1. Angel Investor Performance & Strategy Data from the U.S. and U.K.
Robert E Wiltbank, Ph.D.
Associate Professor of Strategy
Willamette University

2. Business Angel Data Sample Frame: ‘publicly seeking’ angel groups
- Data from 117 different angel groups
- 700 angel investors included in the data thus far, experienced 1,542 exits
- Individual response rate: 15%
Sample Bias?
U.S. Sample: No Significant Self Selection Biases
Outcomes are uncorrelated to the response rate of a group.
2.6X for 7 high response rate groups (2/3 response) vs. 2.4 for low rate groups
Median multiple was 1.2 for Hi rate groups, 1.4 for low rate groups

3. Group Affiliated Angel Investors
Make just more than 1 investment per year
Greater variation in UK work experience than US angels
They had founded a median of 2.5 companies (27% founded 0)
Most everyone (95%) had worked for at least a few years in a large firm
24% had operated as public servants for at least a year or two.
Median of 10% of their personal wealth in both US & UK
About a 2/3 vs. 1/3 split, active vs. passive investors
In UK 2007/2008: Reviewed 20 opportunities made 3 investments
24% of the investments likely not made without tax incentives

4. Distribution of Returns by Venture Investment
Hold: 3.0 yrs.
UK: Overall Multiple: 2.2X
Holding Period: 3.6 years
Approx 22% IRR
Hold: 3.3 yrs.
US: Overall Multiple: 2.6X
Holding Period: 3.5 years
Approx 27% IRR
Hold: 4.6 yrs.
Hold: 4.9 yrs.
Hold: 6.0+ yrs.
Green Bars: U.K. % of exits in that Category (prelim)
Blue bars: U.S. % of exits in that Category

5. Entrepreneurial Expertise
More entrepreneurial expertise (number of ventures founded) is significantly related to better outcomes.
In the U.S. 85% of angel investors are cashed out entrepreneurs
Somewhat lower in the U.K., a larger variation in the experience of angels
U.K. Angels invest in later stage opportunities than U.S. Angels
15% vs. 32% seed stage, 36% vs. 18% early growth

6. Participation post investment
Interaction: hi interaction had significantly less failure
Low interaction (quarterly/annually/rarely) failed 61% of the time
Hi interaction (daily/monthly/weekly) failed 44% of the time
UK: Board Role: related to better returns (related to entre expertise)
Significantly better returns in regression analyses, the largest effect size
Passive vs. Active
Passive was significantly related to smaller investments and worse returns

7. High = 1 or 2 times per month
The Impact of Participation in the U.S.
High = 1 or 2 times per month
Low = 1 or 2 times per year
High 3.7X (4.0 years)
Low 1.3X (3.6 years)

8. The Impact of Time in Due Diligence
Median: 20 hours
26% involved over 40 hours
Overall Multiple for High Diligence 5.9X (4.1years)
Overall Multiple for Low Diligence 1.1X (3.4 years)

9. 30% of deals had follow on investments.
Follow-On Investment from Same Angel Investor
30% of deals had follow on investments.
No 3.6X (3.3 years)
Yes 1.4X (3.9 years)

10. Angel Performance Project
There is practical value in researching angel returns
The strategic choices involved in angel investing influence the success and failure of angel investors.
Research on the process and outcomes can help improve your next investment.
The full reports are available online through the Kauffman Foundation and NESTA
Robert Wiltbank

11. Challenges in Angel Investing
Deal Flow is critical, and can be very spotty
Especially true for individuals, still true for groups in smaller metro areas
Compensation and Capability issues in groups.
Active vs. inactive members performing due diligence and oversight.
Capital Waves
Strong early activity to max capacity often happens before successful exits
Negotiating leverage in growing deals
Angel groups are doing some later stage round, but struggle to control terms
Dispersion of returns: sidecar funds and group cohesion.
Spread out the “winnings”? Interfere in the action?

12. At the Core of Entrepreneurial Expertise
Non Predictive Control in Angel Investing:
Select ventures that appear most capable of influencing critical market elements.
Create and Influence localized markets, rather than compete in large “ideal” ones.
Emphasize the current means and capabilities of the venture rather than on plans for acquiring the “best” means to reach their original goals.
Adjusting goals is less expensive than acquiring different means.
Commitment is more important than Best.
Encourage the venture to make smaller investments that get to cash flow positive rather than investing in the resources suggested by market research to “hit plan.”
Overhead trails growth
Avoid prediction as the basis for investment decisions.
Emphasize affordable loss rather than maximizing expected values.
Control is related to a reduction in failures, homeruns appear random.