Angel Investing Returns - The Impact of the Stock Market
Written by Jay Turo on Wednesday, June 24, 2009
The general misery that the public markets have subjected us all to over the past year (and really the past 10 years, with the Dow Jones, the S & P, and the NASDAQ all trading lower today than they were in 1999), begs the question - how does stock market performance affect angel investing returns?
The answer, on the one hand, is very obvious. A falling tide sinks all boats. So as goes the public markets, so go the private equity markets, of which both venture capital and angel investments are subsets.
This is best illustrated by the amazing (and depressing) statistic that in the last 10 years there has been more money invested into the venture capital industry than has come out of it. A lot of effort for naught.
But in spite of this, and maybe even because of it, average angel investing returns this decade have been surprisingly, even shockingly good. According to data compiled by Thomson Financial, average angel investing returns have been in excess of 20% annually since 1999.
Why is this and will it continue? Well, it has to do with the difference between the "macro" and the "micro."
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