Angel Investing
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
Benefits
- High investment returns
- Attractive tax incentives
- Support local entrepreneurs with advice and money
- Contribute to innovation
- Learn from other angel investors
Risks
- 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
Download Angel Investing in Canada 2015 by
NACO – National Angel Capital Organization
2014 Angel Investing in United States
- 240+ Angel groups and accredited platforms
- 13,000 active angel investors
- 73,000 Investments totaling $24.1 Billion
Download Angel Investing in US 2015 HALO Report by
ACA – Angel Capital Association
“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