Most angel networks and small funds treat the time it takes them to decide as an administrative matter: a consequence of monthly meetings, volunteer diligence leads and members who travel. From the founder's side it looks different. A founder raising a round is usually talking to several investors at once, and the ones who answer first shape the terms and the timetable for everyone else. A network that takes three months to say yes can find that the round it liked closed without it, and it rarely finds out why.
This piece looks at what the evidence says about how long investment decisions take, where deals are lost along the way, how founders judge investors on process, and why doing less diligence is not the answer.
What the Clock Looks Like
The best public benchmark comes from Paul Gompers, Will Gornall, Steven Kaplan and Ilya Strebulaev's survey of 885 institutional venture capitalists. The average deal took 83 days to close, and the average firm spent 118 hours on due diligence over that period and called 10 references.¹ As our own rough arithmetic, 118 hours is about three standard working weeks, spread across close to twelve calendar weeks, and it may well be split among several people working in parallel. Most of the elapsed time is something other than diligence work.
Angel groups that publish their timelines are in the same range. New York Angels says the average time from application to funding is about two to three months, with some deals closing in a month and a few taking more than three, and its process runs on a monthly screening event.² A monthly cycle sets the pace: a company that applies just after one screening waits for the next before anyone has formally looked at it.
Where Deals Leak
Gompers and his co-authors also asked how many term sheets firms offer for each deal they close. The answer was 1.7, which the authors describe as a close rate of roughly 60 percent, noting that other firms can offer competing term sheets at the same time and that a meaningful number of opportunities that end up funded are not proprietary.¹ Late-stage firms offered 50 percent more term sheets per closed deal than early-stage firms, which the authors read as more competition for later-stage deals and more proprietary deal flow at the early stage.¹
The survey does not say why the other 40 percent of term sheets fail to close; some deals will have fallen apart in confirmatory diligence. But it shows that even after an investor has decided it wants a deal, losing it to someone else is routine. For an angel network the leak is harder to see, because it often happens before any term sheet exists. A company that withdraws its application or closes its round elsewhere just drops out of the pipeline, and unless someone records why, the network has no way of telling a lost deal from a rejected one.
Founders also do not choose purely on price. David Hsu's study of start-ups that received competing offers at their first professional funding round found that offers from high-reputation venture capitalists were about three times more likely to be accepted, and that those firms bought equity at a discount of roughly 10 to 14 percent.³ In other words, founders accepted a lower price to take money from a better-known investor. Reputation is built from many things, and how an investor treats founders during a process is one of the few that a small network fully controls.
Founders Compare Notes
How a network runs its process becomes part of that reputation quickly, because founders talk to each other. In Frontline Ventures' 2022 survey of pre-seed and seed founders, asked to choose between two funds offering the same terms and price, 22 percent put positive references from other founders in their top three factors.⁴ It was not the top factor (understanding of the founder's sector and business led, at 53 percent), but it is a direct channel through which one founder's experience reaches the next applicant.
When TechCrunch asked founders to recommend investors for its 2020 investor list, Danny Crichton read more than 1,200 recommendations and found that responsiveness, how quickly investors replied to emails, texts and phone calls, was the most common description of the investors founders rated most highly.⁵ The submissions were endorsements only, with no negative reviews, so they measure what founders choose to praise rather than a balanced rating. Even so, responsiveness was what set the best-rated investors apart.
Neither source measures decision speed directly, and we did not find a study that does. What they show is that founders notice how an investor behaves and pass it on, which is the mechanism by which a slow process turns into weaker deal flow later.
Hours Versus Elapsed Time
The obvious fix, deciding faster by doing less, runs into the evidence on diligence. In Robert Wiltbank and Warren Boeker's 2007 study of angels in groups, the median due diligence before investing was twenty hours. Investments with diligence above the median returned an overall multiple of 5.9X, against 1.1X for those below it, and investments in the top quartile, with more than 40 hours of diligence, returned 7.1X.⁶ That is a correlation from surveyed investors rather than proof that the extra hours caused the returns, but it is a good reason not to treat diligence as the problem.
