirsch, David and Triantis, Alexander J., Are Angels Different? An Analysis of Early Venture Financing (November 4, 2013). Robert H. Smith School Research Paper No. RHS 06-072. Available at SSRN: https://ssrn.com/abstract=1024186 or http://dx.doi.org/10.2139/ssrn.1024186