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Exits 3.9
T he main motivation for angels to invest is financial: they hope that they will derive significant financial returns from a few of their investments that is sufficient to more than offset the losses that arise from their un- successful investments. However, research does indi- cate that most angels are also motivated, in part, by non-financial considerations, including the satisfaction from supporting the next generation of entrepreneurs and the economic and social impacts that their invest- ee companies make. Unfortunately, it is challenging to obtain data on the outcomes of angel investments ei- ther from angel organizations or from individual angels.
Hence there are only a handful of studies that report angel returns. 6
Angel organizations were asked to provide information about the exits that they had achieved in 2022. Twenty angel organizations provided information. Eleven (55%) had no exits, six (30%) each reported having one suc- cessful exit, two (10%) angel organizations each report- ed two exits and one (5%) reported three exits. Only two angel organizations were able to report the returns (2.5x and 4x). The low number of returns underlines the need for angel investors to be patient.
6 Gregson, G, Bock, A J and Harrison, R T (2017) A review and simulation of business angel investment returns, Venture Capital: an international journal of entrepreneur- ial finance, 19 (4) 285-311. Mason, C M and Harrison, R T (2002) Is it worth it? The rates of return from informal venture capital investments’, Journal of Business Ventur- ing, 17, 211-236. Wiltbank, R. E. (2009) Siding With the Angels. Business angel investing: Promising and Effective Strategies. London: NESTA. Wiltbank, R and Boeker, W (2007) Returns to Angel Investors in Groups. SSRN: http://dx.doi.org/10.2139/ssrn.1028592
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