A new report assessing the returns received by angel investors in the U.S. found that investors participating in organized groups received a return on investment that compares favorably with other private equity investments, including those of early-stage venture capital. According to Returns of Angel Investors in Groups, angel investors affiliated with angel networks achieved an internal rate of return of 37%. Exits from these investments generated 2.6 times the invested capital in 3.5 years. The study also examined the impact of key strategic factors on investment: due diligence time, industry experience, participation with the company after the investment is made, and follow-on investing. Among the findings:

• Investors achieved higher returns when they took more time to conduct due diligence.

• Returns for investments where investors had relevant industry expertise were significantly greater than those where such experience was lacking.

• Greater participation after the investment is associated with higher returns.

The study was based on analysis of 86 investor groups involving more than 1100 exits in which companies receiving the investments went public, were acquired or were closed. See the full report at:
www.kauffman.org/pdf/angel_groups_111207.pdf