Top critical review
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on September 23, 2013
The title, and the cover teaser "The truth behind angel investing in American," create the expectation of exposing some scandalous deception or corruption. It's nothing like that. What it does is expose misperceptions created and perpetuated by the media (due to sloppy reporting, possibly to PR efforts by the VC industry, but not due to some nefarious conspiracy). The author, Scott Shane, calls them "gross misperceptions" in his Introduction, and some of them are gross while others are merely slight distortions.
For example, many articles and authoritative-seeming books create a false impression that angel investors tend to be wealthy (accredited investors). Not true. In fact, 79% of angel investments are made by unaccredited investors. Only about 23% of angel investors have a household income of more than $200,000, and about 32% have household income of less than $40,000 per year.
Contrary to a lot of media coverage of angel investing, only about 23 percent of business angel are retired, only about half of them graduated from college, and the typical (median) angel investment was only about $10,000 in 2004.
More debunking: Studies show that an angel's entrepreneurial experience "is not correlated with his financial returns" from angel investments. From the entrepreneur's point of view, "there is no evidence that getting an angel investment increases the chance of getting a venture capital investment" later.
The book is, in fact, a long series of debunks. It's written like an academic report, not a narrative with anecdotes or war stories, and not with any guidance for would-be investors in terms of how to allocate or conduct due diligence. Most of the data is from studies conducted before 2004, when the financial world was different.