The distinction that helps is between hours of work and days on the calendar. Launchpad Venture Group, a Boston angel network, mapped its own process from a founder's point of view, separating time when something useful was happening from time spent waiting, and expressed the result as process efficiency: value-adding time divided by total elapsed time.⁷ Its managing director, Alexander Brown, described the changes in an Angel Capital Association Data Insights mailer (April 2022). The change with the largest effect on the timeline concerned a monthly pre-pitch meeting that added 30 days, so companies that were ready now go straight to the main pitch event. The group also dropped minor checkpoints, scheduled all the meetings up front on the assumption that the deal would go ahead, ran longer activities in parallel rather than one after another, and replaced exhaustive risk review with diligence focused on what needs to be believed for the investment to work. It halved the cycle time from first application to a positive funding decision.⁷ The changes cut the waiting around the diligence rather than the diligence itself.
The Counterpoint
Speed has costs of its own. Pressure to commit quickly is a classic setting for poor decisions, and a network whose members feel rushed may invest less, or follow whoever speaks first. The Gompers data also suggests that competition is weaker at the earliest stages, where more deal flow is proprietary, so a seed-focused angel group may lose fewer deals to slowness than a later-stage fund would.¹ And some founders are better served by a careful investor than a fast one.
These points argue for a predictable process rather than a slow one. Telling founders the timeline up front, as New York Angels does, costs nothing and lets them plan around it.² What hurts a network is elapsed time that nobody chose: a company waiting three weeks for a meeting slot, a diligence lead on holiday, a term sheet sitting unsigned because no one owns the next step.
What to Measure
A network that wants to know what its process costs needs only a few numbers. Record the date a company enters each stage, from application to decision, and track the median number of days at each one. Separate working time from waiting time the way Launchpad did, even roughly. Keep a reason code for every company that leaves the pipeline, and distinguish "we declined" from "they withdrew" and "they closed elsewhere", because the last two are the cost of slowness that otherwise stays invisible. Then check how long the fastest-moving companies, the ones other investors also wanted, spent waiting on you.
Whatever tool a network uses for its pipeline, Pynn included, those figures only exist if stage changes and exit reasons are recorded when they happen; nobody can reconstruct them reliably from email a year later.
Sources
1. Paul Gompers, Will Gornall, Steven N. Kaplan and Ilya A. Strebulaev, How Do Venture Capitalists Make Decisions?, NBER Working Paper 22587, September 2016 (published in the Journal of Financial Economics 135(1), 2020). https://www.nber.org/papers/w22587
2. New York Angels, Investment Process. https://www.newyorkangels.com/investment-process
3. David H. Hsu, What Do Entrepreneurs Pay for Venture Capital Affiliation?, The Journal of Finance 59(4), August 2004. https://repository.upenn.edu/mgmt_papers/29
4. Frontline Ventures, What Founders Want: Results, 2022. https://frontline.vc/report/what-founders-want/results/
5. TechCrunch, Why certain VC investors earn great "Founder NPS" scores, Danny Crichton, 16 July 2020. https://techcrunch.com/2020/07/16/why-certain-vc-investors-earn-great-founder-nps-scores
6. Robert Wiltbank and Warren Boeker, Returns to Angel Investors in Groups, November 2007 (funded by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation). https://www.angelcapitalassociation.org/data/Documents/Resources/AngelGroupResarch/1d - Resources - Research/6 RSCH_-_ACEF_-_Returns_to_Angel_Investor_in_Groups.pdf
7. Angel Capital Association, Data Insights mailer (April 2022): Alexander Brown, Managing Director, Launchpad Venture Group, Applying Analytical Lens to Internal Investment Process. https://www.angelcapitalassociation.org/data/Documents/Data/April_2022_Mailer.pdf