Angels or Sharks? The Role of Personal Characteristics in Angel Investment Decisions

Abstract

We use actual negotiations between angel investors and entrepreneurs to study the impact of personal characteristics on investment outcomes. We construct a unique dataset with 707 investment requests led by 1,089 entrepreneurs and find that the personal characteristics of the entrepreneur, including gender, race, and age, are correlated with requested valuations, the likelihood that an offer is received, and the implied valuation when an angel investor extends an offer. Shared personal characteristics between entrepreneurs and investors also affect the likelihood that an investor makes an offer, the entrepreneur accepts an offer, and the implied valuation when an offer is extended.

Keywords: Angel Investors, Entrepreneurial Finance, Venture Capital

JEL Classification: G24, I25, J14, J15, J16, L26, M13