Angel Investors need portfolio with 25 businesses to realise optimal return research reveals
- On January 27, 2021
- By GrowthInvest Marketing
New analysis from legal-tech firm FounderCatalyst reveals the number of start-up investments needed in order to receive the optimal return is approximately 25.
The research shows that this will lead to a 2.77 times return, or a 3.19 times return, when taking into account the 30% tax relief with HMRC’s Enterprise Investment Scheme (EIS) (returns would be even higher if using the Seed Enterprise Investment Scheme (SEIS)).
This optimal number of investments is higher than the actual average number of investments made by angel investors, which is 17, showing that many angel investors could optimise their portfolio by increasing its size over time.
The findings use data from a report by UK British Angels Association and British Business Bank: The UK Business Angel Market 2020 (p20 & 22). FounderCatalyst used a Monte Carlo simulation to drill into data covering 300 exits from 2018/19 and the rate of return on original investment.
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