Thoughts on startups by investors that
fund them & entrepreneurs that run them

Do most angel investors make money?

The reality is that results in angel investing tend to bifurcate:

“Professional” angel investors, who are investing calmly, steadily, relatively-rationally, over a long period of time and with a strong knowledge of both investment math and early stage realities, tend to not only make money, but do quite well: the average return for a comprehensive, well-managed angel portfolio is between 25% and 30% IRR.

On the other hand, the large majority of self-described “angel investors”, both domestically in the US and internationally, would not fall into this category. That is because they are either new to the field, not taking it seriously as a financial business, not in it for the long haul, or not willing to continue investing until they have a fully diversified investment portfolio. For those people, returns tend to be flat to mostly negative.

*original post can be found on Quora @ : http://www.quora.com/David-S-Rose/answers *

Written by David S. Rose

user David S. Rose Founder and CEO,
Gust

David has been described as "the Father of Angel Investing in New York" by Crain's New York Business, & a "world conquering entrepreneur" by BusinessWeek. He is a serial entrepreneur & Inc 500 CEO who chairs New York Angels, one of the most active angel investment groups. David is also CEO of Gust.

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Comments

2 thoughts on “Do most angel investors make money?”

  1. Batman says:

    David – this doesn’t surprise me. When you look through what most investors are expecting as a return – 10x to 30x their investment in a few years – it looks more like someone buying lotto tickets. I don’t seem to have run into the ones that are happy with a paltry 25 to 30%!

  2. Dave says:

    Where can I find a good definition of IRR (internal rate of return)?