The largest data set on angel investor financial returns has shown that investors receive, on average, 2.5X return on their money invested.
The interesting thing about this is that there has been suggestions in the past that angels are just unwitting philanthropists as apposed to genuine entrepreneurial investors. however a return of 2.5 times the money invested is entirely competitive with venture capital returns!
There were 3 main findings from this research, summarized below:
- In any individual investment, an angel is more likely to lose money than make a profit. However, once an angel’s portfolio exceeds 6 investments, the median return shows a profit.
- 90% of all cash returns are produced by 10% of exits – essentially the same as in VC investments.
- When all data is aggregated, angels across the US and UK produce a gross multiple of 2.5X their investment, in an average time of 4 years.