卡托研究所-財富如何推動增長：天使投資的作用（英）-2021.9-44正式版

P

O

L

I

C

YA

N

A

L

Y

S

I

SSeptember29,2021Number921HowWealthFuelsGrowthTheRoleofAngelInvestmentByChrisEdwardsEXECUTIVESUMMARYTspacetravel,andmanyotherindustries.heroleofwealthintheeconomyisthefocusofmuchpolicydebate.Thisstudyexamineswealthyindividualsas“angel”investors,whofundstartupbusinesses.Angelinvestorspro-Somepolicymakerscomplainthatwealthypeopleandbigcorporationsrigtheeconomyanddenyopportunitiestoothers.Butwealthyangelsdotheopposite:theyfundstartupsthatpryopenriggedindustriesandgeneratecompetition.Thebestcheckonbigcorporationsisvigorouscompetitioninderegulatedmarketsfromwell-fundedstartups.videauniquesourceofsupportforAmerica’sentrepreneurs,particularlyinleading-edgeindustries.ManypeoplearefamiliarwiththeideaofangelinvestorsfromthetelevisionshowSharkTank.Astheshowportrays,angelsprovidetheirmoney,effort,andexperiencetohelpnewbusinessesgrow.Manyofthemostsuccessfulbusi-nessesinAmericanhistorygotoffthegroundwiththehelpofangelinvestors.Angelinvestmentiscrucialtotheeconomy,buttherearestormcloudsinWashington.Democratsareproposingtosharplyraisecapitalgainstaxes.Ifappliedtostartupinvesting,thatwouldkillincentivesforangelsandstarvecashfromthevirtuouscycleintechnologyhubsofsuccess-fulinvestorsandentrepreneursgeneratingwealthandthenplowingitbackintonewbusinesses.Today,thereare335,000wealthyangelsacrossthenationwhotakelargeriskstofundadiversityofstartupbusinesses.Angel-backedstartupsoftenpioneerbreakthroughproductsandtechnologiesthatcreatebroad-basedbene?tstosociety,arolethatgoesbacktotheIndustrialRevolution.Youngcompaniesfundedbyangelsaremakingadvancestodayinbiotechnology,energy,transportation,?nancialservices,Americaneedsdiversesourcesoffundingforinnovativebusinesses,andwealthyindividualsareacrucialsource.Wealthiscentraltothenation’sentrepreneurialecosystem,whichhasspawnedsomanygreatcompaniesandadvancesoverthedecades.CHRISEDWARDSisdirectoroftaxpolicystudiesattheCatoInstituteandeditorofDownsizingG.WEALTHISBUSINESSOWNERSHIPPeoplecomplainthatwealthis“concentrated.”Butintermsofhowitisused,wealthisdispersedacrosstheecono-myinproductivebusinessassets.Bezos’swealthre?ectscapitalinAmazon’svastoperations,whichemploymorethanamillionpeople.Withoutcapitaltosupportthem,thoseworkerswouldnothavetheirjobsandbillionsofAmazonpackageswouldnotbedelivered.A2019WashingtonPosteditoriallamentedthe“ever-higherconcentrationofnationalwealthatthetop.”1Thatsameyear,NewYorkTimescolumnistPaulKrugmanwrotethatweare“l(fā)ivinginaneraofextraordinarywealthconcentratedinthehandsofafewpeople.”2Duringthe2020campaign,presiden-tialcandidateJoeBidensaid“nooneissupportingbillion-aires”andSen.ElizabethWarren(D-MA)advocatedhighertaxesto“addressrunawaywealthconcentration.”3Wealthisconcentratedbysomemeasures.4Thetop1percentofthewealthiestAmericansown32percentofU.S.householdwealth.5Butthatstatisticdoesnottelluswherethewealthcamefrom,whatitconsistsof,orhowitisused.Wheredoestopwealthcomefrom?IntheU.S.economy,thewealthiest1percentofhouseholdsmainlyearntheirwealthfromworkandentrepreneurship.About70percentofthesewealthiestAmericansareself-made,ratherthaninheritingfortunes.6Also,74percentofthemownabusi-ness,comparedto13percentofallhouseholds.7“Mosttopwealthconsistsofbusinessassets,notpersonalassets.”SenatorWarrensaid:“Thetop0.1%offamilies—therich-est1in1,000—nowhavenearlythesameamountofwealthasthebottom90%ofAmericanfamiliescombined.Mean-while,foreveryoneelse,opportunityisslippingaway.”12ButwithhisAmazonassets,Bezosisgeneratingjobopportuni-tiesformanypeoplewhileservingmillionsofconsumers.Bezos’swealthismainlypublicequity,butwhataboutprivateequity,whichisthelargestpartoftopwealth?OneofthelargestprivatecompaniesinAmericaisthefoodconglomerateCargill,basedinMinnesota.TheCargillandMacMillanfamiliesown90percentofCargill,whichhasannualrevenuesofabout$115billion.13ThesefamilieshavebuiltCargilloverdecades,creatingopportunitiesforwork-ersinthefood,agriculture,andtransportationindustries.ManypoliticiansseemtothinkthatwealthandWhatdoestopwealthconsistof?Somepeopleseemtothinkthatbigfortunesconsistofpersonalconsumptionassets.Indiscussingherproposedwealthtax,SenatorWarren’swebsitesays,“Considertwopeople:anheirwith$500millioninyachts,jewelry,and?neart,andateacherwithnosavingsinthebank.”8Mediaarticlesonwealthyindividualsoftenfocusonthevalueoftheirpersonalassets,suchashomes.However,mosttopwealthconsistsofbusinessassets,notpersonalassets.Lookingatthetop0.1percentoftherichesthouseholds,36percentoftheircombinedwealthisequityinprivatebusinessesand33percentisequityinpubliclytradedbusinesses.9Another23percentisdebt,pensions,andotherassets,muchofwhichultimatelyconsistsofcapitalinbusi-nesses.Just8percentofthisgroup’swealtharetheirhouses.Thus,thegreatmajorityoftopwealthconsistsofbusinessassets,whichsupporteconomicgrowth.workers—capitalandlabor—areenemies.ButthecapitalassetsonCargill’sbalancesheetofabout$60billionenablethecompanytoemploy155,000people.LikeCargill,manylargeprivatecompaniesinAmericahavebeenbuiltovergenerationsasfamilieshavestewardedproductiveassets.Sometimesanentrepreneurbuildsalargeprivatebusinessonlytohavesubsequentfamilygenerationsmismanagethebusinessanddissipatethewealth,butthereisnothingadmirableaboutthat.Lookingjustatbillionaires,theconsulting?rmWealth-Xestimatesthatjust2percentoftheirfortunesconsistofhomes,yachts,jewelry,cars,andotherluxuryassets.10ConsidertherichestmaninAmerica,JeffBezos.Hishomesareworthabout$500millionormore,butthataccountsforlessthanabout0.3percentofhistotalwealthofabout$180billion.11ThegreatmajorityofBezos’swealthconsistsofhisownershipshareofAmazon,acompanyhefoundedinhisgaragein1994.FrencheconomistThomasPikettyhasclaimedthat“pastacertainthreshold,alllargefortunes,whetherinheritedorentrepreneurialinorigin,growatextremelyhighrates.”14Thatisnottrue.Wealthintheformofbusinessownershipdoesnotgrowunlessitisnurturedbysoundmanagement,carefulinvestment,andongoinginnovation.152Wealthintheformofbusinessownershipisalwaystenta-tiveandsubjecttochange,asitrepresentsanestimateofthepresentvalueofdiscountedfuturenetearnings.Everypri-vateandpubliccompanyinAmericacouldbeundercutbycompetitionorchangingtastesatanytimeandthenplungeinvalue.InJuly2021,thestockmarketsaidthatUberwasworthabout$92billion,butthecompanyhasbeenlosingmoneyandwillbeworthlittleifitcannot?gureouthowtoearnconsistentpro?ts.Startupsareexperiments.Entrepreneursmakebetsabouttechnologiesandconsumerdemands,andtheyadjusttheirplansastheygo.Yet,despiteallthetime,effort,andmoneyputintolaunchingstartups,halfofnewcompaniesgooutofbusinesswithin?veyearsandabouttwo-thirdswithin10years.18Nobodyknowsinadvancewhichideasandproductswillsucceed,soweneedasteadystreamofentrepreneurslaunchingavarietyofnewven-tures.EconomistJohnHaltiwangerandcolleaguesnoted,“Inthe?rstyearsfollowingentry,manystartupsfail...butthesurvivingyoungbusinessesgrowveryfast.Inthisrespect,thestartupsareacriticalcomponentoftheexperi-mentationprocessthatcontributestorestructuringandgrowthintheU.S.onanongoingbasis.”19Inmarketeconomies,oldwealthisoftenindeclineasnewwealthisbeingcreatedbyentrepreneursstartingandgrow-ingbusinesses.Allbusinessesbeginsmall,andmostremainsmall.However,alimitednumberofthemwillbecomefast-growing“gazelles”andultimatelygrowintolargecorpora-tions.Thegrowthofgazellesisoftenkick-startedbyangelinvestment,venturecapital,oracombinationofthetwo?nancingsources.Thefocusofthisstudyisangelinvest-ment,butbothsourcesofequity?nanceplayanimportantroleinfuelinggrowthinpromisingyoungcompanies.AngelInvestmentandVentureCapitalNewbusinessesneedfundstolaunchandgrow.Entre-preneursoftentapintotheirsavings,borrowontheircreditcards,borrowagainsttheirhomes,orsellsomeoftheirbelongingstoraisecash,whichiscalledbootstrapping.SteveJobssoldhisVWvantoraisecashforthelaunchofAppleComputerin1976.LenBosackandSandyLernermortgagedtheirhomeandranuptheircreditcardstogetnetworkhard-warecompanyCiscoSystemsoffthegroundin1984.20Moststartupswillremainsmallbusinessesthatservelocalornarrowmarkets.These?rmsmaynotneedoutside?nancing,perhapsasidefromsmallloansfromfriends,fam-ily,orlocalbanks.Alternatively,somestartupsgrowintolargecompaniesovertimebyrelyingonreinvestedpro?ts,notoutside?nancing.“Everyyear,about8percentofbusinessesshutdownandmillionsofjobsarelostfromtheclosures.”Thefollowingsectionsdescribethebasicsofangelinvest-mentanddiscusshowangel-fundedcompaniesgenerateinnovationandcompetition.Angelssteertheirwealthtounprovenproductsandtechnologies,andsomeoftheirriskybetsultimatelybecomelargebusinessesandcornerstonesoftheAmericaneconomy.However,ashareofstartupandyoungbusinessesneedout-sideequity?nancing.Theydonothavesuf?cientcash?owtopayinterestonloans,andtheymaynotbeeligibleforloansbecausetheyhavefewhardassetsforcollateralanddonothaveatrackrecordofstablerevenues.Furthermore,themainassetsofsomestartupsareintellectualproperty,whichisnoteasyforpotentiallenderstoevaluate.Inthesecircumstances,equity?nancingisneeded.Afterinitialbootstrapping,AppleandCiscobothreceivedoutsideinjectionsofequity.FUNDINGNEWVENTURESTheAmericaneconomyishugelydynamic.Everyyear,about8percentofbusinessesshutdownandmillionsofjobsarelostfromtheclosures.16Fortunately,entrepreneursarecontinuallycreatingnewbusinessestoreplenishjobsandincomes.Indeed,startupbusinessescreatemostnetnewjobsintheeconomy.17Withoutthosestartups,andwithoutsomeofthestartupsbecominggazellesandgrowingquickly,theU.S.economywouldshrinkinapermanentrecession.Fortechnologystartups,equityfundingmakessense.HarvardBusinessSchoolprofessorTomNicholasnotes,“Becauseresearchanddevelopmentishighlyintangibleandtendstobespeci?ctothe?rminwhichitisbeingused,it3haslimitedliquidationvalue.Asageneralrule,theuseofdebttendstodecreasewithassetintangibility.”21Also,intechnologyindustriestherecanbealargeinformationgapbetweenanentrepreneurandapotentialfunder.Afunderwillneedacloseassociationwiththeentrepreneurtoclosethatgap,whichisarolethatangelsandventurecapitalists(VCs)specializein,butthatbanksandstockexchangesdonot.AngelsandVCsusestaged?nancing—parcelingoutfundingovertime—toreducetheinformationgapandkeepentrepreneursfocusedandaccountable.offering(IPO)downtheroad.AnacquisitionorIPOcreatesan“exit”forangelandVCinvestors,whooftenusethepro-ceedstoinvestinnewstartups.Onepoolofwealththat?owsintostartupsandgrowthcompaniescomesfrom“familyof?ces.”Thesearebusinessstructuresthatmanagetheinvestmentsofwealthyfamilieswithgenerallymorethan$100millionofinvestableassets.Therearemorethan2,000familyof?cesintheUnitedStates,andaboutfour-?fthsoftheminvestinprivateequity.29Thisstudyfocusesonangels,butangelandVCinvestmentareinterconnected,particularlyintechnologyindustries.30AnexpertatVCdatacompanyPitchBooknotedthatangelsare“akeypieceoftheVCecosystem”andthat“angelsandVCshaveasymbioticrelationship.”31Angelsgenerallyfundearlierstagesofcompanygrowthwithsmallerinvestments,whileVCsfundlaterstageswithlargerinvestments.Angelsusetheirpersonalwealthtoinvestdirectlyinstartups,whereasVCsarestructuredaslimitedpartnershipsandraisefundsfromwealthyindividuals,familyof?ces,corpora-tions,pensionfunds,universityendowments,andfounda-tions.Overthepastdecade,VCinvestmenthasaveraged$91billionayear,butitspikedto$166billionin2020.32Angelinvestorsprovidehands-onequity?nance.Theyprovideentrepreneurswithfunding,mentorship,andaccesstotheirbusinesscontacts.Theyoftenhaveindustryexpertiseandcanhelpyoungcompaniesraiseadditionalfunding.Inhisbookonangelinvesting,JasonCalacanissummarizedthefourinputsofangelsas“money,time,network,expertise.”22Thereare334,680activeangelinvestorsintheUnitedStates,accordingtotheCenterforVentureResearch.23A2019surveybytheAngelCapitalAssociationfoundthattwo-thirdsofU.S.angelshavebeenentrepreneursthemselves,andthree-quartersareoverage50.24Atypicalangelputsabout10percentofhisorherwealthintoangelinvestment.25Awell-regardedsurveyonentrepreneurshipfoundthat5percentofU.S.adultsareinformalfriendsandfamilyinves-torstostartups.26Thus,roughly10millionAmericansmaybeconsideredinformalangels.ButinthisstudyIfocusonthesmallergroupofwealthyandprofessionalangelinvestors,thetypeincludedintheCenterforVentureResearchestimate.U.S.angelinvestmentwas$25billionin2020.27Angelsinvestedin64,480companies,withanaverageinvestmentof$392,025.28Thatyear,36percentofU.S.angelinvestmentwenttohealthcareandbiotechnology,23percenttosoftware,andmostoftheresttoenergy,?nancialservices,andretail.Thegoalofmanyangelinvestorsistosupportstartupsthatwillbecomegazellesandgrowrapidly.Somefamousangel-fundedstartupsthatgrewintolargecorporationsincludeAppleComputer,Amazon,Facebook,Google,Uber,HomeDepot,Costco,andStarbucks.