Patterns of Successful Angel Investing by Simeon Simeonov
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Sim Simeonov's presentation from Angel Bootcamp 2011 teaches lessons for successful angel investing based on statistical analysis of thousands of angel investments over a twenty year period. For more info, see http://sim.vc/angels
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Patterns of Successful Angel Investing by Simeon Simeonov
- 1. Data-Driven Patterns for Successful Angel Investing Sim Simeonov sim@fastignite.com @simeons
- 3. Have fun & make $$$
- 4. 58 % IRR
- 8. What determines investment success?
- 9. quality deal flow picking winners winning the deal market environment
- 10. Can you pick winners?
- 11. If you can have asymmetric information most of the time, ignore the advice here
- 12. quality deal flow picking winners winning the deal market environment
- 13. investment optionality dollar cost averaging
- 14. be a player investment optionality dollar cost averaging play a lot
- 15. Angel Investment Returns Analysis Ingredients Instructions • Kaufmann angel 1. Clean data return data set 2. Analyze data set • Additional data 3. Reverse-engineer from angels returns probability Tools distribution • Big data kitchen 4. Do Monte Carlo 5. Adjust & repeat #4 for all interesting questions
- 16. Two things you don’t want to see made: sausage & econometrics
- 17. The end result, however…
- 18. 100% 80% >10x 60% 5-10x 3-5x 40% 2-3x 1-2x 20% <1x 0% % of % of % of % of Angels deals $inv $return
- 20. 100% Portfolio 75% Size Size Portfolio P(return > X), % 5 10 25 50% 50 100 25% 0% 0x 2x 4x 6x 8x 10x Cash-on-Cash Return
- 21. Why do a few angels get the lion’s share of returns?
- 22. Lucky? Smart?
- 23. Portfolio Size P(return > X), % 15% 200% 5 10 25 50 100 Portfolio Size 10% 5% 0% 5x 6x 7x 8x 9x 10x Cash-on-Cash Return
- 24. Answer: most likely luck
- 26. 100% Portfolio 200% Size Size Portfolio P(return>X), % 75% 5 10 25 50 50% 100 25% 0x 1x 2x 3x 4x Cash-on-Cash Return
- 28. Does the lean startup movement benefit angel investors?
- 29. P(failure) reduced from 60% to 50% 125% 100% 75% 50% 25% 0% 5 10 20 25 50 100 DiffP(x > 1) DiffP(x > 2) DiffP(x > 3)
- 30. Answer: yes but very active angels get disproportionate benefits
- 31. What’s the effect of big bets?
- 32. 50x vs. 1000x returns cap 80% 60% 40% 20% 0% 5 10 20 25 50 100 DiffP(x > 1) DiffP(x > 2) DiffP(x > 3)
- 33. 20% 50x cap, 55% fail vs. 10% 1000x cap, 60% fail 0% 5 10 20 25 50 100 -10% -20% DiffP(x > 1) DiffP(x > 2) DiffP(x > 3)
- 34. Answer: big bets make the most sense for very active angels
- 36. Be an active angel. Benefit from: - portfolio effects - lean startup ecosystem - making big bets
- 37. Be a selective angel. Focus on: - information asymmetry - low-failure opportunities - price
- 38. Econometrician seeks angel investor data for discrete long-term relationship and intense anything-goes analysis. Must be clean and BS-free. http://sim.vc/angels