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The majority of angel investors - some extra explanation

Paul Clark
Paul Clark
Last updated: June 4, 2024
Venture south fallback

You probably noticed a few italicized words in that last post. Different cuts of data tell different stories, so in the interests of full disclosure here is more explanation of the data I used.

Through VentureSouth. This excludes any investments individuals made on their own, either before or after being VentureSouth members, or while members but outside of VentureSouth deals. You could argue that I’m cherry-picking the best data by only including VentureSouth performance, when wider data would be more appropriate. If you argue that, you’re saying that people make better investments through VentureSouth than on their own – so the logical conclusion is you had better visit our enrollment page to sign up…

Still, it is a reasonable objection. We have a bit more insight into some of these investors’ portfolios, as we have some data from them about their angel investing experience, and we sometimes see their names on other cap tables, but not enough to be certain about full track records. Nevertheless, it would take a lot of investors making wrong decisions outside of VentureSouth to change the proportion materially.

in aggregate…. I think David means his angel acquaintances have lost money in aggregate, not on any given deal. Of course, we all know angels that have lost money on a particular investment – it’s happened plenty of times here and will happen plenty more – but I’m sure a single deal loss isn’t what David meant.

so far. I’ve included here (a) investors who have lost money on realized investments but still have active investments in play and (b) investors who have made money so far but whose portfolios include some active companies that seem unlikely to generate a positive return. Several of the first group are on track to “rescue” their positions with a payoff from their remaining portfolios, and things might improve for those in the second; but as future payoffs are estimates, I’ve included both of those groups in our data as a “worst case” proportion.

(before fees). I excluded fees (for us, membership dues and carried interest) from this data. These are small relative to the invested capital and returns, so while they might reduce the net aggregate return, they are unlikely to move an individual from the “made money” category to the “lost money”– and certainly not enough individuals to impact the proportion in each group materially.