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New research shows angel investors make an average of 14.7% return when investing into startups

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by Startacus Admin

 IRR of angel investing GRAPH


Envestors, the marketplace for early-stage investing, has just announced the results of its research into the Real Returns of Angel Investing.

againFounded in 2004, Envestors has helped more than 200 high growth businesses raise more than £100m through its own private investment club. The business, which has matched £100m+ of investment into over 200 companies, is regulated by the FCA and supports investors with deal flow and full detailed information on every deal via its platform.

They carried out an analysis of the portfolios of nearly 50 experienced angel investors found a weighted average Internal Rate of Return (IRR) of 14.7%.

Of the £75.4m invested by study participants, the value of exited and existing portfolio companies totalled £208.5m*, resulting in a gain of £133.1m.

Figures exclude the tax benefits offered by the Seed and Enterprise Investment Schemes, which when tallied would increase the results.

The portfolio across participants included over £75m in investments in over 1,660 early-stage businesses.

89% of respondents showed a net gain
11% of respondents showed a net loss
173 of the businesses had exited while 368 had failed and 1,119 were still in play

Participants were required to have invested a minimum of £250k in at least five companies over a ten-year period. Results, therefore, reflect the average returns of private investors who have built a portfolio of early-stage investments over time.

Oliver WoolleyOliver Woolley, CEO of Envestors and an active angel himself said, “The results are really enlightening. Angel investing is known for being high risk, but what the study is clearly showing is that it can be very lucrative. We’ve been helping to match companies and investors for nearly 15 years, and we’ve had our share of winners and losers. What’s clear is that if you approach investing carefully, work with a regulated network and build a diverse portfolio, it can pay off.”

When asked for advice, study participants offered the following:

‘Spread your risk, recognise that many will fail (including those you rated as relatively low risk), and crucially, remember the time for the successful ones to provide an exit opportunity is many times longer than predicted by the company at the time you first invest.’

‘Meet the CEO. If you’re not seeing the CEO, there’s a big problem.’

Lastly, they stressed the importance of strong leadership teams, ‘The entrepreneur(s), are they leaders, driven, committed, experienced Do they have the qualities necessary to build a large and successful business?’




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Published on: 18th February 2022

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