Join our Waitlist for Expert Advice!

Survey: 1 in 2 Angel Investors Regrets an Investment Made This Year Entrepreneurs tend to over-promise when pitching their startup at the earliest stages, investors say.

By Catherine Clifford

Opinions expressed by Entrepreneur contributors are their own.

Angel investors sign up for risk. That's part of the game. What really gets them frustrated, though, is being sold unreasonable financial projections and valuations.

Nearly one in two angel investors surveyed by Worthworm, a Scottsdale, Ariz.-based startup valuation company, reported having regretted an investment decision they made this year. The small-sample survey of 100 angel investors was conducted in July by market research firm OnePoll.

Related: Startup Entrepreneurship Growing at an Exponential Rate

Of those angel investors who regretted an investment, almost half report that the problem was pie-in-the-sky financials -- entrepreneurs telling them that their company was going to be worth more than it was or that it would make more money than it ended up making.

To get an angel on board -- and keep him or her happy -- entrepreneurs need to have well thought out financial valuations and revenue projections they can deliver on.

"Our research clearly shows that angels believe the majority of entrepreneurs do not do their homework before stepping through the door," says Alan Lobock, a co-founder of Worthworm, in a statement. "It is imperative that they put themselves in the investor's shoes and prove that they can efficiently scale."

Related: SEC Releases Long-Awaited Rules on Crowdfunding

Only a small percentage of angel investors say they are in the startup investing game for the pure thrill of it. Most angels say they are looking to either diversify their portfolio or are attracted by the potential for a high reward on their investment.

In addition to wanting well-researched and reasonable financial projections, angel investors' other top concerns when deciding where to lay their financial bets also include having a demonstrable sustainable competitive advantage and relevant previous experience on the resumes of the startup team.

Related: Bloomberg Says London, Not Silicon Valley, Is New York City's Top Tech Competitor

Catherine Clifford

Senior Entrepreneurship Writer at CNBC

Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

You Have One Month Left to Buy a House, According to Barbara Corcoran. Here's Why.

"If you are planning on waiting a year and seeing where interest rates go, you are out of your mind," Corcoran said.

Business News

These 3 Side Hustles Make the Most Money While Working Fewer Hours, According to a New Survey

The survey also found that having a side hustle doubled as a path to becoming more employable.

Data & Recovery

Train Your Company to Avoid Costly Data Breaches With This $30 Bundle

Train in the eight domains of CISSP and protect your business from growing cyber threats.

Side Hustle

I Made $14,000 in 1 Week With a Spontaneous Halloween Costume Side Hustle — Here's How

Sabba Keynejad was in art school when he started to refine his entrepreneurial skills.

Franchise

The McRib Is Back, But Only at Select McDonald's — Here's Where to Find It

This scarcity is nothing new. In 2022, McDonald's announced a "Farewell Tour" for the McRib, suggesting that it might be the last time customers could get their hands on it.

Business News

This New Restaurant Is Banking on One Dish — Because It's the Only Entrée on the Menu

The new hotspot is gaining buzz on social media for its innovative yet super simple concept.