12 Nov National study cites 27 percent on angel investments
Madison, Wis. – A national study released on the eve of the Wisconsin Early Stage Symposium shows that angel investors participating in organized angel groups achieved an average 27 percent internal rate of return on their investments, but it also said investment capital is lost more than half of the time.
The largest study on the financial returns of angel investors in North America was released Monday by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation. Angel investors are high net worth individuals who make equity investments directly into growing companies, usually as the ventures are starting up.
The study concluded angel investors affiliated with angel groups experienced exits that generated 2.6 times their invested capital in 3.5 years from investment to exit. These returns compare favorably to those of other private-equity investments, including early-stage venture capital.
Seven percent of exits generated returns above 10 times their initial investment, but the results also demonstrate the risk inherent in angel investing. In slightly more than half the venture investments, some or all of the study respondents’ investment capital was lost.
“As the largest empirical study of the investment returns of angel investing, it sets a benchmark on returns and performance factors for angel investors connected to angel groups,” said Robert Litan, vice president of research and policy at the Kauffman Foundation.
The “Returns of Angel Investors in Groups” study was conducted over the past year and analyzed results from 86 organized angel investor groups throughout the United States. It was conducted by Robert Wiltbank of Willamette University and Warren Boeker of the University of Washington.
• Medical Cyberworlds closes round of angel funding
• Elevator Pitch Olympics return to Early-Stage Symposium
• Investor warns of angel-venture funding gap