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Strategic Factors Impact The Outcomes
A study on the financial returns of angel investors in North America, released in a report by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation, shows that angel investors participating in organized angel groups achieved an average 27 percent internal rate of return on their investments. The “Returns of Angel Investors in Groups” study was conducted over the past year by Robert Wiltbank of Willamette University and Warren Boeker of the University of Washington. The study analyzed results from 86 organized angel investor groups throughout the United States, involving 539 individual angel group investors who have experienced more than 1,130 exits in which companies that had received the investments were acquired, went public, or were closed. It comprises the largest data set of angel investor exits ever collected. The study also assessed how the following strategic factors impact the angel investors’ outcomes: Due diligence time – Investors experienced better returns in the deals where they exercised more due diligence. Industry expertise – Analysis indicated that expertise has a material impact on angel investors’ returns. Participation – After an angel makes an investment, his or her participation in the venture – through mentoring, coaching, and financial monitoring – is significantly related to that venture’s returns, according to the study. Follow-on investing – Deals where the angel investor made follow-on investments generated significantly lower returns. HBM
The study can be downloaded at www.kauffman.org/angelstudy/ . More information is available at www.angelcapitaleducation.org.
Previously published in the August 2008 issue of HOME BUSINESS® Magazine, an international publication for the growing and dynamic home-based market. Available on newsstands, in bookstores and chain stores, and via subscriptions ($15.00 for 1 year, six issues). Visit www.homebusinessmag.com
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