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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Exiting the Exit

Below please find a guest column that Nino Marakovic and Elizabeth Clarkson contributed to Fortune Term Sheet, in which they debate what makes for a better exit — an IPO or acquisition?

Everyone in the venture-backed technology industry — entrepreneurs, venture capitalists, and limited partners — can probably agree that a healthy exit market is critical. Without sufficient exits, there would be a liquidity gap, which would negatively impact everyone. Yet not all “successful exits” affect all the players in the venture world the same way. Accordingly, there are different views on the best path to liquidity.

Take IPOs. They’ve historically generated amazing returns for employees and investors — more than M&A exits.

Read more

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