There is always a lot of talk about investor returns when it comes to angels and early stage investments. Here is a good conversation with Manny Fernandez and Bill Payne where they discuss Rob Wiltbank’s data as well as how investors can go about working themselves into a position to conform to the data on returns. These same principles were recently discussed in Forbes by Marianne Hudson of the ACA. Here is a quick summary and the full recording.
- The basics of the Wiltbank data is that angel returns of 27% IRR require 20-25 investments and over 20 hours of due diligence per company. Here is a link to the presentation Rob gave at the Seattle Angel Conference.
- Most investors invest 3-10% of their entire net-worth (some invest more, but considering there is risk and optionality investing more is less-common)
- The median wealth of accredited investors is $2.5m – meaning they likely invest $250k total and $5k per company they invest in with $5k reserved for follow-on
- DreamFunded.com is launching as a platform for angel groups to bring vetted deals to an online platform and allow accredited investors outside of their group to participate with low dollar amounts
- The idea of DreamFunded is to take the angel group investing principles, that Rob has shown in his research as key to getting high returns, and implement them online. This is somewhat similar to FundersClub, SeedInvest, and CircleUP, yet they all have some aspects that are unique differentiators. DreamFunded’s differentiators include working with existing angel groups who are more representative of Rob’s data.
Here is the recording of Manny Fernandez & Bill Payne: