Angel Network’s Realized Multiple and Internal Rate of Return Higher; Hold Period Also More Favorable
IRVINE, Calif.—August 30, 2016—Tech Coast Angels (TCA) today revealed that its performance record is better than the average angel investment in nearly all categories, as compared to an extensive study of returns prepared by Dr. Rob Wiltbank and Professor Wade Brooks for Willamette University and the Angel Resource Institute (ARI) earlier this year. TCA based its 3.3x return as follows:
If a TCA member had invested $25K in all of the network’s 305 investments ($7.7 million), s/he would have so far:
- Already realized $12 million in cash liquidity events;
- Taken $2 million of tax-deductible write-downs; and
- Still have $4.1 million of active investments, which, if the average performance is same as earlier exits/write-downs, would provide an additional $13.6 million of cash realized
…all of which implies a potential 3.3x overall return (not counting tax benefits).
The 3.3x in total investments return surpasses the 2.5x average as listed in the ARI report angel investment averages, as well as in earlier studies. TCA’s IRR (Internal Rate of Return) of 26% and Hold Period of 4.3 years compared to ARI’s measured average of 22% and 4.5 years, respectively. TCA’s percentage of exits returning less than 1x is marginally better at 68% (the ARI report is 70%). For more information, please visit https://tcaventuregroup.com/performance/.
Of the 305 investments made by TCA since its inception in 1997, 162 (53%) are still active. There have been 64 exited investments, including 45 that returned at least 100% of the investor’s capital—and 12 returned between 5x and 139x. For a list of TCA exits since 2000, please visit https://tcaventuregroup.com/exits/.
“We invest across most industries, but so far our success rate has been highest in Financial Services, Life Sciences, BTB and Cleantech/Industrials sectors — all of which have realized over 60% success rates,” said John Harbison, TCA Chairman. “Software is close behind with a 45% success rate. We’ve had two home runs so far with returns of over 110x, and another at 70x.”