Data on angel returns

Many people – quite rightly – ask what returns they should expect from angel investment. At this year’s USA angel conference in San Francisco, Scotland’s Professor Richard Harrison from the University of Edinburgh’s Business School gave a thorough data-based overview of angel portfolio returns. 

His key points were:

– annual returns (IRR) vary from 17% to 37%.

– 50 is the magic number as only at this portfolio size does the risk of an IRR of less than 10% fall below 20%.

– for portfolios below 20 companies 30% show a negative IRR but 20% generate returns of over 75%.

His presentation can be found here.

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Start-up investment rewarding but takes time and money

Don’t miss out on NZVIF’s snapshot or our market…  just released today.

It contains a raft of fascinating insights into the NZVIF portfolio. Franceska’s press statement is below and the report is attached. It includes such things as:
•    for every dollar of initial investment 2-4 times is needed for follow-on investment
•    20% of exits have earned the level of investment back or better
•    average hold times for investments are 3 years for angels
•    $1 of public investment leverages $9 of private capital
•    57% of the portfolio (131 angel and 66 venture) were valued under $1m at investment and 27% under $500,000.

Investing in start-ups and young technology companies can be rewarding but investors should not hold high expectations of fast turnarounds in investment gains, according to a New Zealand Venture Investment Fund report released today.

NZVIF’s Snapshot Report says that speedy profitable exits occur occasionally but, in general, investors should take a portfolio approach, be prepared for the long haul, and be well provisioned for follow on investments.

As an example of the latter, the report says that investors making an initial investment of $20,000 into a young technology company should typically expect to make follow-on investments taking their stake to between $40,000 and $80,000.

NZVIF CEO Franceska Banga said that while early stage investing is a high risk investment class – at least four in 10 companies fail – it is enjoying a period of marked growth.

Read more on www.scoop.co.nz

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