Is this good or bad? True or not true?
For the sake of clarity, I consider an “active” angel to be one who is a “member” of an organized angel group (such as the Common Angels in Boston) and who is actively investing in angel deals in their community or through one of the new online platform such as AngelList.
FYI–I have tackled this subject of accredited households in a previous post, and have had a long standing interest in determining the “numbers” of active angel investors.
However, in my August post, I only used the GAO and SEC studies to determine the approximate number of accredited households in the US, not the actual number of “active” angel investors in the US.
Number of “active” angel investors in the US: 265,000.
Here is where the number 265,000 for active angels is derived–Last week, I read a recent presentation that the Angel Capital Association gave to the SEC at the November 21, 2013 SEC Forum on Small Business Capital Formation. The Angel Capital Association is the preemminent angel investor trade organization in the United States and they are the sister organization to the Angel Resource Institute. They collaborate with Silicon Valley Bank on the Halo Report and they collaborate with the New Hampshire Center for Venture Research. I trust their numbers and their research.
In the presentation (slide 8) the Angel Capital Association gives the number of accredited (“angel” investors) households on a national basis (8.7M—which is on the high end), the number of “active” angels (265,000), and the number of angel investors in formal angel groups in the United States (15,000). The 265,000 “active” angels represent approximately 3% of the overall population of the 8.7M “accredited” households. Interestingly, the above 3% also corresponds roughly with my previous post in which between 3% and 5% of the overall population are “accredited” households.
By coincidence, the Wall Street Journal published a story today about angel investing that uses similar numbers:
“What You Need to Know to Become an Angel Investor”
Since I live in Atlanta, Georgia, we will use Atlanta as an example of these numbers and attempt to postulate how many accredited households are in the state of Georgia and in the city of Atlanta and how many of those accredited investors can be considered “active”.
- 2012 US Population of Accredited households: 8.7M
- 2012 Active Angel Investors: 265,000
- 2012 US Population: 315M
- 2012 Georgia Population: 9.9M
- 2012 Atlanta, Georgia population: 443,775
8.7M/315M = .0276 or 2.76% of the US population are accredited households
9.9M X .0276 = 273,240 accredited households in Georgia
273,240 X .03 = 7,541 “active” angel investors in Georgia
443,775 (Atlanta Pop) X .0276(% of accredited investors) X .03 (Active angels %) = 367
So there you have it. If you are a company looking to raise capital from accredited, “active” angels in the city of Atlanta, Georgia, you have 367 customers.
*I am not a researcher, nor a lawyer nor represent any angel group. I just like to keep up with this fascinating field. Please alert me if you believe my math above is incorrect or my conclusions in error.