Positive Impact of Angel Investors on Your Start-Up = 23% Higher Success Rate

I am currently fundraising for 10 companies through my Dental Venture Capital group, and although we have raised over $4m in funding this past year, it isn't easy. Angel investors is the best way to go and companies that get Angel investors are more likely to succeed.

Firms backed by angel investors have a 23% higher chance of successfully exiting the startup phase than otherwise comparable firms without such support.

Angels are friends, family, members of the dental industry (strategic), and other wealthy individuals who are often actively involved in the startups they back. Angels are typically not professional investors.

Angels have surpassed venture capitalists as a funding source for startups in the United States, and they are a great way to get started. Angels are estimated to have deployed $25 billion in capital each year.

Across the hundreds of pitches I have seen, the question almost always comes up: "How much has been invested so far?" I respect bootstrappers and self-funders, as do most VCs, but angels are second on the list and are crucial for attracting outside venture capital funding. Securing Angel funding is critical to raising additional rounds.

Angel investors fund early-stage entrepreneurs and serve as mentors or outside directors of startups. They are often more idiosyncratic than venture capitalists and uniquely focused on the firms they back. Often, the Angels are family members with a vested interest in your success, or dentists who simply want to get involved in something other than dentistry. Venture Capital typically comes in when there is $500k or more in ARR.

According to research by Josh Lerner, Antoinette Schoar, Stanislav Sokolinski, and Karen Wilson presented in The Globalization of Angel Investments: Evidence across Countries (NBER Working Paper 21808), angels are beneficial to the growth, performance, and survival of startups. Angels are often the first customers of the startup.

Angel-backed companies are at least 14 percent more likely to survive for 18 months or more after funding than firms that do not. Angel-backed firms hire 40 percent more employees, and angel backing increases the likelihood of a successful exit from the startup phase by 10 percent, to 23 percent.

Firms that have attracted a high level of interest among angel investors were more likely to grow, issue patents, win new rounds of funding, and have a successful exit from the startup phase.

The researchers suggest that firms seem to "self-censor" when they apply to angel groups in less venture-friendly markets, reflecting that angel investors themselves are more risk-averse or less experienced in assessing very early-stage investments.

Having a robust angel community appears to be an important predictor of startup success. The researchers conclude, "the positive impact of angel financing on the development of portfolio firms remains consistent across the nations...regardless of the level of venture activity and the entrepreneur-friendliness of the environment."

So go recruit your dentist and your friends in the dental industry to invest in you!!! Or, better yet, hire us at Dental Venture Capital, and we can help you run the investment pipeline and load you up with 14k investors from our database and 50k dentists who are engaged in funding outreach.