Methodology
We are creating an index or ranking of the top “Angel Investors” or “Business Angels” in the world. A solid methodology is crucial to ensure objectivity and relevance.
Methodology
Disclaimer:
All information presented in our ranking has been obtained from public sources. The company is not responsible for any incorrect data or the use of this information by third parties. Any personal data that may be used in the ranking can be removed upon request. In free form to the following e-mail: oskar@areteangels.com
Step 1. Collecting data:
We started by creating a comprehensive, global list of angel investors, including angels with at least one unicorn in their portfolio. We used public databases, open sources, blog posts, news articles, industry reports, surveys, and other interviews not only with the angels themselves, but also with startup founders (also unicorn founders) to identify potential candidates.
See more about the sources in the appendix.
Step 2. Defining and establishing criteria:
We defined some main criteria against which angel investors will be evaluated.
Including:
– The number, amount and success of their investments:
1. Investment success rate: takes into account how many successful exits and the growth of invested companies.
2. ROI and exit valuations: The return on investment or the increase in the lifetime investment value compared to the initial capital invested.
– Ability to support startups (unique criteria for our evaluation):
1. Strategic Support: How much additional support (strategic and operational) an investor provides to startups beyond financial assistance. This could be in the form of networking/introductions, advice, or industry experience.
2. Company development and growth: The investor’s impact on the growth and development of the invested companies. Criteria such as revenue growth, employee growth, and market penetration could be considered here.
3. Mentoring and coaching: The level of personal guidance, mentorship, and coaching an investor offers to founders to strengthen their entrepreneurial skills and guide the companies to success.
– Early-stage Risk Appetite:
The investor’s willingness to invest in very early stages, where risk is particularly high, and early support can be crucial for the success of a startup.
– Industry focus:
Industry-specific expertise: Investments and successes in specific industries or technologies. An investor specializing in new, hot technologies, like AI, for example, might be particularly relevant for a ranking.
Step 3. Peer Review, Outreach and Surveys:
We also take into consideration the opinions of experts (primarily our GPs and LPs and other partners), investors and thousands of founders. We conduct surveys and interviews to gain qualitative insights into the impact and influence of angel investors.
Step 4. Weighting and Aggregation:
We assign a weight to each evaluation criterion, depending on how important it is for the overall evaluation. Then we aggregate the scores to create a ranking.
Step 5. Validation and Review:
We ensure that the results of our index / ranking are validated by professionals to ensure that the methodology is sound and potential bias or errors are minimized.
Conclusion
Creating this index is a complex task and requires careful research and consideration of many factors. It is important for us to include unique criteria that can help capture and evaluate the diversity of impact and engagement by angel investors. These criteria can also contribute to expanding the ranking to encompass social and far-reaching implications of investor engagement.
Finally, it is important to update the ranking regularly to reflect the changing investment landscape and new investor successes. The index will be updated on an annual basis.
Appendix
More About Sources of Information and Data:
1. Investment fund reports and databases: Valuable public resources (Pitchbook, Crunchbase, CB Insights, Dealroom, Preqin…) are used to gather information about investments, fund performance, and specific investments made by individual angel investors.
2. Company valuations and exit data: Public platforms and open sources (see above) are used to provide information about company valuations and exits,offering insights into the success of investments.
3. Industry-specific reports and data sources: Reports from industry associations, research firms, and specialized data providers could be valuable for evaluating industry-specific successes and expertise.
4. Case studies and reports on strategic support: Insights into the strategic impact of investors can be gathered from interviews and autobiographical accounts of company founders as well as insights into the impact of support and guidance provided by investors.
5. Financial reports and business publications: These sources can provide information about the growth, development, and financial performance of companies in which an investor has invested.
6. Direct interviews and surveys with angels, investors, founders and their teams: E.g. direct insights from company founders who have been, or are currently, supported by a specific investor can offer valuable insights into the personal guidance and performance of an angel investor.
7. Social impact studies and reports: Reports from academics, NGOs, and social organizations can provide deeper insights into the social impact of investors.
8. Diversity and inclusion statistics in the investor landscape: Analysis of diversity and inclusion statistics in investments and portfolio companies based on data from industry initiatives and diversity reports.
9. Technological innovation reports and patent analyses: These sources can offer insights into actual technological innovation and the influence of investors on such developments.
10. Industry reports on early-stage investments: Reports and analyses on the dynamics and success rate of early-stage investments in different sectors can help understand the appetite for risk and the influence of investors.
11. ESG data: Environmental, social, and governance factors. We considered public ESG data and reports on companies in which an angel has invested to gauge the environmental and social impact of these companies.