Abstract
We use the angel investor market to examine the effect of performance on the network connectedness of individual angel investors. We collect data on start-ups and angel investors from CrunchBase, the largest crowd-sourced database on start-ups and investors, and AngelList, the leading online fund-raising platform for start-ups. We find that angels that successfully lead a portfolio company to the next financing stage, especially from seed stage to series A stage, experience an increase in both the quantity and quality of their co-investment connections relative to their unsuccessful peers, and are rewarded with more new investment opportunities, both as lead investors and as participants. Success begets more success, making it more likely that other seed-stage portfolio companies of a successful angel also progress to the next financing stage. Finally, successful performance also expands the online followership of angels, and makes it more likely that their existing followers establish a new co-investment connection. Overall, our results highlight that reputation for good performance enhances the network capital of angel investors.
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