Angel Investors Around the World

64 Pages Posted: 17 Jan 2016 Last revised: 3 Jun 2016

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University; Birmingham Business School; European Corporate Governance Institute (ECGI)

Minjie Zhang

Odette School of Business - University of Windsor

Date Written: June 1, 2016


Angel investors finance small high growth entrepreneurial firms in exchange for equity. Unlike private equity (PE) and venture capital (VC) funds, which invest capital from institutional investors, angels invest with their own money. We compare the impact from legal and cultural conditions on disintermediated angel finance versus intermediated PE/VC finance. We use PitchBook's comprehensive data collection of over 5,000 angel deals and 80,000 PE/VC deals from 96 countries from 1977 to 2012. The data indicate that relative to PE/VC funds, angel investors are more sensitive to stock market conditions, legal environments, and Hofstede’s cultural conditions (specifically, higher levels of individualism and risk intolerance). The data further indicate that investee firms funded by angels are less likely to successfully exit in either an IPO or acquisition, on average, whether those angels are involved in the first round or later stages. Our test results are robust to propensity score matching methods, as well as clustering standard errors, among other approaches. In addition, we perform difference-in-differences tests and find evidence that more stringent disclosure regulation and more forgiving bankruptcy laws spawn entrepreneurial activities induced by both angels and PE/VC funds.

Keywords: Private Equity, Angel Investor, Venture Capital, IPO, Entrepreneurship, Law and Finance, Bankruptcy Law, Culture

JEL Classification: G22, G23, G24, K22, K35

Suggested Citation

Cumming, Douglas J. and Zhang, Minjie, Angel Investors Around the World (June 1, 2016). Available at SSRN: or

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States


Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

HOME PAGE: http://

Minjie Zhang (Contact Author)

Odette School of Business - University of Windsor ( email )

401 Sunset Avenue
Windsor, Ontario N9B 3P4

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