Stairway to heaven?: Rethinking angel investment policy and practice

Angel investing has grown globally across economies, accompanied by growth in both academic and policymaking interest. In this paper, we critically analyse the current state of knowledge about the process and impact of angel investment. We use a series of stylised facts to highlight key trends as well as misperceptions about those trends. These include the rise of formal and ad hoc angel groups, the efficiency of early stage risk capital markets, the complex interaction between angel and institutional venture capital, and policymaking to address perceived capital market failures. We review the emerging literature on angel investment returns and draw on a new simulation-based analysis of tax incentives to challenge the rationale for government intervention in angel investing.