ANGELS 411 - The 411 On Startups (tm)

Kauffman Foundation Bashes VCs For Poor Performance, Urges LPs To Take Charge

May

2012

The Kauffman Foundation, which has ties to the venture industry, has issued a damning study of the business that addresses long-running concerns about poor performance and concludes that the limited partners who invest in funds have no one but themselves to blame. The report, “We Have Met The Enemy…And He Is Us,” draws on lessons ...

The reality of returns on angel investment

May

2012

A majority of all new, angel-backed companies fail completely, so if you invest in only one company, the odds are that you will LOSE ALL YOUR MONEY, not just “not make a profit”. Several studies and mathematical simulations have shown that it takes investing the same amount of money consistently into at least 20-25 companies before your ...

Study Indicates Follow-on Funding Gives Lower Returns for Angel Investors

Apr

2012

In 2007, Professor Rob Wiltbank reported in Returns to Angel Investors in Groups that angel investors made follow-on investment in about 30% of their invested companies. It was surprising for me to learn that follow-on investments correlated with lower returns, that is, angels that made follow-on angel investments saw returns of 1.4X their investment, while ...

‘Angel’ Investors Exist Outside Tech Elite, Too

Feb

2012

Many “angel” investors, who put their own money into small start-ups at a very early stage, previously worked at technology icons that are known for minting millionaires, like Google Inc. and PayPal. But Silicon Valley’s angel-investor scene is far from homogenous, new data show. AngelList, a San Francisco start-up that connects accredited investors with companies ...

Start an Angel Group – Angel Resource Institute

Aug

2011

As more and more investors and communities recognize the benefits of establishing angel groups, it’s important to have resources that ensure that they don’t have to recreate the wheel. The Kauffman Foundation and ARI have developed tools that will help groups in formation get a quicker and more effective start. This page includes many practical ...

The Venture Capital Math Problem

Apr

2009

This is a post by Fred Wilson of Union Square Ventures. It goes through some statistics on Venture investing and ROI to imply the VC returns model is broken. More interesting are the comments it inspired; those comments have some really good data, freely given.

Venture Capital Exit Times and Return on Investment (ROI)

Dec

2008

Two previous posts: Venture Capital Firms are Too Big and Venture Capital Funds – How the Math Works, described how venture capital investors will want to invest too much and exit only for very high returns.Why are those bad things for entrepreneurs and angel investors? Well, it turns out those can be extremely bad. These ...

Performance Persistence in Entrepreneurship — Venture Success Statistics — HBS Working Knowledge

Dec

2008

All else equal, a venture-capital-backed entrepreneur who starts a company that goes public has a 30 percent chance of succeeding in his or her next venture. First-time entrepreneurs, on the other hand, have only an 18 percent chance of succeeding, and entrepreneurs who previously failed have a 20 percent chance of succeeding. But why do ...

Best Practices for Angel Investors and Entrepreneurs by Basil Peters

Oct

2008

Angelblog is devoted to the development of best practices for angel investors and entrepreneurs. Its goal is to facilitate profitable, fair and enjoyable interactions between angels and entrepreneurs. After being an active angel investor for about fifteen years, I realized that many of the discussions I was involved in were virtually identical to ones I’d ...

The Portfolio Effect: Battery’s Tom Crotty on Why VCs Should Back at Least 25 Companies in Every Fund

Oct

2008

If you build a portfolio of less than 20 deals, and especially if you are an early-stage investor where the industry mortality rate is somewhere in the 50% range and maybe higher, you better be damn lucky on the winners and get more than one with strategic ‘exit’ premiums of 7x or more,’ he said. ...