“Somefamousangel-fundedstartupsthatgrewintolargecorporationsincludeAppleComputer,Amazon,Facebook,Google,Uber,HomeDepot,Costco,andStarbucks.”AdifferencebetweenangelandVCinvestmentisthegeographicdispersion.Angelsareineverytownandcityandusuallyinvestinstartupsclosetohomesothattheycanadviseandmonitorentrepreneurs.Venturecapitalistsaremoreconcentratedininnovationhubs,suchasSiliconValley.Morethanone-thirdofAmericanVCinvestmentgoestoSiliconValley,whereasonlyabout17percentofangelinvestmentgoestoCaliforniaasawhole.33Infast-movingindustries,gazellesneedoutsidefund-ingtoscaleupoperationsandgainamarketpresencewithanewproductorinnovation.Gazellesoftenreceive,insequence,personalfunding,thenangelfunding,andthennumerousroundsofventurecapitalfunding.Ifabusinesssucceeds,itmaybeacquiredorgopublicinaninitialpublicBothangelandVCinvestmentare“patientcapital,”butangelsareevenmorepatientthanVCs.Angelsoftendonotseeareturnontheirsuccessfulinvestmentsfor5to10years,andallthewhiletheyareworkingwithentrepreneursto4achievesuccess.34Angelinvestmentsarelongterm,risky,andhighlyilliquid.Itisonlypeoplewithsubstantialwealth,time,andexpertisewhocan?llthisuniqueroleintheeconomy.theriskthatanangel-fundedcompanywillnotbeabletoattracttheVCfundingitmayneedinthefutureforittocontinuegrowing.Politiciansandthepublicunderappreciatethehugerisksthatentrepreneursandangelinvestorsface.Mostpeopleareawareonlyofthecompaniesthatbecamelargeandsuccess-ful,notthehugegraveyardofstartupsthatfailed.38Today’sbigretailandtechnologycompaniesseemto?llobviousconsumerneeds,butcompaniesareneverasurethingwhentheyarelaunched.“Angelinvestmentsarelongterm,risky,andhighlyilliquid.Itisonlypeoplewithsubstantialwealth,time,andexpertisewhocan?llthisuniqueroleintheeconomy.”Music-streaminggiantSpotifywasalongshotwhenitwaslaunchedin2008.Oneexpertnoted:“Mostinves-torsdidn’twanttotouchit.Themusicindustrywasrisky,hadrazor-thinmargins,andopenedaworldofheadachesinnegotiatingwithindustryexecs.”39TherewereworriesthatSpotifywouldfacecopyrightissues,whichhadkilledNapster.Fortunately,awealthyHongKongangelandaVC?rmtookachanceontheSwedishstartup.40Considercurrenteffortstoimprovebatterytechnologies,whichisacentralchallengetoimprovingtheperformanceofelectricvehicles.Enovix,foundedin2007andbackedbyangelT.J.RodgersandVCcompanies,isjustnowgoingpublicandisexpectingtomakeits?rstcommercialbatterysalesnextyear.35Meanwhile,QuantumScapewasfoundedin2010andbackedbyangelBillGates,Volkswagen,andVCcompanies.Itispursuingarevolutionarydesignforsolid-statebatteries,whichwouldhavefasterchargingandreduced?rerisksthanexistingbatteries.TheWallStreetJournalnotes,“QuantumScape’sinvestorsareplayingaverylonggame.Thebusinessplandoesn’tenvisagemeaningfulrevenuesbefore2026.Thereisalsonoguaranteethatthecompany’ssolutionwillwinoutoverthoseofToyotaandothers.”36Thatispatientcapital.WhenGooglewasastartup,numerousVCsturneddownthechancetoinvest.Google“wasbynomeansasure-shotinvestmentin1999.Thesearchalgorithmspacewasalreadycrowded”atthetime.41Similarly,someVCspassedonthechancetoinvestinAirbnb.42Inthe1970s,AtarifounderNolanBushnellturneddownthechancetobeanangelinvestorinAppleComputer,eventhoughSteveJobshadbeenanemployeeofhis.43AsforAtari,Bushnellsaysthatwhenhediscussedhisstartupplanin1972,“peoplethoughttheideaofplayinggamesonatelevisionsetwasthestupidestideathey’deverheardof.”44ButAtarimadeBushnellwealthy,andheputthatwealthtogoodusebybecomingaserialentrepreneur,includinglaunchingtheChuckE.Cheeserestaurantchain.Asawealthyangel,JasonCalacaniswritesthatheturneddownanoffertoinvestinTwitterasastartupbecausetheappseemed“inaneandpointless.”45Hesaysthatasapioneerofblogging,hedidnotinitiallyseeanybene?tinTwitter’sshortmessages.Hesaysofthestartupsthatangelsinvestin,“Ifthesebusinessesdidn’tlookcompletelycrazy,theneveryonewouldwanttoinvestinthemandtherewouldbenoneedforangels.”46Calacanisinvested$25,000inUberearlyon.HediscusseshowheinvitedUberleaderstopresentatanangelforuminSanFranciscotoraisefurtherfunding.47MostangelsattheforumpassedupthechanceastheysawnofutureinUber,whichatthetimeoperatedinasmallnichemarket.RisksandRewardsAngelinvestorsfacemanyrisks.Thestartupstheyinvestinmaymisjudgeconsumerdemands,theirproductsmaybefaulty,orcompetitorsmaybeatthemtomarket.Angelsalsofacerisksthatentrepreneurshavepoormanagementskills,leavetheirstartups,orthattheyhidebadnewsoractunethically.37AngelandVCinvestorsinthehigh-?yingblood-testingcompanyTheranos,forexample,discoveredtoolatethatthecompany’sfoundersappeartohavepulledahugefraud.AngelinvestmentisgenerallyhigherriskthanVCinvest-mentbecausecompanieshaveshortertrackrecordswhenangelinvestmentsaremade.Theguidancethatangelsprovidetoyoungcompanieshelps“de-risk”themforlaterVCinvestment.Angelsalsoface?nancingrisk,whichmeans5HenotesthatearlyinvestmentinYouTubewasalsoariskybetbecausethecompany“wasburningmoney,hadcomeafteradozenpreviousfailuresdoingthesamething,andhadmassivelegalrisk.”48AsforTesla,Calacaniswrites,“ElonMuskwasdelusionaltothinkhecouldupendthecarindustrybygoingelectric.”49ButTeslahasdrivenitselftothefrontoftheelectriccarindustry,aheadofexist-ingmajorcarproducers.manyfailedinvestments.Thesamepatternisevidentintheventurecapitalindustry.TheruleofthumbinVCisthatabouttwo-thirdsofinvestmentsfailtoproduceareturn,andthatisaboutwhatthedatashow.53Inrecentyears,aver-ageVCinvestmentreturnsappeartohavefallenfromthehighlevelsofthe1990s.54AnotherresultfromtheWiltbankandBrooksstudyneedsstressing.Theaverageholdingperiodforangelinvestmentstheystudiedwas4.5years,buttheexitsonthebiggestsuccessesoftentookabout10years.Therarebigwinsfromangelinvestmentoftentakeadecadeofefforttopayoff.Toreducerisks,angelsperformextensivescreeningandduediligenceoncompaniesbeforetheyinvest.UnlikethequickdecisionsportrayedbytheangelsonSharkTank,theseactivitiesareverytime-consuming.50Despitetheirbestefforts,angelstypicallylosemoneyonmorethanhalfoftheirinvestments.Theycandiversifybyinvestinginnumerousstartups,butscreeningandduediligenceissotime-consumingthatitisdif?cultforangelstodiversifysuf-?cientlywhentheyinvestalone.TrendsinAngelInvestmentAngelinvestmenthaschangedinrecentdecades.Becauseofthehighrisks,themoreinvestmentsanangelmakes,themorelikelytheywillearnpositivereturnsoverall.Forthatreason,angelinvestmenthasbecomemorenetworkedandstructured.About400regionalangelgroupshavebeenformedacrosstheUnitedStatestomakejointinvestments,upfromjust10suchgroupsinthe1990s.55“Inangelinvestment,asmallshareofthebetsproducebigwins,andthosebigwinsneedtocoverthelossesonthemanyfailedinvestments.”Angelgroupsallowinvestorstopoolfundsanddiversify,tolearnfromeachother,andtoef?cientlyscreencompaniesandperformduediligence.Also,angelgroupswithpooledresourcesarebetterabletoprovidefollow-oninvestmentsingrowingcompanies.Thegroupsareamajordevelopmentinimprovingthe?owofriskcapitaltoyoungcompanies.Anotherdevelopmentistheriseofonlineangelinvest-mentplatforms.AngelList,SeedInvest,Gust,andotherplatformshelpmatchstartupswithangels.AngelListisdesigned“tomaketheinvestmentprocessmoretranspar-entforangelinvestorsandentrepreneursthroughanonlineplatform.Sinceits2010launch,1,040startupshaveraised$445millionfromangelinvestors.”56Withsuchhighrisksandlargetimedemands,whydoangelsdoit?Whydon’ttheyjustputtheirwealthinastockindexfund?Angelsoftenhaveastrongdesiretomentoryoungentre-preneurs,andtheyseetheirrolepartlyasasocialmission.Theywanttoearnhighreturns,buttheyalsoenjoytheexcite-mentofnewventuresandwanttocontributetoinnovation.Wedonothavegreatdata,butitappearsthatangelsoverallearnpositivereturns.A2007analysisbyRobertWiltbankandWarrenBoekerexaminedreturnson1,137angelinvestments.51Theyfoundthat52percentproducedlosses,whilethebest7percentproduced75percentoftheoverallreturns.A2017analysisbyWiltbankandWadeBrooksexaminedreturnson245angelinvestments.52Theyfoundthat70percentlostmoney,while10percentproduced85percentoftheoverallreturns.Theoverallaveragegrossrateofreturnacrossinvest-mentswas22percent.Arelativelynewsourceoffundsforentrepreneursis“crowdfunding,”whichissmall-dollarinvestmentsmadethroughinternetplatforms.Kickstarterlaunchedin2009andhaspumped$6billionfrom20millionpeopleintomorethan200,000projectsandcompanies.57BetsyMikesellandAngieWhitehadanewideaforbunkbedsheets.In2014,theyraised$108,000onKickstartertolaunchtheirbusiness,calledBeddy’s.58Thebusinesssucceededandnowgener-ates$7millioninannualsales.PhilosophyprofessorDavidBarnettraisedmoneyonKickstarterin2012todevelophisInangelinvestment,asmallshareofthebetsproducebigwins,andthosebigwinsneedtocoverthelossesonthe6smartphoneaccessoryPopSockets.Hehassoldmorethan200millionunitsoftheproduct,whichpeoplelaughedatwhenhe?rstproposedit.59andotherbusinessleadersbuilttheAmericaneconomy.However,angelinvestorsplayedkeysupportingroles.AsTomNicholasnotesinhishistoryofriskcapital,“SomeofAmerica’sleadingentrepreneursandtechnologistsowedtheirstarttowealthyindividualsproviding?nanceforinvestmentandexpansion.”65Othernewfundingoptionsforstartupsincludeinitialcoinofferingsandexoticblendsofdebtandequity.60Andtherearenewinstitutionstoaidstartups,includingincubatorsandaccelerators.Theformerprovideof?cespace,adminis-trativesupport,andadvisoryservicestostartupsforperiodsofuptotwoyears.Thelatterprovideintensi?edsupportandusuallymakeequityinvestmentsinstartups,butoffersup-portforshorterperiodsthanincubators.YCombinatorinSiliconValleyhousedAirbnbin2009andprovided$20,000inexchangefor6percentofthecompany’sequity.61HenryFordcofoundedFordMotorCompanyin1903withangelinvestorAlexanderMalcomson,whohadearnedhiswealthasaDetroitcoalmerchant.66HisinvestmentinFordwasagamblebecausemostautomobilecompaniesatthetimefailed.67Indeed,Ford’s?rstautomobilestartupfailed,andhelefthissecondstartup.Fortunately,FordMotorCompanysuc-ceeded.HenryFordintroducedhisModelTin1908andearnedafortunebycontinuouslycuttingthecar’spriceandexpand-ingsalestothebene?tofmillionsofconsumers.“HenryFord,SteveJobs,andotherbusinessleadersbuilttheAmericaneconomy.However,angelinvestorsplayedkeysupportingroles.”GeorgeEastmanwasabankclerkinthe1880s,andinhissparetimeexperimentedwithphotography.Hequithisjobandlaunchedaphotographycompanyin1888witha$6,000angelinvestmentfromHenryStrong,whohadgainedwealthbymakingbuggywhips.68Thestartup