Angel Investors follow their instincts not balance sheets

Angel Investors are more likely to follow their intuition than most financial calculations when they decide whether a company would make a good investment or not. This is according to research done by Angels Den. Angels Investors are individuals with a very high net worth who put their money and their knowledge into companies who need funding.

In the Angels Den survey, over 70% of the 50 Angels that were asked said that they would mainly use their ‘gut feel’ to determine the value of a business in its early stage. Every single Angel questioned said they used their ‘gut feel’ to some extent. Lois Cook, the co-founder of Angels Den, said that using intuitive judgment when a company is just starting out and has nothing that a valuation can be based on.

Many Angels also take into account the management team of the company, and how likely they would be able to work with them effectively. But perhaps the most surprising result is that few of the Angels noted that they do not rely on their advisor or accountant to a great extent.

Angels Den co-founder Bill Morrow says that Angels tend to work with “entrepreneurs with passion”, and that personality can play a large role in judging companies. Angels Den, since it launched three years ago, has become one of the largest networks for Angels in Europe and the UK. There are currently several thousand Angels who are registered on the website.