Benefits and Risks
Angel investing can be very rewarding personally and business wise. It is very different from traditional investing and comes with some unique benefits and risks
- High investment returns
- Attractive tax incentives
- Support local entrepreneurs with advice and money
- Contribute to innovation
- Learn from other angel investors
- Early stage investment are high risk and illiquid
- Start-ups have a high rate failure
- The path from start-up to successful exit is uncertain
- Dramatic up and down swings or down rounds
The Pillars of Angel Investing
- Time spent on due diligence translates in better investment outcomes.
- Investors who spent more than 40 hours saw a 7.1 multiple, 20 hours a 5.9x and less than 20 hours a 1.1x.
- High industry expertise in the area of the invested venture delivered twice the returns.
- A higher interaction with portfolio companies delivers a higher exit of 3.7X. A lower interaction of a couple of times per year delivered 1.3X.
Source: *Returns to Angel Investors in Groups, Wiltbank and Boeker, November 2007
Angel Investment Returns (2016)
- Angel groups average 2.5X return (22% IRR) and 4.5 years before exit..
- 30 percent of exits returned more than the original investments.
- 10% of all exits generated 85% of the returns
- Bigger wins take 9-10 years to exit
Tracking Angel Returns, Wiltbank and Brooks, November 2016
Angel Investment Returns (2007)
- Angel groups average 2.6X return (27% IRR) and 3.5 years before exit.
- 48 percent of exits returned more than the original investments.
- 7% of exits returned more than 10x the money invested and accounted for 75% of the returns.
Returns to Angel Investors in groups *Wiltbank and Boeker, November 2007
Angel Investing Facts & Figures
2015 Angel Investing in Canada
- 32 Angel groups and 1,650 active angel investors
- 283 Investments totaling $133.6 Million
- 28% of investments were in Western Canada
- 75% of the deals syndicated with outside capital
- 57% of syndicated deals with other Angel investors
“If you’re a new angel, and you don’t make a number of investments that gets to a portfolio effect, you’re likely not going to be an angel for long, because losses will happen before winners.” – David Verrill in Startup Wealth by Josh Maher
The Angel Investing Process
Early stage investments can provide excellent returns when properly selected and managed. Angel investing requires a different approach than traditional investing. Joining and Angel Investment fund is a great way to get familiar with the unique opportunities, risks and rewards of angel investing.
Our team of investors follows a multi-stage process to identify and screen the most promising local companies that meet E-Fund’s investment criteria.
“Try to minimize the impact of mistakes. Don’t write too big of a first cheque. Start learning about what can go wrong.” – Rudy Gadre in Startup Wealth by Josh Maher
Learn more about Angel Investing
- Meet with an E-Fund Investment Team or Board Member
- Join an E-Fund Event or Workshop or monthly VANTEC Angel Network meetings
- Subscribe to our E-Fund Angel Investing Newsletter and get notified for upcoming workshops and events